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Unilever To Buy Tazo Tea From Starbucks For $384 Million

04 November 2017

"With our growth strategy for premium tea exclusively focused on Teavana, we are pleased to transition our Tazo business to Unilever". Sold mostly at supermarkets, bib-box and convenience stores, its line-up includes packaged teas, K-Cup pods, and ready-to-drink bottles.

The acquisition by Unilever is the latest in a string of deals by the Anglo-Dutch consumer giant to add smaller and healthier brands to its portfolio, particularly those in the fast-growing speciality tea market. In announcing the Tazo deal, however, the retailer said it will continue to invest in the growth and development of the Teavana brand in Starbucks stores and in other channels.

Under the asset purchase agreement, Unilever will acquire the Tazo brand and all related intellectual property, signature recipes and inventory for $384 million.

"With its strong appeal to millennials, TAZO® is a ideal strategic fit for our USA portfolio", Kees Kruythoff, President of Unilever North America, said in a statement.

Starbucks sold more than $1.6 billion in the Teavana brand in the past 12 months, compared to $112 million in sales for Tazo brand beverages.

For the three months ending October 1, net revenue of U.S. $5.7 bn was flat compared with the same period a year earlier.

On the company's quarterly call, Starbucks said it would launch a co-branded Chase Visa credit card this winter. The company also reported narrower operating margins and earnings per share of 54 cents. Analysts had expected a rise of 3.3 percent, according to FactSet.

Excluding some items, profit amounted to 55 cents a share last quarter - in line with analysts' forecast. It is sold in Starbucks outlets and grocery stores in the US and Canada.

Because of the disappointing performance, Starbucks is revising its long-term projections. Sales came in $100 million short of estimates at $5.7 billion.

Over the long-term, the café chain is targeting global comparable sales annual growth of between 3% and 5% and annual growth in consolidated net revenue of the high-single digits.