Starbucks Teams With Oprah for Tea

Starbucks is banking on the idea that Oprah Winfrey can get her fans to support and sample a new tea named after her.

Mar 21, 2014 at 7:43AM

Starbucks (NASDAQ:SBUX) has gotten into the Oprah Winfrey business.

The coffee giant and the media mogul announced plans to collaborate on a tea that will be named after the one-time talk show host and current TV network boss. The tea, which will be called Teavana Oprah Chai Tea, was announced jointly by Starbucks CEO Howard Schultz and Winfrey at Starbucks' annual shareholder meeting March 19.

Beginning April 29 the tea will be sold in Starbucks and Teavana stores across the U.S. and Canada, with Starbucks making a donation for each product sold to the Oprah Winfrey Leadership Academy Foundation to benefit educational opportunities for youth, according to Starbucks.

How did Starbucks and Oprah create a tea?

According to Starbucks Winfrey personally developed the tea with Teavana's leading teaologist, Naoko Tsunoda. The blend they came up with "features a bold infusion of cinnamon, ginger, cardamom, and cloves, blended with loose-leaf black tea and rooibos."

Winfrey gushed about the tea on-stage with Schultz in her trademark overly emotive style. 

"I looove tea," said Winfrey who explained that she had made Teavana one of her 2013 "favorite things" because "when I find or discover a good thing I just can't keep my mouth shut." 

Schultz has high hopes for the tea and what an association with Winfrey can do for tea drinking in general.

"With the introduction of Teavana Oprah Chai, we are going to elevate the tea experience in the same way we did for coffee," said Schultz in a release. "Partnering with Oprah Winfrey in the creation of this distinctive and remarkable tea is a strong next step forward in accomplishing this objective." 

How much is an Oprah endorsement worth?

At the height of the success of her talk show, Winfrey was one of the most powerful names that could support a brand. When she was still on the air with her talk show, her book club was a massive force helping semi-known, under-appreciated, and unknown authors become best sellers. 

Fordham University marketing professor Al Greco told USA Today that he estimates that sales of Oprah editions of the 70 titles in her book club total about 55 million copies, "and there wasn't a James Patterson or a John Grisham among them."

Winfrey's reach goes far beyond books. Researchers from the Kellogg School of Management at Northwestern University even found that Winfrey's support of Barack Obama made a difference in his primary race against Hillary Clinton. They calculated that Winfrey's endorsement was worth about one million votes for Obama, "which is a significant number," according to researcher Craig Garthwaite.

"In politics, if you could guarantee that you could turn a million more people toward your candidate you'd be happy," he added. "The other thing you have to remember is that this was a really close election. So in that sense, I think that a million votes is a pretty important number."

Does Oprah still matter?

The Oprah who hosted the nation's most popular talk show is not the Oprah that Starbucks is getting now. The current version of Winfrey has her attempting to get the Oprah Winfrey Network off the ground -- which has been a bigger challenge than she expected.

The network struggled in its early days both in finding viewers and financially. From its 2008 inception through Dec. 31, OWN may have lost as much as $330 million, based on Discovery's annual 10-K filing with the Securities and Exchange Commission, Business Week reported.

Now OWN is on better financial footing largely due to Winfrey upping her involvement (with an assist from Tyler Perry, who brought his newest shows to the network). Winfrey however is a diminished brand from the days when she had a daily talk show watched by million of (mostly) women.

"The Oprah Effect isn't what it used it be," said Laura Ries, a marketing strategist, in Entrepreneur. "Oprah is still a force in the world, she just can't create a tsunami effect for a company she 'likes' like she used to."

Oprah matters 

Though she may not be quite as huge as she was at her peak, Winfrey still commands a large audience. Forbes even recognized her in 2013 as the single most powerful celebrity on its annual list. 

"Even without her eponymous daytime talk show, Winfrey made an estimated $77 million between June 2012 and June 2013, down from last year's $165 million," Forbes reported. "While she wasn't the highest earner on our list, her money, mixed with strong fame scores in metrics like press mentions and social networking power, pushed her to the top."

Starbucks and Winfrey are compatible brands that both make a lot of money while pushing positive social agendas. Winfrey will certainly bring attention to the product and you can bet a lot more women (and some men) know what Chai Tea is today than yesterday. 

It's hard to imagine a better celebrity for the Starbucks brand or someone with a stronger history of getting people to try new things. If Winfrey can get millions of people to read, it's likely she can get millions to sample a tea carrying her name.

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Daniel Kline has no position in any stocks mentioned. He has long believed that Mr. T and Ice T should team up for the inevitable beverage endorsement. The Motley Fool recommends Starbucks. The Motley Fool owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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