Starbucks Corporation Sells Tazo Tea for $384M

Ann Santiago
November 4, 2017

Starbucks also said it would sell its Tazo brand of teas to focus on its Teavana brand.

"With its strong appeal to millennials, Tazo is a flawless strategic fit for our United States portfolio that includes exciting new brands such as Seventh Generation, Dollar Shave Club and Sir Kensington's", Unilever North America president Kees Kruythoff said.

Johnson further added, "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".

"We have not consistently delivered against our long-term financial targets", said Chief Executive Kevin Johnson.

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

Starbucks announced Thursday it's selling its Tazo tea brand to Unilever after reporting lower-than-expected revenue for the fourth quarter.

Unilever plc (ADR) notes that the acquisition price for the Tazo Tea brand represents 10 times its pro forma EBIT.

Starbucks paid $8.1 million for Tazo in 1999, five years after it was founded.


"Tazo's solid position in the fast-growing speciality tea segment, coupled with Unilever's tea expertise, presents a fantastic growth opportunity".

"With its strong appeal to millennials, Tazo is a flawless 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.

Tazo had sales of $112.5 million during the past year.

For Unilever, the acquisition will expand the company's presence in the US premium tea category.

The chain's fourth quarter in 2016 included an extra week, so comparisons between this year and last week will be a little off, the company said. Although Starbucks has been shutting down stand-alone Teavana stores, it still sells its teas in stores.

Starbucks traded at $55.90 Friday morning.

The company also announced that it generated $5.7 billion in revenue in the company's fiscal fourth quarter ended October 1.

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