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Friday, November 16, 2012

Starbucks buys yet another tea company

I have thoughts, no feelings yet, on many aspects of this

Starbucks just sent me a (welcome) marketing message (11:30pm) about going to Tazo.com to buy loose leaf tea. The new site is vastly superior to the old one. They used to push you to StarbucksStore.com to buy Tazo, I guess that is over?

Yesterday I found out via Starbucks Gossip that “Starbucks buys Teavana for $620 million in cash“

Starbucks Newsroom

I was a little surprised because Starbucks had already purchased Tazo from Steven Smith (who went on to make another tea company)

Bloomberg

Yahoo

WSJ

NBC news

And was/is planning to make stand alone Tazo store(s) Article at Starbucks Melody

Why two tea brands? Are they going to combine them? Or have them stand independently like Seattle's Best vs. Starbucks

Did they fail to innovate Tazo appropriately? Was it easier to buy more tea knowledge? I would have loved to be head of tea product for Starbucks! (My two loves, combined!)

I do think this makes sense, tea is on an upswing in the US

Starbucks grew through education (good coffee is enjoyable!), before they got large most people had diner or instant coffee in the US. Yes there were independent shops, but it wasn't ubiquitous and mainstream – only certain people appreciated good coffee. Starbucks pushed education, and a third place (they had failures along the way). By making people expect more/better, providing a third place, and making it a chain, it grew!

Teavana is the gateway drug to tea. Much like the early days of coffee in the US, tea is coming along, people are learning there is good tea out there, and that preparation matters. They have been educating (and pushing like used sales people, as well as spreading health misconceptions) helping educate and commoditize good tea. They don't have the best tea, and they company THEY purchased (specialteas.com ) did have some nicer tea but that has since gone below the radar.

So, I wonder what Starbucks will do, but I feel that this is the right time to apply Starbucks knowledge of education, consistency, marketing, and expansion to explode the US tea market. The Starbucks effect allowed local coffee shops to INCREASE business as a result of people having more of an appetite for better coffee, I think the same will happen for tea. I hope this is the beginning of a new age of tea.



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