Two beverage industry titans are teaming up to enter the $1 billion ready-to-drink premium bottled tea segment.
On Thursday, Starbucks and Anheuser-Busch InBev announced a partnership to manufacture and distribute a ready-to-drink bottled tea under the Starbucks-owned Teavana brand, which Starbucks acquired in 2012 for $620 million. The product is slated to launch in the first half of 2017.
The division of labor for the joint venture will see Starbucks “contribute Teavana’s tea expertise, industry-leading retail activation, and consumer engagement capabilities,” while Anheuser-Busch “leads production, bottling and distribution to retailers nationwide,” the companies revealed via press release.
“Tea has been an important part of Starbucks heritage since we opened our doors as Starbucks Coffee, Tea and Spices in the Pike Place Market in 1971,” said Starbucks CEO Howard Schultz. “When we acquired Teavana in 2012, we saw a unique opportunity to do for tea what Starbucks has done for coffee and expand the Teavana brand across many customer experiences and products. We are excited to work with Anheuser-Busch to unlock the premium ready-to-drink market and further grow demand for the Teavana brand.”
Schultz discussed the alliance further in a conference call Thursday afternoon, saying that the company elected to look outside of its longstanding relationship with PepsiCo – the companies sell both bottled coffees and Starbucks-owned Tazo teas jointly — for the launch of RTD Teavana due to PepsiCo’s existing Pepsi-Lipton Tea partnership with with Unilever. Schultz also championed the power of Anheuser-Busch’s distribution capabilities, pointing to A-B’s ability to access more than 300,000 retail accounts on a weekly basis.
“[We’ll have] more points of distribution than we have with Frappuccino, which is well over $1 billion in sales,” Schultz added. “There is a great demand for this product and we are sitting on a very large category.”
Also on the call was Anheuser-Busch CEO Carlos Brito, who indicated that the partnership with Starbucks to produce a premium bottled tea represented the company’s shift towards higher-end craft products.
This isn’t the first time AB-InBev has tried to make a run at the premium tea or the non-alcoholic beverage segment overall. In 2009, under its 9th Street Beverage incubator, the company launched Paradise Key, a tea brand it developed with Jimmy Buffet property Margaritaville. AB-InBev has also had a longstanding relationship with Monster Energy that has eroded as that company has moved its products into the Coca-Cola distribution network.
The loss of the valuable Monster franchise has hurt many Budweiser distributors who missed the high margins of the energy drink brand.
Meanwhile, this is the second major announcement from Starbucks this week that has the potential to have a major effect on the beverage industry; earlier, the company said it would begin serving cold brewed coffee more widely at its cafes as a way to get traffic from that fast-growing category as well.
This story and a press release from the company can be found on BevNET.com.