Unilever picks up Tazo brand from Starbucks

Nov 04, 2017, 00:28
Unilever picks up Tazo brand from Starbucks

European consumer goods giant Unilever on Thursday said it inked a deal to buy the Tazo specialty tea brand from Starbucks for $384 million, a sizable premium on the $8.1 million the coffee giant paid for the company in 1999.

In turn, Starbucks will drive a single tea brand strategy and focus with its super premium tea brand, Teavana.

"Over the past five years, we have established Teavana as our primary global brand focused on the premium tea segment".

"We've been streamlining the business", chief executive Kevin Johnson said in an interview after the release of results.

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

Starbucks said that, by selling Tazo, it would "sharpen its focus on its up-level tea strategy with Teavana".

The move signals Starbucks' faith in the Teavana brand, which it acquired for $620 million in 2012.

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In addition to Tazo, Unilever owns beverage brands Lipton and Brisk, both of which make tea products.

Net income for the quarter reached $788.5 million equal to 54 cents per share, in comparison to $801 million equal to 54 cents per share for the same period one year ago.

"With its strong appeal to millennials, Tazo is a ideal strategic fit for our United States 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.

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

"Tazo's solid position in the fast-growing speciality tea segment, coupled with Unilever's tea expertise, presents a fantastic growth opportunity". The brand pulled in $112.5 million in revenue over the past year and UL believes that there is room for more growth.

Starbucks traded at $55.90 Friday morning. But the coffee chain also reported disappointing fourth-quarter sales growth at stores around the world, and its shares fell more than 3 percent in after-hours trading.

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