It's Official: Starbucks Makes its First Move Beyond Coffee

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Starbucks (NASDAQ: SBUX  ) will open the first of its redesigned Teavana stores tomorrow in New York City. The move marks the start of yet another promising business for Starbucks' emerging brands portfolio. In addition to expanding Teavana's footprint to include a thousand new stores, each of the new locations will be outfitted with Teavana tea bars.

Source: Starbucks

Starbucks purchased the specialty tea retailer last year in an all-cash deal valued at $620 million. At the time, Teavana operated 350 stores in malls around the country. Over the next few years, Starbucks plans to expand this model to include stand-alone Teavana stores in every city across the U.S., as well as Canada and possibly Asia, according to Starbucks' CEO Howard Schultz.

The new concept stores will serve a carefully curated selection of handcrafted tea drinks, premium loose-leaf teas, and tea-inspired snacks. Tea is currently the second most-consumed beverage worldwide after water, which creates a clear growth opportunity for Starbucks. 

Source: Starbucks

What does the java giant have to gain from this new venture? An entry point into the $90 billion global tea market, for starters. Moreover, if Starbucks is able to replicate even a fraction of the success it's achieved with its namesake coffee stores it will be a homerun for the company. Not to mention that by positioning Teavana as a separate entity, Starbucks will be able to evolve the brand into its lucrative consumer-packaged goods business, similar to what it did with Tazo tea.Sip to your wealth

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9/26/2016 4:00 PM
SBUX $54.04 Down -0.39 -0.72%
Starbucks CAPS Rating: ****