Economy

Starbucks sells Tazo tea brand to Univeler, focuses on Teavana instead

Starbucks sells Tazo tea brand to Univeler, focuses on Teavana instead

"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.

The brand also sells liquid concentrates focusing on the Chai tea market segment and produces a number of ready-to-drink bottled teas.

Starbucks announced Thursday it's selling its Tazo tea brand to Unilever after reporting lower-than-expected revenue for the fourth quarter.

Tazo was founded in Portland, Ore.in 1994 by Stash Tea co-founder Steven Smith, who sold the company to Starbucks in 1999 for $8.1 million.

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

Tazo, which had sales of $112.5 million over the past year, sells specialty black, green and herbal teas, as well as liquid concentrates to make chai lattes.

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. The company expects to launch a Starbucks-branded credit card with Chase this winter.

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For the three months ending October 1, net revenue fell slightly short: $5.7 billion against the Street's estimation of $5.8 billion.

US same-store sales increased 2 percent, including a 1-percent increase in the number of customers. The company said USA same-store sales would have risen 3% in the quarter if not for closures and lost business related to Hurricanes Harvey and Irma.

Excluding some items, profit amounted to 55 cents a share last quarter - in line with analysts' forecast.

Because of the disappointing performance, Starbucks is revising its long-term projections.

In terms of Starbucks earnings, the company posted adjusted diluted earnings per share (EPS) of $0.54 on revenues of $5.7 billion.

Tea sales inside of Starbucks locations are growing at double digits annually, particularly as the chain expands in Asia and other markets where tea is popular.