Unilever Looks to Move Beyond Black Tea With Tazo Buy

The sale of the Tazo Tea brand to Unilever plc (ADR) will include all of its recipes, inventory and intellectual property that now belongs to Starbucks Corporation.

According to the company, shoppers purchased more than $1.6 billion worth of Teavana beverages in stores in the past year. Sold mostly at supermarkets, bib-box and convenience stores, its line-up includes packaged teas, K-Cup pods, and ready-to-drink bottles.

For Starbuck's, which acquired Tazo in 1999 for $8.1 million, the deal is a lucrative one which offers a more than 47-times return on its investment.

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"With its strong appeal to millennials, Tazo is a ideal strategic fit for our US portfolio that includes exciting new brands such as Seventh Generation, Dollar Shave Club and Sir Kensington's", said Kees Kruythoff, president, Unilever North America.

"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", says Starbucks CEO Kevin Johnson.

Starbucks total net income slipped 1.6% to $789 million, or 54 cents a share, on total net revenue of $5.7 billion for the three months ended October 1. Same-store sales in the region increased 2%, missing analysts' predictions of a 3.2% gain. The company expects to launch a Starbucks-branded credit card with Chase this winter. Starbucks said same-store sales would have increased 3 percent without the impact of hurricanes Harvey and Irma. Overall, the company reported net income of $788.5 million, or 54 cents per share, in the three months ending October 1.

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Excluding some items, profit amounted to 55 USA cents a share last quarter - in line with analysts' forecast.

"A balanced conversation of our performance over the past two years acknowledges that we have not consistently delivered against our long-term financial targets", the company said during its earnings call. Analysts had expected $5.80 billion.

Tea sales inside of Starbucks locations are growing at double digits annually, particularly as the chain expands in Asia and other markets where tea is popular.

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