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Starbucks selling one of its tea brands

Tazo is no longer in the tea leaves at Starbucks Corp.

The coffee giant has entered into a deal for Unilever to acquire the assets of the Tazo brand, including its recipes, intellectual property and inventory, for $384 million. Starbucks said the move will allow it to drive a single tea brand strategy focused on its Teavana brand.

Tazo was founded in 1994, and purchased by Starbucks in 1999 for $8.1 million. It is sold primarily in grocery, mass and convenience channels, available in packaged teas, K-Cup pods, and bottled ready-to-drink teas.

In June, Starbucks announced plans to shutter Teavana's 379 stores during the coming year. 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.

Starbucks said the tea category in its namesake stores continues to grow double-digits globally, and that it is well on its way to building the Teavana business to over $3 billion during the next five years.

According to the company, shoppers purchased more than $1.6 billion worth of Teavana beverages in stores in the past year. Starbucks is also building its bottled Teavana tea business and planning to enter the packaged tea category next year.

"With our growth strategy for premium tea exclusively focused on Teavana, we are pleased to transition our Tazo business to Unilever,” said Kevin Johnson, president and CEO, Starbucks. “We continue to see significant growth in our tea business through our Teavana brand, and this transition supports our strategy to elevate the premium tea experience for our customers.”

Tazo had sales of $112.5 million during the past year.

"With its strong appeal to millennials, Tazo is a perfect strategic fit for our U.S. portfolio that includes exciting new brands such as Seventh Generation, Dollar Shave Club and Sir Kensington’s,” said Kees Kruythoff, president, Unilever North America. “Tazo’s solid position in the fast-growing specialty tea segment, coupled with Unilever’s tea expertise, presents a fantastic growth opportunity.”

The transaction is expected to close during the fourth calendar quarter of 2017, with complete transition between the two companies by the end of calendar year 2018, subject to regulatory approval.
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