Starbucks teamed up with beermaker Anheuser-Busch to produce a ready-to-drink, bottled version of its Teavana tea in the United States. The new partnership signals the coffee company's product expansion in the grocery aisles.
Anheuser-Busch will be in charge of the bottling, distributing and marketing of the new tea products. There are no updates yet if the new Teavana tea will be sold in glass bottles just like Starbucks' frappuccino products - it's possible it will be sold in cans just like Budweiser. Moreover, the coffee company has yet to announce the new products' available flavors.
In 2012, Starbucks acquired Teavana and incorporated its teas in its menu. As of last year, the coffee company sold more than $1 billion worth of Teavana tea. In January, the company announced that it is expecting Teavana to grow into a $3 billion business in the next five years.
The numbers of coffee, tea and water drinkers are picking up with the decline of soda consumption. The Beverage Marketing Corp. found that the volume of ready-to-drink tea products increased by 6.1 percent from 2014 to 2015 while its coffee counterpart surged 16.5 percent.
Starbucks works with PepsiCo for its bottled frappuccino products. According to the coffee company's CEO Howard Schultz, Starbucks partnered with Anheuser-Busch for Teavana because PepsiCo is already handling tea brand Lipton.
Anheuser-Busch is the world's largest brewer with a distribution reach of more than 300,000 stores weekly in the United States. In comparison, PepsiCo's weekly distribution of bottled frappuccino is in just more than 200,000 stores.
"The values of the company coupled with the power of their distribution capability and the recognition that we're sitting on a category that globally is larger than coffee ... there is a huge opportunity here," said Schultz.
The Starbucks CEO highlighted the popularity of tea, especially the iced and premium tea options, among young consumers. This suggests that there is an opportunity to expand the tea category at a faster rate.
"We see an amazing opportunity in tea, when you look at tea on a global basis, but especially in the [United States]," said Anheuser-Busch CEO Carlos Brito.
Starbucks will sell its new Teavana tea next year, marking the company's first ready-to-drink tea product.
Photo: Craig Anderson | Flickr
