In a surprise move, Starbucks announced on Thursday that all 379 Teavana stores, mainly based in malls across the country, have been under-performing and the Teavana brand will be shut down.
The closings will impact 3,300 workers. Starbucks CEO Kevin Johnson noted declining foot traffic at malls.
“We felt it was an appropriate time to take the decision and begin shutting down those stores,” Johnson said.
“The company concluded that despite efforts to reverse the trend through creative merchandising and new store designs, the under-performance was likely to continue,” Starbucks said in a press release.
Most locations will shut down by Spring 2018, Starbucks said, and people employed at Teavana locations will be invited to apply for jobs at Starbucks locations in order to preserve their jobs.
Does this move foretell gloom for the American tea culture?
I don’t think so. The Starbucks marriage in 2012 was a bad match. The tea culture is worlds apart from the coffee culture. The only thing the two beverages have in common is hot water!
Tea was first introduced to western consumers through coffee houses in London and Boston but the two eventually went their own ways – as did chocolate, the other exotic beverage of the 17th century.
Each drink found its unique audience and prescribed rituals.
I remember when Teavana was originally Elephant Tea, a small tea shop on Atlanta’s Peachtree Street back in the 1990s. The name Elephant Tea was not nearly as alluring as A Heaven of Tea, the company’s interpretation of the Teavana name. But they were one of the first stores to offer fresh whole-leaf tea at the beginning of America’s latest tea renaissance.
Elephant Tea received a healthy infusion of investment capital, changed their name, and set about locating new stores in high-end malls across North America. The model worked and a healthy modern tea brand was born.
By 2011, Teavana owned 161 (updated to 300 in 2012 and 379 in 2017) stores in the United States and 18 franchises in Mexico. Their tea outlets generated almost $125 million in sales for 2010, a significant increase from their 2006 sales of $33.8 million. Teavana’s average customer ticket was then a respectable $36.
I meet people across the country who love to tell me they wandered into their local Teavana and left with over $100 in tea on their first visit. Best of all, these anecdotes are coming from new tea drinkers who now seek out tea sources wherever they go. That’s why Teavana’s growth was good for the entire tea scene in America. They introduced real tea to more and more Americans.
|Starbucks Shanghai opened in 2018 with a second floor dedicated to the Teavana brand.|
A Rising Tide
Teavana’s upscale mall locations enticed a young new crowd to the tea culture, and all tea purveyors benefitted from this tea awareness. Thank goodness, Teavana customers are not always brand-loyal.
This positive spillover is similar to the “Starbuck’s effect” that infused America’s coffee scene in recent years. Starbucks spent millions of dollars on advertising and received a lot of press, but coffee shops everywhere benefited from the new appeal of freshly-brewed gourmet coffees.
By 2012, the global tea market stood at $56.6 billion dollars annually. And although America ranks 22nd in per capita tea consumption, there is no country with a hotter tea scene.
In November 2012. Teavana was purchased by Starbucks for 620 million dollars. This was another indicator of the rising interest in specialty tea and Wall Street’s confidence in tea’s future. Howard Schultz saw the tea market as a nine billion dollar opportunity for Starbucks over the next ten years.
Flagship Teavana tea bars soon opened – and closed – in Manhattan and Seattle as the coffee giant tried to come up with a successful model for their new acquisition.
Even with raising prices and fruit-filled teas, they were unable to steep a profit from their brand as mall traffic struggled to keep customers from fleeing to the lower prices found on Amazon and other internet sites.
Tea Maestro Bruce Richardson serves on the Editorial Board for Fresh Cup magazine. You can read his column in every edition of TeaTime magazine. His latest book is The Social History of Tea, 2014 Benjamin Press.