Starbucks Announces TAZO Sale to Unilever

Starbucks Corporation today announced an agreement to sell the TAZO tea brand to British-Dutch CPG conglomerate Unilever for $384 million, a move that president and CEO Kevin Johnson said will allow the Seattle-based coffee giant to focus on supporting its other premium tea brand, Teavana.

“Over the past five years, we have established Teavana as our primary global brand focused on the premium tea segment,” Johnson said in a press release. “With our growth strategy for premium tea exclusively focused on Teavana, we are pleased to transition our Tazo business to Unilever. We continue to see significant growth in our tea business through our Teavana brand, and this transition supports our strategy to elevate the premium tea experience for our customers.”

Under the terms of the agreement, Unilever will acquire the Tazo brand and all related intellectual property, signature recipes and inventory.

Tazo was founded in Portland, Ore. in 1994 by Stash Tea co-founder Steven Smith, who sold the company to Starbucks in 1999 for $8.1 million. The brand, which is sold mainly in conventional grocery and convenience retail channels, produces a range of tea products, including packaged tea, K-Cup pods and bottled ready-to-drink (RTD) beverages. TAZO had sales of $112.5 million over the past year.

Kevin Havelock, president of refreshment at Unilever, said in a press release that the acquisition would strengthen the company’s global tea portfolio, which includes Lipton, Pure Leaf, PG Tips, T2 and Pukka, towards “high growth segments.” Unilever North America president Kees Kruythoff, meanwhile, praised TAZO’s strong appeal with millennials.

“TAZO’s solid position in the fast-growing specialty tea segment, coupled with Unilever’s tea expertise, presents a fantastic growth opportunity,” Kruythoff said in a press release.

The transaction is expected to be close in the fourth quarter of this year, subject to regulatory approval.

The move signals Starbucks’ faith in the Teavana brand, which it acquired for $620 million in 2012. Despite announcing in July the decision to close all 379 Teavana brick-and-mortar outlets, Starbucks extended the brand with the February launch of Teavana Craft Iced Teas. The line is manufactured and distributed through a joint venture with Anheuser-Busch InBev that was announced in 2016.

According to the company, Starbucks sold more than $1.6 billion of prepared and RTD Teavana beverages in its stores in the past 12 months.

Starbucks announced the agreement shortly before releasing its Q4 earnings this morning. The company fell short of analysts’ predictions, reporting revenues of $5.7 billion compared to $5.8 billion projected.

“Growing Teavana in CPG channels is a major opportunity for us,” said Starbucks executive vice president and CFO Scott Maw, during the call, according to a transcript. “In our pilot markets, Teavana ready to drink tea captured the leading position in the super premium tea category during the quarter, and given the enthusiastic response to-date, we have accelerated our national rollout to this coming January.”