Starbucks In $1 Billion Deal With Beer Giant

Starbucks has taken a large leap into the tea business with the most surprising partner. Last Thursday, the coffee giant confirmed that they were entering into a partnership with the beer giant, Anheuser – Busch InBev to launch a Teavana ready to drink tea in America. This new product line is planned to be rolled out in the first half of 2017, being displayed in approximately 300,000 stores in the AB InBev distribution network.

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Starbucks CEO, Howard Schultz confirmed that the company had acquired Teavana in 2012 and they saw a unique opportunity to do for tea what they have done so successfully for coffee, and expand the brand Teavana across numerous customer experiences and product offerings. Schultz went on to explain how excited they were to be working with the beer giant Anheuser – Busch InBev to really unlock the potential of this premium ready to drink market and to grow the demand or the brand Teavana even further.

In the previous year, Starbucks as a chain sold over $1 billion of Teavana beverages in the areas of the U.S which has produced yearly growth of 11%. Globally, the tea industry is worth in the excess of $125 billion with premium ready to drink tea generating sales of $1.1 billion. This is the category where Starbucks and AB InBev believe that Teavana is best suited for.

Schultz stated that they know there is huge demand for this product already, due to the popularity of premium and ice tea amongst the younger consumers, it is enough to suggest that this is an area that they can grow at a rapid rate, even faster than coffee.

Carlo Brito, the CEO of Anheuser – Busch InBev, was quick to echo the thoughts of Schultz. Although AB InBev is a company with far more experience in beer than tea, they also see this as an amazing opportunity, and see all of the opportunities that tea can bring to this partnership.

Schultz, suggested that the line of tea would most probably take on the same design to the Starbucks ready to drink range of bottled Frappuccino which was launched in 1996. Their partner for this particular drinks range was PepsiCo. The ready to drink coffee and energy drinks which are also produced by this partnership currently generate $1.5 billion of the market.

Although the decision Starbucks has made to partner with Anheuser – Busch InBev as opposed to PepsiCo for this project may cause a lot of eyebrow raising, Schultz justified this decision by explaining that Starbucks had chosen the beer giant Anheuser – Busch InBev due to their vast experience in distribution, corporate ideas, values and thinking. PepsiCo already have their own place in the tea market with their collaboration of tea that is already huge in the market with well-known partner Lipton. Schultz commented that it would have been seen as bad business practice to partner with a company that would in effect be competing against themselves for sales.

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