You might find this surprising, but Starbucks just took over the tea industry, with a beer company.
This month, Starbucks announced it was joining forces with Anheuser-Busch InBev in order to launch Teavana tea drink in the US. Currently, Teavana offers a wide range of loose tea options as well as other innovative tea products. One of the more popular items is the bottled iced tea drink, which Starbucks is hoping to put on the shelves of 300,000 AB Inbev stores in 2017.
Starbucks acquired Teavana in 2012 for $620 million dollar cash buyout, and the product has been extremely popular in many of the Starbucks stores across the country. Since Howard Schultz, CEO of Starbucks, saw this potential market, the company began making expansion plans for Teavana. In April this year, Starbucks announced that Teavana was going global, reaching Europe and EMEA. As demand grows, this new venture with Anheuser-Busch is set to propel the ready to drink tea market into the next level.
For those of you who didn’t know, Anheuser-Busch is the producer of the popular Budweiser beer. In this recent move, AB InBev will become the lead in production, bottling and distribution of Teavana products.
In recent reports from Starbucks, the conglomerate has sold more than $1.1 billion Teavana products, with an 11% growth in sales each year. This is a small drop in the $125 billion tea industry that Starbucks seems ready to conquer. The Tea Association found that 80% of tea consumed in North America is iced tea, making Teavana a hot product to enter the market. Both partners have a strong belief that this merger will push Teavana to become one of the industry’s top sellers.
It appears that coffee is going to have to step up its game, with premium tea becoming more popular than ever. This game changing move might just be a way to keep Starbucks in the running as the nation’s favorite drink provider. Even though the AB inBev bosses have a wider background in beer manufacturing and selling, they also believe the tea business is growing faster in the US.
The Teavana products seem to be following a similar trend in Starbucks ready to drink options. For example, the Frappuccino line, launched in partnership with PepsiCo in 1996, has been extremely successful as a bottle drink sold in stores. This product has brought Schultz $1.5 billion dollars of business a year, though he believes that Teavana will easily surpass this.
PepsiCo may not have been too happy with this recent partnership, but the company’s CEO made his decision based on the beer giant’s experience in distribution and a close relationship with the executives. Some have claimed that there may have been conflict of interest for Starbucks to go forward with Pepsi, due to their current partnership with Lipton Tea.
http://www.businessinsider.com/starbucks-and-ab-inbev-enter-tea-business-2016-6
