Founded in 1994, and purchased by Starbucks in 1999 for $8.1m, Tazo is sold primarily in grocery, mass and convenience channels, offered in formats including packaged teas, K-Cup pods, and bottled RTD teas. It has a focus on specialty black, green and herbal teas, as well as liquid concentrates in the chai latte segment.
Starbucks says it is instead focusing on building the Teavana business to more than $3bn over the next five years: it launched RTD Teavana in a partnership with AB InBev this year, and plans to enter the packaged tea category next year.
Tazo: millennial appeal
The fast-growing specialty tea segment makes up 48% of the total US$1.6bn (FY 2016) at-home tea category and Unilever believes it will become more prominent in the future.
“With its strong appeal to millennials, TAZO is a perfect strategic fit for our US portfolio that includes exciting new brands such as Seventh Generation, Dollar Shave Club and Sir Kensington’s,” said Kees Kruythoff, president, Unilever North America.
“TAZO’s solid position in the fast-growing specialty tea segment, coupled with Unilever’s tea expertise, presents a fantastic growth opportunity.”
Unilever’s tea brands include Lipton, Pure Leaf, PG Tips, T2 and Pukka, which it acquired in September.
Starbucks says it will concentrate on developing and growing its Teavana brand of teas in stores and other channels.
“The tea category in Starbucks stores continues to grow double-digits globally, with Starbucks well on its way to building the Teavana business to over $3bn over the next five years,” says Starbucks.
“In the past 12 months alone, Starbucks has sold more than $1.6bn of Teavana beverages in Starbucks stores, launched ready-to-drink premium Teavana Craft Iced Teas through its partnership with Anheuser-Busch InBev and plans to enter the packaged tea category in 2018.”
The transaction is expected to close during the fourth calendar quarter of 2017, with complete transition between the two companies by the end of calendar year 2018, subject to regulatory approval.