Starbucks sells iced tea and green tea drinks in some of its 6,200 stores in Asia but the latest move is a rebranding of this growing segment as Teavana, an Atlanta-based tea retailer it acquired for $620 million in 2012, and replacing its older brand Tazo. But China’s tea industry, which stands nearly ten times bigger than the country’s coffee market at about 63.2 billion yuan ($9.5 billion), could pay off big-time for Starbucks, according to Bloomberg. So it does seem a little odd that we’re seeing more and more news stories about foreign companies exporting tea to China, especially when the articles often to refer to a product that was grown there in the first place!
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Bloomberg suggest that this is a sensible strategy for Starbucks, pointing to the fact that the tea market in China is far larger than the coffee market.
Speaking to Fortune, Starbucks’ director of product innovation for China and Asia Pacific Vera Wang said that Starbucks is well aware of local preferences but the “growing middle class” in China are more than eager to experience the real “Starbucks experience”. “There is a strong tea identity in Asia and it also chimes well with the particularly Asian view of healthcare as being centered around prevention, rather than cure”.
Starbucks has developed new drinks and full leaf tea sachets specifically for sale in the Asian markets. “We believe that the bold flavor and texture is really about the “premiumization” of the experience and [being] different from traditional tea”.
Starbucks may already be late to the game, with growth in China’s tea market slowing to 5.8 percent a year ago, after steadily decelerating from an 18 percent growth rate in 2010, according to data from Euromonitor International. “Starbucks just fills that gap”, said Tang.
Tea isn’t exactly a new concept in China. “Aiming at not only that young consumer group with new products and new and exciting products, but also something that’s based on tea, which is a traditional drink, is likely to find favor”.
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Matthew Crabbe, director of research at Mintel Asia Pacific, likened the target market to that of bubble or “boba” tea, “which grew very rapidly out of Taiwan, hit China, and expanded enormously”.
