Unilever Looks to Move Beyond Black Tea With Tazo Buy

Starbucks posts disappointing sales figure, will sell Tazo

"We continue to see significant growth in our tea business through our Teavana brand, and this transition supports our strategy to elevate the premium tea experience for our customers", says Starbucks CEO Kevin Johnson. Unilever is paying $384m for the Tazo brand, which is sold primarily in grocery and convenience stores.

In addition to Tazo, Unilever owns beverage brands Lipton and Brisk, both of which make tea products. Despite announcing in July the decision to close all 379 Teavana brick-and-mortar outlets, Starbucks extended the brand with the February launch of Teavana Craft Iced Teas.

Through the agreement, Unilever has agreed to buy the Tazo brand, its recipes, intellectual property and inventory for $348mn.

The chain's fourth quarter in 2016 included an extra week, so comparisons between this year and last week will be a little off, the company said.

The coffee company bought Tazo for $1.8 million in 1999, five years after it was founded.

On an earnings call on Thursday, Johnson shared that the company will focus on streamlining setups while investing in business in China, which is anticipated to reinforce half of growth next fiscal year. He added that the company reset its long-term guidance to "represent performance we can meet or beat in the years ahead". With JPMorgan Chase & Co., the company is also developing credit and debit cards that have rewards built in. 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%.

The Seattle-based roaster was also hit by growing pains as the company took charges related to restructuring and refining its operations. Net revenue was US$5.7 billion, short of the estimate of US$5.8 billion. Separately, the coffee-shop giant missed revenue and same-store sales forecasts for the quarter, sending shares lower after hours. USA same-store sales grew 2%.

Starbucks also adjusted its long-term annual global same-store sales growth target to 3% to 5%, compared with its previous target of mid-single digit growth.

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