One of the largest breweries on the globe and a mighty coffee purveyor are teaming up to deliver America...bottled tea. Anheuser-Busch InBev (NYSE:BUD) and Starbucks (NASDAQ:SBUX) announced that, together, they will develop a line of ready-made bottled teas, branded under the latter's Teavana name.
Anheuser-Busch will produce, bottle, and distribute the beverages throughout the U.S., in partnership with its wholesaler network.
Although Starbucks has been a presence in grocery and convenience stores with the line of cold drinks it makes and distributes in partnership with PepsiCo (NYSE:PEP), this is its first attempt with the Teavana line.
In their joint press release announcing the move, the two companies quoted Starbucks CEO Howard Schultz as saying that "[w]e are excited to work with Anheuser-Busch to unlock the premium ready-to-drink market and further grow demand for the Teavana brand."
The first Teavana bottles should start appearing on store shelves in the first half of next year.
Does it matter?
It's always good to see Starbucks diversifying away from coffee, and better to see it opening a new revenue channel outside its own stores. It and Anheuser-Busch were quick to point out that the ready-to-drink tea category is worth over $1 billion, and has grown at a 16% compound annual growth rate over the past few years.
What they didn't mention is that many beverage makers large and small are fighting for consumer dollars in the category. To name but one, Starbucks cold coffee teammate PepsiCo distributes a strong bottled tea lineup anchored by the classic Lipton brand, and including Brisk and Pure Leaf.
So considering the established competition from PepsiCo and other peers, I can't imagine this will be a game-changer for either Starbucks or Anheuser-Busch. Rather, it should be a good side business for both that will add modestly to their respective top lines.
Eric Volkman has no position in any stocks mentioned. The Motley Fool owns shares of and recommends PepsiCo and Starbucks, and recommends Anheuser-Busch InBev. 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.