Starbucks Opens First Teavana Tea Bar in New York

When you walk past a café and see people sipping lattes, you might wonder: why can’t tea have the same cultural moment? In 2012, the world’s biggest coffee chain asked itself the same thing — and decided to find out by launching a completely separate tea experience.

Yes, Starbucks opened its first standalone tea bar, Teavana Fine Teas + Tea Bar, in New York on October 24, 2012. The company plans to open at least 1,000 such outlets globally within five years.

What Is Teavana Fine Teas + Tea Bar?

Teavana Fine Teas + Tea Bar is a new retail concept from Starbucks, built around premium loose-leaf teas and an in-store tea bar offering prepared tea drinks. The first location debuted in New York City with an interior inspired by Zen design — featuring grey walls and dim lighting. A second store was slated to open in Seattle by late November 2012.

Why Did Starbucks Enter the Tea Market?

In October 2012, Starbucks announced it had acquired Teavana, a retailer of tea and tea-related products, for $620 million. The goal was to apply the same strategic approach Starbucks used to dominate coffee — focusing on quality, customer experience, and premiumization — to the world of tea.

CEO Howard Schultz stated that tea would be treated with the same care as coffee, with flavors designed for mass appeal. Unlike Starbucks coffee shops, these tea bars would not display the Starbucks logo or sell coffee. Schultz also emphasized a key cultural difference: “People who like coffee don’t like tea,” which informed the decision to keep the two experiences separate.

What’s the Business Plan and Expert Reaction?

Starbucks aims to open at least 1,000 Teavana tea bars globally within five years. The company believes it can generate similar success in tea as it did in coffee by creating demand and emphasizing premium tea experiences.

Industry analysts are divided. Brian Sozzi, CEO of Belus Capital Advisors, acknowledged that “Starbucks is trying to make tea drinking fun,” but expressed skepticism, noting, “Teavana is unlikely to reach the heights of Starbucks, because coffee has a much larger consumer base.” He added, “In today’s fast-paced, tech-driven lifestyle, people are more likely to reach for a 100mg caffeine hit.”

Conversely, Nick Setyan of Wedbush Securities was bullish. He pointed out that Starbucks has a strong track record of creating product demand and noted that “tea has higher profit margins than coffee,” suggesting solid financial incentives behind the expansion.

Frequently Asked Questions

Where was the first Teavana tea bar opened?

The first Teavana Fine Teas + Tea Bar opened in New York City on October 24, 2012. It featured Zen-inspired décor with grey walls and dim lighting.

How many tea bars does Starbucks plan to open?

Starbucks plans to open at least 1,000 Teavana tea bars globally within five years of the first launch.

Does the tea bar sell coffee or display the Starbucks logo?

No, the Teavana tea bars do not sell coffee and do not display the Starbucks logo, in order to create a distinct tea-focused environment.

How much did Starbucks pay for Teavana?

Starbucks acquired Teavana, the tea and tea-related goods retailer, for $620 million in 2012.

What did analysts say about Starbucks’ tea business?

Analysts were mixed. Some, like Brian Sozzi, were skeptical due to coffee’s dominance and modern caffeine habits, while others, like Nick Setyan, were optimistic due to Starbucks’ demand creation abilities and higher tea profit margins.

What was the concept behind the tea bar’s design?

The first Teavana tea bar in New York was designed with a Zen aesthetic, including grey walls and dim lighting, to evoke a calm tea-drinking atmosphere.

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