Starbucks Closes All Teavana Stores! What Tea Company Will Step Up to Replace Teavana?
Focusing on its core coffee-shop business, Starbucks on Thursday said it will close its Teavana tea stores worldwide. (source: http://www.cbsnews.com/news/starbucks-closing-all-379-teavana-stores)
The company, which bought Teavana for $620 million five years ago, will shut all 379 Teavana retail stores over the coming year. Many of the struggling stores, most of which are in the U.S. and Canada, are located in malls, where traffic has been declining.
The 3,300 employees affected can apply for positions at Starbucks stores, where Teavana drinks will be sold as well as at grocery stores.
This move means that it creates opportunity for other tea companies to step up and replace Teavana. One such company is called Mahalo Tea (https://www.mahalotea.com).
Mahalo Tea is a Hawaiian themed online loose leaf tea retailer. Boasting an excellent selection of Black Tea, Green Teas, Oolong Teas, and Rooibos Teas and creating custom blends by mixing fruit directly from Hawaii with Tea from all over the world to create amazing blends of tea. Mahalo Tea is also a strategic partner of Amazon by delivering 2 day shipping optimizing delivery and delighting customers. Over the past year, Mahalo Tea has focused on creating a sustainable brand and is growing in share.
Some other honorable mentions include: DAVIDs Tea widely popular in Canadian markets where it was founded and is continuing expansion into the US.
It is expected by the end of next year Teavana is gone from the market. Who will you choose to replace it?
David’s Tea is pretty awesome. Prices are a bit high, but many high-end tea shops are like that. They have a very nice selection. They are also eco-conscious as they let you bring in your own tins to fill with tea. Their Golden Monkey tea is excellent.
I love Mahalo Tea! I just ordered from them and it only took 2 days to get to my house. I ended up buying Paradise Passion Fruit and Tropical Hibiscus and wow…it was so good either hot or iced. I hope they expand near me!
I always thought some of Davids Tea were artificial especially flavors like cottoncandy…it was just gross. Give me something made with real fruit like what Mahalo Tea does.
I’m a big Davids Tea fan, but lately I’ve been getting tired of their artificial flavors. How does Mahalo Tea fair?
Never heard of Mahalo Tea. Here in Chicago, Adagio and David’s Tea are the big tea stores after Teavana. I’m seeing more Davids Tea popping up around town but I wonder if they will run into the same issues that Teavana did as mall and retail business continues to drop.
T2 also has potential. That was more or less the Australian version of Teavana (not exactly the same theme, but comparable). It was bought out by Unilever a few years ago, with a few branches in the US already. If the problem is with the model Teavana was using then no major chain shop will replace it, and any that try will have marginal success.
Per my understanding Teavana mall shops were making a profit, just not much of one, on the order of 5 or 6%. It seems to me they already played every card related to pushing low product cost high-margin blends and that didn’t make enough difference, and couldn’t get anything like a cafe theme to work, to also sell food or RTD options. T2 formerly sold higher end better plain teas and also inexpensive range versions and blends and they’ve moved pretty far into blends, dropping better teas, following Teavana’s lead, whether related to either market demand or profit margin issues.
Teavana’s decision to locate their stores primarily in malls was a bit of a double-edge sword. Some may say that they benefited from mall traffic when customers who may not have normally entered their stores stumbled in, but also, it ate away at their market potential when malls fell into disarray and generally out of favor. The online argument is pretty strong— almost everyone here could name an online store that sells tea that they prefer and online shopping has boomed in the last 10 years.
In my opinion, Teavana created a niche and overpriced themselves in the process. Their products weren’t particularly unique to tea fanatics and their emporium approach versus a tea room or tea shop approach didn’t endear anyone either. The experience and the products were, overall, a bit lack-luster. It is not surprising that Starbucks saw the under-performance and decided to pull the plug.
I guess one next question is how they could have did better. Can any version of corporate tea shop open hundreds of branches and make it work? I just checked the store count for David’s and they say on their site they have over 200 stores now, and per the Wikipedia content they had over 75 in 2012. It seems like they may have already sorted it out. It should be a difficult puzzle to solve since no matter what they sell online competition can match it with lower business overhead to cover, at least in terms of just the physical product. Related to coffee Starbucks was always selling a cafe experience and the food items, with the coffee products as made to order goods, so it was always a different kind of thing, but loose tea is just a dry good.
It’s a shame to see teavana go, I always liked stopping in and looking at it whenever I went to the mall, but I’m excited to hear about Mahalo tea!
Login or sign up to leave a comment.