Dive Brief:

• Starbucks is launching Teavana packaged tea in grocery stores beginning this summer, according to a company statement. The six premium tea sachet varieties are inspired by popular Teavana blends and include Youthberry, Peach Tranquility, Citrus Lavender, Jade Citrus, Imperial Spiced Chai and Earl Grey Crème.
• The new line marks Teavana’s entry into the $1.2 billion U.S. packaged tea market and builds on the success of handcrafted beverages in Starbucks stores, a report in Food Business News states, noting that this category at U.S. company-operated Starbucks stores grew 14% year-to-date.
• “The launch of Teavana packaged tea in grocery is just the beginning of the journey to bring consumers some of their Teavana favorites in a new, accessible format where they purchase their groceries,” John Culver, group president – international, channel development and global coffee and tea for Starbucks, told FoodBev Media. “Since our acquisition of Teavana five years ago, we have continued to innovate within the tea category and build distribution outside of Starbucks stores. We remain committed to executing our plan to increase our tea business to $3 billion over the next five years through Starbucks global retail, packaged tea, and ready-to-drink premium Teavana craft iced teas.”

Dive Insight:

There’s lots of change going on at Starbucks as the company seeks to readjust to meet taste shifts of today’s consumer.

The company announced a year ago it planned to shutter all 379 mall-based Teavana stores because of low sales, but the turn to grocery shelves could be a way to gain more profit from the brand, which Starbucks bought in 2012. Last year, company executives said Teavana was among its fastest growing products, but it was not enough to sustain independent stores. 

With this move for Teavana, Starbucks is counting on consumers being more likely to pick up a carton of their favorite tea along with bread, milk and other groceries than they would be to travel to an independent shop for a freshly brewed cup. It will be interesting to see whether the healthy-sounding and unique flavors — including a citrus-berry white tea blend with mango, orange, hibiscus and rose petals; peach and tropical fruit with notes of lemon; or orange and pineapple with lavender blossom and sage will be enough to attract millennial drinkers.  

The turn to teabags doesn’t mean Starbucks is turning away from ready-to-drink Teavana products. Two years ago, Starbucks partnered with Anheuser-Busch to produce, bottle, distribute and market a ready-to-drink tea range under the Teavana brand, with the idea of bringing together strengths of the two companies — Starbucks' expertise in premium tea and the beverage company’s distribution footprint. Only time will tell whether the move from independent stores to grocery aisles will work for the ready-to-drink products — already dominated by Lipton’s Pure Leaf, Arizona, Gold Peak and Snapple.

This could be the right time for Starbucks to aggressively push Teavana into grocery stores. About four in five U.S. consumers drink tea, including 87% of millennials. As Americans view tea as a healthier alternative to other beverages and millennials are looking for new flavors and experiences, tea trends like boba, kombucha, and green tea are on the rise. Perhaps new tea experiences can successfully take over the idea of hip coffee shops of past decades.

Still, Jordan G. Hardin, food and beverage director for Alfred Tea Room and Alfred Coffee and editor-in-chief of World of Tea, told the American Specialty Tea Alliance, that the market should expect to see lots of failures as it becomes infused with many new tea flavors. He predicts teas most likely to succeed will be those sourced from new or different regions of the world, including less-sourced Asian countries such as Thailand, Vietnam or South Korea. Tea, he told the Alliance in an article discussing outlooks for 2018, is trying to become “hip and relevant to a younger crowd. But I’m not sure anybody has quite captured what exactly the essence is of modern tea culture.”

No one can read the tea leaves on whether Starbuck’s moves with Teavana are what the market is looking for, but shifting into trendy teas appears to be a savvy move for the company.