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By Catholic Online (NEWS CONSORTIUM)

10/23/2013 (1 year ago)

Catholic Online (www.catholic.org)

Starbucks CEO Howard Schultz betting On $90 billion market

Starbucks mastermind and billionaire CEO Howard Schultz is betting that many others are watching their caffeine intake, and has opened up his first tea bar, called the Teavana in Manhattan this week.

Will voracious American consumers take tea -- and see?

Will voracious American consumers take tea -- and see?

Highlights

By Catholic Online (NEWS CONSORTIUM)

Catholic Online (www.catholic.org)

10/23/2013 (1 year ago)

Published in Business & Economics

Keywords: teavana, Starbucks, CEO Howard Schultz, tea, coffee


LOS ANGELES, CA (Catholic Online) - Eschewing drinking coffee after 5 p.m., Schultz is banking that others will be following his lead and switch to tea - a worldwide favorite drink that is served both cold and iced, full of cancer-fighting anti-oxidants.

Haven taken a liking to the Maharaja Chai Oolong blend sold at Teavana, the mainly mall-based tea retailer Starbucks was bought for $620 million last November.

Schultz imbibed a $4.95 cup of his new favorite at the Teavana tea bar recently. He's now telling the world at large to be on the lookout for 1,000 such tea bars - complete with zen decor, gray walls and dim lighting in the next five years. He says he plans to do to tea what he did with coffee with Starbucks.

Located on Manhattan's super-wealthy Upper East Side at 85th St and Madison Avenue, Teavana Fine Teas + Tea Bar is located just a few steps from a branch of cult yoga outfitters Lululemon and blocks from Central Park.

Schultz says Starbucks will slowly add tea bars to its 300 or so existing Teavana stores, which until now sold loose-leaf tea plus gifts and accessories like ceramic teapots and stainless steel infusers. Drinks such as Matcha Lattes, the new tea bars will sell food to appeal to a health-conscious customer.

Angling for a piece of a hot and cold tea market worth $90 billion worldwide, Starbucks-saturated countries like Japan, China, Canada and the U.K. Lead this new beverage trend. Tea is the second-most consumed beverage besides water. While Americans still consume coffee at a far greater rate than tea, their taste for leaves versus beans is growing. America's interest in tea has grown by 16 percent over the past five years, according to data from the Tea Association USA.

Schultz admits that caffeine fiends who yearn for a Starbucks to start their day are unlikely to be big tea drinkers. There will be no Starbucks branding in this first Teavana bar, nor will there ever will be. There's no coffee on offer, and the drinks are sold as either 12- or 16-ounce servings rather than "tall" or "grande." "Don't you think that's the right choice?" Schultz asks.,

Some analysts aren't convinced. "This is Starbucks trying to make a boring category - tea - interesting," Brian Sozzi, CEO of Belus Capital Advisors scoffs.

"I don't believe Teavana will ever grow into what the Starbucks brand has become for one simple reason: tea lacks the major caffeine count," he added. "That sounds silly, but the bottom line is that in this day and age of frantic tech-driven lifestyles, people want to run on 100 mg of caffeine, and they will trade taste to make that happen."

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