Starbucks & Teavana...Match Made in Heaven?

Two weeks ago Starbucks agreed to acquire Teavana Holdings Inc. for a little over $600 million (lawsuit has been filed to halt takeover so things could get interesting). Looks like a smart move, even with the likelihood of Teavana cannibalizing Tazo Tea (already owned by Starbucks). Any thoughts on this move? Personally, I think its brilliant. Coffee is slowly falling by the wayside as tea is becoming the new drink of choice. I actually stopped at Starbucks this morning and swapped my usual grande dark roast for a grande green tea. I wish I had made the switch sooner. Needless to say, it looks like Starbucks is staying ahead of the trends in North America and appears they are looking to make a play in foreign markets....tea is way more popular in Asia. So with that in mind will any of you be making the switch from coffee to tea?

For more info see:

Starbucks to Buy Teavana for 620 Million

Why Starbucks is smart to push tea

Stockholder Lawsuit to Halt Takeover

 

I think this is a great move as well. I was going to disagree about them "cannibalizing" Tazo, but the more I think about it, I am not so sure... Curious to see where they go with this.

“Tea has been part of our core from the beginning,” Alstead said. “It’s the second-most consumed beverage in the world, second only to water. We should be leading in tea.”

Sometimes it just seems so obvious after the fact...

Full Disclosure: I did not know Teavana was that large or that popular.

"That dude is so haole, he don't even have any breath left."
 
Best Response

Its about retail footprint. Starbucks has a bit too much, Teavana needs more (rationale for IPO). Throw in a bit of cross-selling and its an easy strategic rationale.

They also seem to have gotten a decent price, slight premium to IPO price from last year. And starbucks does need the product growth.

They have already shown a willingness to abandon Tazo when necessary - see India Tetley deal. Don't think there will be that much cannibalization, since the price continuum at starbucks looks like tea

 

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