Why Starbucks Failed with Its Tea Chain Expansion

In 2013, Starbucks opened Teavana Tea Bar in New York as a stylish, standalone tea shop—touted as the future of modern tea drinking. Just two years later, four out of five locations shut down, leaving only one "experimental" store in Seattle. The failure raised major questions: Why did a global coffee giant, known for precision and brand power, stumble so badly in tea? What went wrong with Teavana Tea Bar—and what does it reveal about branding drinks in the U.S. market?

Starbucks misjudged the fundamental differences between coffee and tea. Experts say the brand wrongly assumed tea could be sold like coffee—through standalone shops focused solely on beverage sales. But in the U.S., tea isn't a standalone "heavy" drink like coffee; it’s usually paired with food, not consumed alone for a caffeine boost. That mismatch in consumer behavior made a pure tea-bar model a tough sell.

Starbucks’ Misstep: Treating Tea Like Coffee

According to positioning expert Laura Ries, interviewed by China Management Magazine, Starbucks’ core mistake was treating tea the same way it treated coffee. “Howard [Schultz] made the error of equating tea with coffee,” she said. While the U.S. has thriving coffee chains—like Starbucks, Dunkin’, and Peet’s—those successes don’t automatically translate to tea. Coffee is seen as a “strong” beverage, often consumed alone for a jolt of caffeine, especially in the morning. Americans commonly “go out for coffee,” and many sip it solo in cafés.

Tea, by contrast, is much lighter in flavor and typically contains one-third to one-fourth the caffeine per ounce compared to coffee. In the U.S., it’s rarely consumed alone. “People don’t go out ‘for a cup of tea,’” Ries explained. Tea is more likely to accompany food, like pastries or desserts. That means a tea-only shop doesn’t have the same daily utility or cultural habit behind it that a coffee shop does.

Why a Tea-Only Chain Doesn’t Fit U.S. Habits

Ries argued that while the tea market is large—potentially $900 billion globally—it requires a different approach than coffee. “Starbucks shouldn’t do tea,” she said flatly. However, if it insisted on entering the tea space, focusing on food pairings would have made more sense. “Maybe a dessert chain makes more sense. They could focus on pies, cakes, and pastries—which consumers often pair with tea.”

The issue wasn’t the market potential but the execution. A tea concept built like a coffee shop—with no food focus and no cultural tradition of solo tea drinking—struggled to attract repeat, standalone business. The very idea of a “Tea Bar” as a destination didn’t align with how Americans actually consume tea.

Would Tea Damage the Starbucks Brand?

Some might worry that expanding into tea could dilute Starbucks’ strong coffee identity. But Ries dismissed that concern. “Even if a typical Starbucks location moved all its tea sales to Teavana, the loss would be small,” she noted. Most customers don’t go to Starbucks primarily for tea. “You rarely see consumers in a coffee shop drinking tea,” she added. The “third place” social role of Starbucks—where people gather outside home and work—is tightly linked to coffee, not tea.

With coffee consumption in the U.S. roughly three times higher than tea, most patrons still gravitate toward Starbucks for its coffee-centric environment. Even if both coffee and tea were on offer, the brand’s identity kept consumers in the coffee lane.

Teavana in China: A Different Story?

Starbucks had planned to expand Teavana Tea Bar into China, where tea culture is deeply rooted. The company intended to integrate “coffee + tea” offerings in a hybrid store format. But Ries urged caution. “We have reservations,” she said. “Starbucks would do better to stay focused on its coffee shop concept in China. Combining Teavana with Starbucks blurs the brand’s identity.”

She emphasized the marketing principle of focus: “Brand success often comes from focusing on a single concept.” In China, a dedicated tea chain under the Teavana name might succeed—but merging it with Starbucks would violate that core principle. The two concepts compete for attention and confuse customers about what the brand truly stands for.

What Starbucks Should Have Done Differently

Ries advised brand leaders to “start by narrowing the focus.” She pointed to how Starbucks itself succeeded by zeroing in on coffee, even though most restaurants serve multiple food and drink items. “Starbucks created a coffee-focused restaurant. Their coffee sales make up around 90% of revenue,” she said. To stand out, a brand must create a clear, differentiated concept—not try to be everything.

Other successful brands follow the same rule. Zappos, for example, focused solely on shoes and offered free, easy returns. That sharp focus helped it succeed and eventually get acquired by Amazon for $12 billion. For any brand, the first step is choosing one thing to represent—and doing it exceptionally well.

Frequently Asked Questions

Why did Starbucks close most of its Teavana Tea Bars?

Starbucks closed four out of five Teavana Tea Bars after two years because the standalone tea shop concept failed to attract enough customers. The brand misjudged how Americans consume tea—preferring it with food rather than as a standalone caffeine drink—and the tea-focused locations couldn’t sustain business as standalone venues.

Did Howard Schultz personally push for the Teavana Tea Bar expansion?

Yes, according to the article, Starbucks founder Howard Schultz viewed the tea market as a “once-in-a-lifetime opportunity” with $900 billion in potential. He was the driving force behind Teavana Tea Bar, believing it could become a major new pillar for the brand—similar to how Starbucks revolutionized coffee.

What was the main mistake in Starbucks’ tea strategy, according to branding experts?

Branding expert Laura Ries said the key mistake was treating tea like coffee. Starbucks incorrectly assumed that what worked for coffee—standalone shops focused solely on beverage sales—would work for tea. But tea is consumed differently in the U.S., often with food and not as a solo “energy” drink, making the tea-bar format unsuccessful.

Could a tea chain have worked under the Starbucks brand?

Ries argued that a tea chain wouldn’t have damaged Starbucks’ core brand, since most customers don’t go to Starbucks for tea. However, she cautioned that adding tea to the existing coffee-focused brand would dilute its clarity. A better approach would have been a dedicated, food-focused tea concept—or a separate brand entirely.

Was Teavana ever successful anywhere before the closures?

The original Teavana stores (before the Tea Bar concept) sold loose leaf tea and tea products in malls, and had some success. But the Teavana Tea Bar experiment—standalone shops focused only on serving tea drinks—failed in the U.S. market. Only one location remained open as an “experiment” after the closures.

Why is focus so important in branding, according to the article?

Focus helps a brand establish a clear identity and meet a specific customer need. As Ries noted, successful brands like Starbucks (coffee) and Zappos (shoes) succeeded by narrowing their focus. Trying to represent too many things at once confuses consumers and weakens brand power. “You can’t build a brand that represents everything,” she said.

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