Unilever to acquire Tazo from Starbucks

Starbucks shifts to single tea brand strategy with Teavana

Englewood Cliffs, N.J.-based Unilever North America announced an agreement to acquire the TAZO brand from Seattle-based Starbucks Coffee Co. TAZO is a leading brand in the fast-growing specialty tea category.

Under the asset purchase agreement, Unilever will acquire the TAZO brand and all related intellectual property, signature recipes and inventory for $384 million, the company says. The transaction represents a multiple of 10 times pro forma EBIT. TAZO had sales of $112.5 million during the past year ending June 30, 2017, it adds.

Founded in 1994, TAZO has a strong position in specialty black, green and herbal teas, as well as liquid concentrates focused in the chai latte segment. The fast-growing specialty tea segment makes up 48 percent of the at-home tea category and trends suggest it will become more prominent in the future, the company says. TAZO is primarily sold in grocery, mass and convenience channels in the United States and Canada. The brand is offered in formats including packaged teas, K-Cup pods and bottled ready-to-drink teas.

“With its strong appeal to millennials, TAZO is a perfect strategic fit for our U.S. portfolio that includes exciting new brands such as Seventh Generation, Dollar Shave Club and Sir Kensington’s,” said Kees Kruythoff, president of Unilever North America, in a statement. “TAZO’s solid position in the fast-growing specialty tea segment, coupled with Unilever’s tea expertise, presents a fantastic growth opportunity.”

Kevin Havelock, president of Refreshment at Unilever, added: “TAZO represents another strategic addition which strengthens our tea portfolio toward high-growth segments. Its artfully crafted specialty teas perfectly complement our global tea business, which includes Lipton, Pure Leaf, PG Tips, T2 and our recent addition, Pukka.”

With Unilever taking the reins on the TAZO brand, Starbucks is moving to a single tea brand strategy and focus with its super-premium tea brand, Teavana.

Starbucks will continue to invest in the growth, innovation and development of the Teavana brand of teas in its stores and other channels, the company says. The tea category in Starbucks stores continues to grow double-digits globally, with Starbucks on its way to building the Teavana business to more than $3 billion in the next five years, it says.

“Over the past five years, we have established Teavana as our primary global brand focused on the premium tea segment. With our growth strategy for premium tea exclusively focused on Teavana, we are pleased to transition our Tazo business to Unilever,” said Kevin Johnson, president and chief executive officer of Starbucks, in a statement. “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.”

Subject to regulatory approval, the transaction is expected to close in the fourth quarter 2017, with complete transition between the two companies by the end of calendar year 2018, subject to regulatory approval.

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