Spending Too Much On Starbucks? Get Ready for Tazo Tea Shops

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Tea at Starbucks Spending Too Much On Starbucks? Get Ready for Tazo Tea ShopsStarbucks plans to open its first stand-alone tea shop this fall. The store, which will operate under the company’s Tazo brand, is scheduled to open at a Seattle shopping center across town from Starbucks’ headquarters.

The tea shop will include a staff-run blending bar where customers can mix their own tea from more than 80 loose-leaf choices. Offerings will also include iced teas, tea lattes and full-leaf tea sachets.

Besides tea, the store will feature packaged chocolates, infused sugars and honey, varying types of tea snacks, as well as brewing merchandise.

Starbucks bought Tazo in 1999 for $8.1 million, and according to Starbucks’ executives, Tazo already represents a $1-billion business for the company.

Lisa Jennings with Restaurant News points out that Starbucks has been selling Tazo Tea in its coffeehouses and grocery stores for years, but the new concept will be the tea brand’s first outlet.

Tiffany Hsu with the Los Angeles Times notes the global tea market is estimated to be worth $95 billion.

Starbucks Tazo Tea Spending Too Much On Starbucks? Get Ready for Tazo Tea Shops“It’s becoming increasingly difficult to refer to Starbucks as a chain that serves mainly ‘Joe’,” writes Hsu.

“The company recently launched its Evolution Fresh juice store in Washington state. This month, it paid $100 million to buy Bay Area bakery brand La Boulange.

According to the NPD Group, a market research firm, tea is among the top five fastest growing beverages on restaurant menus, and coincides with what research says consumers are looking for: a health oriented beverage that’s low in calories, soothing and refreshing with exotic blends and flavorings.

Starbucks will be competing with Teavana Inc., an Atlanta-based chain of upscale tea shops offering loose-leaf teas and accessories.

Teavana also offers tea in retail outlets in 223 US and Canadian locations and 18 franchised locations in Mexico.

Jennings claims other competitors will be Argo Tea, Talbott Teas, and Stash Tea Co. Argo Tea is a tea shop/café concept that is also growing its grocery store and foodservice presence.

Starbucks Tazo Tea Store Spending Too Much On Starbucks? Get Ready for Tazo Tea ShopsJennings also notes Jamba Juice acquired Talbott Tea with plans to grow tea options in its smoothie shops as well as a packaged product in grocery and other retail outlets.

And tea wholesaler Stash Tea is planning to open a tea bar location in Portland later this year.

Sharon Zackfia, an analyst with William Blair & Co., predicted that Starbucks will assimilate knowledge from the Tazo test location to enhance its tea-beverage platform within its coffeehouse units.

“It also remains a question as to how effective Tazo’s selling and educational techniques will be for a U.S. customer base that remains largely untutored in the art of tea, whereas Teavana’s intensive training processes are well proven, given incredibly high sales productivity of nearly $1,000 per square foot,” Zackfia wrote.

Starbucks also plans the sale of single-cup coffee machine this fall, allowing consumers to brew lattes and other drinks at home.

The company also offers other single-cup options, including K-cups that are compatible with the Keurig systems made by Green Mountain Coffee Roasters.

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