Starbucks Buys Teavana for $620 Million to Expand Tea Business

Starbucks, known for reshaping how the world drinks coffee, is making another bold move—this time into tea. Last year, the company dropped 'COFFEE' from its logo, signaling a broader ambition. Now, with a $6.2 billion all-cash deal, it’s acquiring Teavana, a major player in the specialty tea space. This isn’t just about diversification; it’s a strategic push into a market growing 10% annually and worth an estimated $400 billion globally.

Yes, Starbucks is spending $6.2 billion to buy Teavana. The goal? To grow the tea brand into over 1,000 new stores worldwide within five years, targeting fast-growing tea markets beyond the U.S. and Canada.

What Is Teavana and Why Is It Worth $6.2 Billion?

Teavana was founded in 1997 and specializes in more than 100 varieties of loose-leaf teas, along with tea ware and related accessories. The brand operates 300 company-owned stores—every one located in the U.S. and Canada—and an additional 19 franchised international locations, mostly in Mexico. Despite its limited global footprint, Teavana has built a solid reputation for high-quality loose teas and a retail experience focused on tea culture.

What’s Starbucks’ Plan for Teavana?

Starbucks intends to integrate Teavana into its broader beverage and retail strategy. The company has confirmed it will work to expand the Teavana brand into other high-growth tea markets. CEO Howard Schultz stated plans to open over 1,000 new Teavana stores globally within the next five years. This move positions tea as a major growth pillar alongside coffee in Starbucks’ long-term vision.

What’s Behind Starbucks’ Interest in the Tea Market?

The move reflects shifting consumer trends and strategic market analysis. According to market research firm Euromonitor, in 2012, the average person in China drank 16 times more tea than coffee. With China and India being two of the world’s largest tea-consuming nations, Starbucks sees significant opportunity. The company had already begun selling tea products in some of its Chinese locations prior to this acquisition. Schultz also revealed plans to make China Starbucks’ second-largest market outside the U.S. by 2014, with a target of 1,500 stores in China by 2015.

Frequently Asked Questions

Why is Starbucks buying Teavana for $6.2 billion?

Starbucks is acquiring Teavana to expand its presence in the global tea market, which is growing at 10% per year and valued at around $400 billion. The purchase supports Starbucks’ strategy to diversify beyond coffee and tap into the lucrative and culturally significant tea sector, especially in markets like China and India.

Does Teavana have stores outside the U.S. and Canada?

Yes, Teavana has 19 international franchise locations, most of which are in Mexico. However, none of its 300 company-owned stores are located outside North America, and it has no current presence in major tea markets like China or India.

How many new Teavana stores does Starbucks plan to open?

Starbucks CEO Howard Schultz has announced plans to open over 1,000 new Teavana stores globally within the next five years as part of the brand’s international expansion strategy.

What kinds of products does Teavana sell?

Teavana offers more than 100 varieties of loose-leaf teas, as well as tea ware, accessories, and related products. Its retail stores focus on creating an in-store tea tasting and shopping experience centered around specialty tea culture.

Why is Starbucks interested in the tea market now?

Tea is a $400 billion global market growing at 10% per year. With data showing that in 2012 the average Chinese person drank 16 times more tea than coffee, Starbucks sees strong potential in expanding its offerings beyond coffee, particularly in high-consumption tea markets such as China and India.