Starbucks Teams up with AB InBev to Sell RTD Teas in Retailers

03 Jun 2016 --- Starbucks is teaming up with Anheuser-Busch InBev to produce and sell the first ready-to-drink (RTD) teas under the Teavana brand, as the companies aim to tap into a $1.1 billion a year market. Starbucks acquired the Teavana brand in 2012 and now hopes that by striking a deal with the beverage giant it will help grow tea sales so that it becomes as much a staple of its offering as coffee.

For AB InBev, the deal means that it can offer a broader portfolio beyond its core alcoholic drinks.

AB InBev will help with production, bottling and distribution of Teavana, which will be sold as a premium offering, as well as helping with wholesaler relationships to help get the drink onto shelves. 

Starbucks, meanwhile, will focus on making the product and lending marketing expertise.

Teavana, which is non-alcoholic, is slated to be sold in supermarkets and convenience stories shelves in the first half of 2017.

The coffee giant already sells the Teavana brand in its stores and it says it has sold more than $1bn of Teavana sales in the past year.

By striking the deal with AB InBev, it is hoping that it can now boost sales of Teavana across retail outlets.

According to Starbucks, premium RTD tea drinks are the fastest-growing segment in the RTD tea category and generate $1.1 billion in sales.

Figures from the Tea Association show that Americans drink 800 million cups of tea per week.

“Tea has been an important part of Starbucks heritage since we opened our doors as Starbucks Coffee, Tea and Spices in the Pike Place Market in 1971,” said Howard Schultz, chairman and chief executive officer, Starbucks. 

“When we acquired Teavana in 2012, we saw a unique opportunity to do for tea what Starbucks has done for coffee and expand the Teavana brand across many customer experiences and products. We are excited to work with Anheuser-Busch to unlock the premium ready-to-drink market and further grow demand for the Teavana brand.”

“This arrangement will bring together the strengths of two great companies, each with a long history of successful brand-building,” said Carlos Brito, chief executive officer, Anheuser-Busch InBev. 

“Starbucks’ expertise and leadership in premium tea, combined with our world-class production capabilities and strong U.S. distribution footprint, will position this new product well in what is an exciting and growing category. We are delighted to be in a position to offer this great product to our wholesalers and believe, with their support, we are ideally structured to maximize the sales opportunity for Teavana RTD tea across the U.S.”

Philip Mullin, chairman of the Anheuser-Busch Wholesaler Advisory Panel, added: “Throughout Anheuser-Busch’s history, wholesalers have played a crucial role in the introduction of new products to the market. This arrangement with Starbucks comes at a very exciting time given the considerable growth in the premium RTD tea category, and I expect this news will energize wholesalers throughout our network.”