With the launch planned for the first half of 2017, Teavana RTD, a non-alcoholic premium ready-to-drink tea, will be sold across US channels.
The two companies say the partnership will bring together Starbucks’ experience in premium tea, and the production capabilities and US distribution footprint of brewer Anheuser-Busch.
Both Anheuser-Busch and Starbucks are eying up premium RTD as a ‘significant growth opportunity.’ It is the fastest-growing segment in the RTD tea category, which grew at 16% CAGR over the past five years, and generates $1.1bn in sales.
Starbucks acquired Teavana in 2012, when the company saw an opportunity ‘to do for tea what Starbucks has done for coffee.’
Teavana produces its premium teas and botanicals for both new tea drinkers and tea connoisseurs. Acquired by Starbucks in 2012, and set to be introduced in Europe this year, the brand offers an array of loose leaf teas and tea products.
Over the past year, Starbucks’ US locations have sold more than $1bn of Teavana tea beverages – showing 11% growth in year-over-year sales.
Starbucks has previously outlined ambitions to build the Teavana business to more than $3bn over the next five years.
“The new RTD product line will integrate the handcrafted nature and epicurean flavors drawn from Starbucks and Teavana’s retail favorites to offer consumers premium layered flavors,” said the two companies as they announced the partnership.
Tea expertise meets distribution muscle
“We are excited to work with Anheuser-Busch to unlock the premium RTD market and further grow demand for the Teavana brand,” said Howard Schultz, chairman and CEO of Starbucks.
In the creation of the Teavana RTD, Starbucks will bring its tea expertise, retail activation, and consumer engagement capabilities.
Meanwhile, Anheuser-Busch will lead production, bottling and nationwide distribution in partnership with its established network of wholesalers.
Carlos Brito, chief executive officer at Anheuser-Busch InBev, said both Anheuser-Busch and Starbucks’ had a history of successful brand building.
“We are delighted to be in a position to offer this great product to our wholesalers and believe, with their support, we are ideally structured to maximize the sales opportunity for Teavana RTD tea across the US.”
In America, 80% of tea consumed is iced tea, according to The Tea Association of the US.
The global tea category size is $125 bn, with American consumers drinking 800m cups of tea every week.
Anheuser-Busch and Starbucks expect to finalize definitive agreements for the Teavana RTD partnership by the latter half of 2016.