Unilever acquires Tazo tea brand from Starbucks for $384 million

Along with releasing their always-anticipated annual holiday cup, Starbucks made another announcement this week as well. The coffee mega-giant is selling their Tazo tea brand to Unilever for $384 million as they say they will be focusing on Teavana as their sole tea brand. The sale includes all recipes, intellectual property and inventory.

Tazo, founded in 1994, was sold to Starbucks just five years later for $8.1 million. The brand is primarily sold in grocery stores. Consumers can buy Tazo as a packaged tea, K-Cup pod or in bottled-form.

Tuesday’s announcement was made as Starbucks released their fourth-quarter results and 2017 financial results. The final numbers came in much lower than Wall Street expected and the markets showed it. Starbucks’ fourth-quarter revenue came in at $5.7 billion. Experts were projecting to see at least $5.8 billion in revenue from the company.

Store sales also lagged behind. The company reported a two percent growth in its global comparable store sales. This number too came in lower than estimated; the Consensus Metrix projected a 3.2 percent growth in that sector.

Although the net income for the quarter also slipped, the outlook wasn’t all that bleak. Starbucks reported a five percent growth in full-year revenue at $22.4 billion.

The sale is perhaps not that surprising, after all, Starbucks announced back in July that it would be closing all 379 brick-and-mortar stores for its other tea brand, Teavana. However, closing down shop for Teavana may have more to do with the changes in how consumers shop than sales. In fact, Starbucks announced that sales for their tea category continue to grow.

“The tea category in Starbucks stores continues to grow double-digits globally,” the company’s announcement read. “With Starbucks well on its way to building the Teavana business to over $3 billion over the next five years.”

Over the past year, Starbucks has sold over $1.6 billion worth of Teavana product in stores. They’ve also launched bottled, ready-to-drink Teavana tea through a partnership with Anheuser-Busch InBev. Next year, the company plans to start selling packaged Teavana teas as well.

In the next five years, Starbucks plans to grow their Teavana line into a $3 billion business.

Kevin Johnson, president and chief executive officer at Starbucks, underscored the importance of Starbucks’ tea category and impressed the company’s desire to focus solely on Teavana.

“Over the past five years, we have established Teavana as our primary global brand focused on the premium tea segment. With our growth strategy for premium tea exclusively focused on Teavana, we are pleased to transition our Tazo business to Unilever,” Johnson had to say about the sale.

And Starbucks should be pleased. As Forbes puts it, the nearly $400 million sale to Unilever “marks a more than 47-times return on investment.”

Unilever is already home to many well-known food and drink brands, like Ben & Jerry’s, Lipton, Pure Leaf, Klondike, Breyer’s and much more. The UK-based consumer products behemoth’s leadership claims that, in addition to beefing up the company’s existing tea brands, the acquisition is targeted at millennials.

“With its strong appeal to millennials, Tazo is a perfect strategic fit for our US portfolio that includes exciting new brands such as Seventh Generation, Dollar Shave Club and Sir Kensington’s,” Kees Kruythoff, president of Unilever North America, commented on the news. “Tazo’s solid position in the fast-growing specialty tea segment, coupled with Unilever’s tea expertise, presents a fantastic growth opportunity.”

The announcement this week follows Unilever’s acquisition of the organic herbal tea brand Pukka Herbs back in September.

Unilever Acquires Dollar Shave Club for $1 Billion

On Tuesday, Unilever announced its plan of joining the razor business by purchasing Dollar Shave Club.

Dollar Shave Club is a razor start-up that sells disposable razors and grooming utensils for $1 a month. Although Dollar Shave Club has 3.2 million consumers, it doesn’t make any revenue.

No financial terms have been released but several media sources have pointed to the $1 billion deal. These same sources also indicate that Unilever addressed Dollar Shave Club with the offer.

The CEO of Dollar Shave Club, Michael Dubin, will continue to lead the company and the business will function independently. Dollar Shave Club only operates in three countries (the U.S, Canada, and Australia), but now, with Unilever’s support, Dollar Shave Club will be able to expand rapidly into other countries.

Dubin made a statement about the recent acquisition saying, “DSC couldn’t be happier to have the world’s most innovative and progressive consumer-product company in our corner,” and “We have long admired Unilever’s purpose-driven business leadership and its category expertise is unmatched. We are excited to be part of the family.”

In November, Dollar Shave Club earned over $160 million in venture capital funding at a $539 million assessment. Dollar Shave Club’s funding was sponsored by Venrock (for its Series A and B), Crossover Ventures (for the most recent Series A and B) and Forerunners Ventures.

Bud Light’s Campaign is Promoting Rape

Bud Light’s advertising campaign may be encouraging rape with their new slogan: “The Perfect beer for removing ‘No’ from your vocabulary for the night”

The company has recently apologized for the message relayed in their campaign.

Controversy quickly ran on social media outlets with the company’s labels reading “Up for Whatever” on their bottles.

Many back lashed on Twitter with pictures of the bottle and saying the slogan “perpetrated rape culture.”

The controversy even hit Congress. Democratic congresswoman from New York, Representative Nita Lowey was “grossly shortsighted” by the campaign. She said it shows the “epic lack of understanding of the dangers associated with excessive alcohol consumption, such as sexual assault and drunk driving.” “We need responsible companies to help us tackle these serious public health and safety problems, not encourage them,” she told the New York Times.

Anheuser-Busch InBev owns many huge beer brands including Bud Light and others such as, Budweiser, Stella Artois and Beck’s.

A Budweiser spokesperson announces that the slogan was a one mistake made out of the 140 other campaigns established by the company and that it would not appear on any more beers.

Vice President for Bud Light Alexander Lambrecht regrets the campaign saying, “We would never condone disrespectful or irresponsible behavior.”