Starbucks Gets Tea’d Up

Discussion
Oct 24, 2013

Starbucks wants to do the same thing for tea that it did for coffee. That’s the intention behind the grand opening of Teavana Fine Teas + Tea Bar today on New York’s Upper East Side.

The idea is similar to Starbucks in that the company is looking to elevate the experience of tea drinking and get consumers to pay for it in the process. The new tea bars, according to Starbucks, will deliver "a carefully curated assortment of handcrafted tea beverages, premium loose leaf teas, tea-inspired food offerings and beautifully made tea merchandise."

Tea, according to Starbucks, is the second most consumed beverage across the globe. Water is the first.

Mr. Schultz is looking to open at least 1,000 tea bars in North America over the next five to 10 years. Starbucks will also look to open shops in other spots of the globe during the same period. The second Teavana Tea Bar is scheduled to open in Seattle next month.

According to USA Today, the new concept’s fare is "a bit pricier than Starbucks" with a 16-ounce tea latte selling for $5.95, scones for $3.75 and the priciest salad, $14.95.

Do you expect Starbucks to be successful in its goal to do for tea what it has done for coffee? What do you see as the greatest opportunities and challenges facing the Teavana Fine Teas + Tea Bar concept?

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14 Comments on "Starbucks Gets Tea’d Up"

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Steve Montgomery
Guest
4 years 1 month ago
Thought the point of reference of tea being “the second most consumed beverage across the globe” was interesting. More relevant would have been tea popularity here in the U.S. when stating Starbucks’ intent to open 1,000 stores in this country. There is no question that tea is gaining popularity. Verification is simple – look at the explosion of cold tea offerings in your local c-store. That being said, those offerings don’t have the price points Starbucks is quoting. I would expect Starbucks Teavana Tea Bars to have some success in the major metros, but I don’t expect to find multiples… Read more »
Bob Phibbs
Guest
4 years 1 month ago
Tea has been touted as “the next big thing” for decades. I remember seeing the new Lipton Tea shop in Old Town Pasadena in the 90s. As a former coffee executive, I can tell you the hype never lives up to reality. Tea drinking in the USA in particular is not a mass market like coffee. And don’t say iced tea as that is not a connoisseur beverage. And while there are no doubt pockets of dense city centers like Manhattan where the shear numbers of people can make it work, I don’t expect a Teavana on street corners throughout… Read more »
Giacinta Shidler
Guest
Giacinta Shidler
4 years 1 month ago

Coffee is a mass market commodity with high percentage of consumption in America, thoroughly ingrained into the daily routine – everyone’s got to have their daily fix on the way to work. Tea consumption is nowhere near that same level and often stops with Lipton or iced tea. Those who enjoy specialty, high-end tea blends can find them without too much difficulty. Starbucks really has an uphill battle here if they are looking to replicate their success.

Joan Treistman
Guest
4 years 1 month ago

I thought that a major part of Starbucks’ success has been the consumer experience provided. And that experience includes the entire day part an individual resides in the store, along with the ability to select a coffee or TEA drink. Now comes Teavana.

I am wondering if its consumer experience will include a selection of coffee drinks. If so, it’s too blurry for me (across retailers). There is the potential of the number of brands and overall tea/coffee drinking establishments cannibalizing each other, aka as market saturation.

J. Peter Deeb
Guest
4 years 1 month ago

Many years ago when I was working for Lipton, we experimented with opening Tea shops in major metro areas. There were a variety of products ranging from mainstream teas to very exotic blends along with scones and cakes. We were singularly unsuccessful and soon abandoned the concept.

Having said that, the growth of tea consumption may make this the right time for the idea. The price points, however, seem out of line for a beverage that usually costs much less than a similar coffee product.

Lee Kent
Guest
4 years 1 month ago
I am a huge tea drinker and I believe if anyone can do it, Starbucks can but…they will need to define the Tea Bar experience and get even non tea drinkers to by into it. In a heavily coffee drinking place such as the good ole USA, that could prove difficult. The other thing is the price points. I can buy a chai tea latte at Starbucks for about the same price as any latte there. Why oh why are they jacking up the price on a drink that isn’t that popular in this country? Go for it, Starbucks, but… Read more »
Karen S. Herman
Guest
4 years 1 month ago
Starbucks will most certainly turn tea into a destination experience. The fact the company is looking to enhance the experience of drinking tea with a “curated selection of tea beverages, loose leaf teas and tea-inspired food offerings” creates culinary and learning extensions, too. The lingering question is whether these tea destinations will be as successful as the coffee destinations have been. It will be interesting to watch how Starbucks handles teatime and whether they can influence the regulars at swanky hotels and restaurants to be a bit more pedestrian and give Teavana Tea Bars a try. Another thing to look… Read more »
Warren Thayer
Guest
4 years 1 month ago

I just don’t see it working at $5.95. It’s easy to get a variety of herbal teas in upscale restaurants now, so the trend is growing. But if they have to have baristas and matadors make a 5-minute drama over brewing a cup of tea, I’m not interested. Why not just ease tea into the normal Starbucks offering and test things out without a big hoo-ha?

Lee Peterson
Guest
4 years 1 month ago

I definitely think SBUX will succeed, but I don’t think the tea market is anywhere near as large as the coffee market. It’s simply not as addictive (good?) a product as coffee. But could/will they have 500 awesome tea stores with kick-ass service fairly quick? Count on it.

Gordon Arnold
Guest
4 years 1 month ago
It is true that in India and China, tea is a very popular beverage and their respective populations combined with age old tradition do in fact support staggering consumption numbers, but we are not there in spirit or fact. I can only think of one successful tea party in all of North America and that was in Boston a few hundred years ago. That said, I’m wondering why not hot chocolate or fruit juice? The good news is there’s still a lot of cheap real estate and labor everywhere including where they can and will pay ten bucks for tea… Read more »
James Tenser
Guest
4 years 1 month ago
Wait a pekoe-pickin’ minute. Is the big idea to segregate tea drinkers from coffee drinkers? Please don’t tell me it’s too operationally complex to offer both under the same roof. OK, maybe SBUX is playing off some big insights about tea-drinking occasions versus coffee-drinking occasions. The promised “immersive experience” goes way beyond a dunk in a cup. The menu of tea-based lattes and such suggests a strategy to boost price points and invent a tea culture. As ever, the market will decide if separate havens are a prudent idea. Tea and coffee drinkers have always been a volatile mix, simmering… Read more »
Bob Houk
Guest
Bob Houk
4 years 1 month ago
“Do you expect Starbucks to be successful in its goal to do for tea what it has done for coffee?” Do you mean – turn tea drinkers into annoying snobs prattling about which side of the hill the best beans (leaves) grow on? Or raising the price for a simple cup of beverage to absurd levels? Either way, as a tea-drinker, I certainly hope they fail miserably. More seriously, I doubt they’ll succeed to the extent they hope with this venture, for the reasons others have already mentioned. Tea does not occupy as prominent a role in US life as… Read more »
Kai Clarke
Guest
4 years 1 month ago

No. Coffee is clearly the key beverage of choice in the USA. Paying even more for tea, which is consumed less than coffee, is not the same winning concept. Short and simple Starbucks needs to continue to do what it knows best – coffee

Alexander Rink
Guest
4 years 1 month ago
Based on the study mentioned on Tuesday (in which German scientist K. Muller used brain scans to determine that people would be willing to pay more for Starbucks than they already do), perhaps Teavana will be successful, though I must say that $6 for a latte seems quite pricey to me. David’s Tea (a Canadian tea company that has ventured into the US) has managed to sell tea lattes successfully for just over $4, and it is possible that Starbucks may be able to charge a premium on that number. I definitely think the timing is right, with tea gaining… Read more »
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