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Starbucks buys Teavana. First coffee dominance, now tea?

Starbucks is taking the $90 billion global tea market head on opening its first Teavana Fine Teas + Tea Bar in Manhattan tomorrow. Will Starbucks revolutionize the tea industry the same way it did coffee? 

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Candice Choi/AP Photo
A Starbucks employee shows the new Teavana 'tea bar' in New York during a media event on Wednesday. Starbucks will open its first Teavana 'tea bar' in New York on Thursday. Will Starbucks revolutionize the tea industry as it did coffee?
  • By Denali Tietjen Contributor

Brewery, bakery, juicery. Now you can add zen tea bar to Starbucks’ list of specialties.

Starbucks will open its first Teavana Fine Teas + Tea Bar this Thursday in Manhattan’s Upper East Side. The tea bar will serve luxury tea beverages, tea-inspired food and sell tea merchandise.

Starbucks dropped the word ‘coffee’ from its logo in 2011 in a move to expand beyond the coffee market and become a multi-product company. And over the past two years, the company has made several changes with goal in mind. In November 2011, it jumped into the $1.6 billion juice market with the acquisition of bottled juice company Evolution Fresh and opened four stand-alone juice bars under the same name. Earlier this year, the chain went after the taste buds of pastry lovers with the introduction of La Boulange brand baked goods. Now, Starbucks is betting on the $90 billion global tea market with new Teavana Fine Teas + Tea Bars.

Starbucks acquired the specialty-tea retailer of about 300 stand-alone stores last November. Closing at $670 million, Teavana was Starbuck's largest acquisition to date. In addition to opening Teavana Tea Bars, Starbucks plans to introduce Teavana speciality tea drinks to their menu in the future. 

“Tea has been a part of Starbucks heritage since 1971, when we were founded as Starbucks Coffee, Tea and Spices, and this new store concept elevates the tea experience in the same way we’ve done for coffee,” Howard Schultz, Starbucks chairman, president and chief executive officer, said in a press release.

Over 50 percent of Americans drink tea on a daily basis. It's the second most consumed beverage in the world, behind water, and total sales from the tea industry have increased 16 percent over the last five years, according to data from The Tea Association USA. 

Starbucks is approaching the market tactically. The tea bar is strategically located next to yoga clothing store Lululemon and just blocks away from Central Park.

The tea room will be the first public showcase of the merged companies.

“The first Teavana Fine Teas + Tea Bar will bring together Starbucks strengths in store design and customer experience, with Teavana’s deep expertise in tea sourcing and blending,” Starbucks said in a press release.

The tea bar adopts Teavana’s zen feel in its design–gray walls,soft lighting and Teavana’s signature ‘Wall of Tea’ which showcases the company’s tea selection.

“The Teavana Tea Bar is a critical first step for us to meet the needs of tea drinkers everywhere by providing a place where tea enthusiasts and casual tea drinkers alike can learn about, enjoy and share in the tea experience,” said Cliff Burrows, Starbucks group president, Americas, Europe, Middle East and Africa, and Teavana.

The Manhattan location is just the beginning of Starbucks' tea revolution. A second tea bar is due to open near Starbucks' Seattle headquarters this Thanksgiving and the company plans to open over 1,000 locations in the next five years.

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