Starbucks to sell Tazo tea brand to Unilever for $384 million

Starbucks to sell Tazo tea brand to Unilever for $384 million

Coffee chain to focus on selling a single tea brand inside its stores

Starbucks Corp. said Thursday that it has agreed to sell its Tazo tea brand to Unilever PLC for $384 million in a deal that will enable the coffee giant to focus on a single brand of tea, Teavana.

Unilever will acquire Tazo’s recipes, intellectual property and inventory. Starbucks acquired the brand in 1999 for $8.1 million, five years after Tazo was founded.

Tazo is primarily sold in grocery, convenience and mass merchant stores.

The deal for Tazo comes months after Starbucks said it would close all 379 of its Teavana locations and would focus on selling Teavana inside its coffee shops, rather than at stand-alone retail locations.

Starbucks said that, by selling Tazo, it would “sharpen its focus on its up-level tea strategy with Teavana.” The company plans to invest in growth, innovation and development of Teavana.

Tea sales inside of Starbucks locations are growing at double digits annually, particularly as the chain expands in Asia and other markets where tea is popular. The company believes the Teavana business could be worth more than $3 billion in five years, and over the past 12 months the company has sold $1.6 billion worth of Teavana beverages inside its stores.

“With our growth strategy for premium tea exclusively focused on Teavana, we are pleased to transition our Tazo business to Unilever,” Starbucks CEO Kevin Johnson said in a statement.

The company also announced that it generated $5.7 billion in revenue in the company’s fiscal fourth quarter ended Oct. 1. The company also reported narrower operating margins and earnings per share of 54 cents. The numbers fell below investors’ expectations, and the company’s stock was down about 6 percent in after-hours trading Thursday.

Same-store sales increased 2 percent globally, the company said, including a 1-percent increase in transactions.

U.S. same-store sales increased 2 percent, including a 1-percent increase in the number of customers. Starbucks said same-store sales would have increased 3 percent without the impact of hurricanes Harvey and Irma.

Contact Jonathan Maze at [email protected]

Follow him on Twitter: @jonathanmaze

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