Unilever To Buy Tazo Tea From Starbucks For $384 Million

Starbucks tea

"With our growth strategy for premium tea exclusively focused on Teavana, we are pleased to transition our Tazo business to Unilever", Starbucks CEO Kevin Johnson said in a statement.

Tazo is primarily sold in grocery, convenience and mass merchant stores.

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

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

Under the asset purchase agreement, Unilever will acquire the Tazo brand and all related intellectual property, signature recipes and inventory for $384 million.

Unilever North America president Kees Kruythoff, meanwhile, praised TAZO's strong appeal with millennials.

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The deal is expected to close in the fourth quarter, pending regulatory approval, the companies said.

On the company's quarterly call, Starbucks said it would launch a co-branded Chase Visa credit card this winter.

Starbucks total net income slipped 1.6% to $789 million, or 54 cents a share, on total net revenue of $5.7 billion for the three months ended October 1. The company also reported narrower operating margins and earnings per share of 54 cents.

The Seattle-based coffee giant made the announcement moments before it released its fourth-quarter earnings Thursday. And the company committed to returning US$15 billion to investors over the next three years through dividends and stock buybacks.

Global same-store sales increased 2%, fueled by a 2% increase gain in the average ticket and a 1% increase in the number of transactions. After excluding the effects of hurricanes Harvey and Irma - which mauled Texas and Florida during the quarter and forced Starbucks to close a total of 1,100 locations - same-store sales growth was 3 per cent. However, revenue was $5.7 billion while analysts were expecting $5.8 billion. The tea category in Starbucks stores continues to grow double-digits globally, with Starbucks well on its way to building the Teavana business to over $3B over the next five years.

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