Starbucks Corp (SBUX.O) plans to open a Tazo tea store in Seattle as early as this fall, adding another concept to its growing stable of retail brands that are moving the company beyond its core coffee business.
The company opened its first Evolution Fresh juice bar in a swanky Seattle suburb in March and two weeks ago announced plans to buy La Boulange bakery owner Bay Bread Group for $100 million in cash.
Now, Starbucks says it wants to do for tea what it did for coffee.
Its planned Tazo store will sell more than 80 varieties of loose-leaf tea and other tea products. It will also offer hot and cold tea drinks, brewing equipment, pastries, packaged chocolates, infused sugars and honey, a spokeswoman said.
Starbucks bought Tazo for $8.1 million in 1999 and says it is now a $1.4 billion brand for the company, which sells Tazo products through its own shops and the grocery aisles of many retailers.
The Seattle-based company says tea is a $95 billion global market that represents a significant growth opportunity.
Potential rivals include publicly held Teavana Holdings Inc TEA.N as well as small chains like Argo Tea and Dado Tea & Coffee.
In 2011, 5.6 million tons of coffee were consumed at home and through food service channels like restaurants. Tea came in at 2.9 million tons, according to Euromonitor International. Both figures exclude ready-to-drink products.
Sales of ready-to-drink tea beverages through stores, restaurants and vending machines hit $56.2 billion in 2011, up from just over $32 billion in 2006. Euromonitor said.
Starbucks shares were up 0.9 percent at $55.64 in afternoon trading on the Nasdaq.
(Reporting By Lisa Baertlein in Los Angeles; editing by Leslie Gevirtz, Andre Grenon and Bernard Orr)