Say the name Starbucks and the first thing most people will think of is coffee. However, many industry analysts argued it was that very fact that was one of the major obstacles standing in the way of CEO Howard Schultz’s dream to create the most recognizable and respected brand in the world. How was Schultz ever going to be able to capture the coffee market in China, a country of tea drinkers, or Japan or Taiwan, they asked?
Schultz’s reply came in the form of Starbucks tea. In 1998, Schultz approached the new-age tea company, Tazo Tea Company, with the idea of creating a partnership. Schultz wanted to create a Starbucks tea, particularly to help his company break into the Asian market. In 1999, Starbucks wound up purchasing the Tazo Tea Company outright for $8.1 million and set about manufacturing a unique line of Starbucks tea.
Today, Starbucks has created its very own line of Starbucks tea. Its line of products includes a wide range of black teas, herbal teas and green teas. From Tazo Chai and African Red Bush filter bag teas, to Montage and Mambo full leaf teas, to Lemon Green and Giant Peach iced teas, there is now a Starbucks tea available for every taste.
In the nearby tea-drinking country of Japan, Starbucks tea became a huge success when it was introduced into the market in the summer of 2005. The Starbucks Green Tea was particularly popular, which convinced company executives that Starbucks tea should be sold in their stores around the world. “We know if something is successful with the Japanese, it will definitely be popular elsewhere,” says Christine Day, president of the Asia-Pacific region for Starbucks. Today, the company’s 600 stores throughout Japan, which all sell varieties of Starbucks tea, are raking in sales of over $565 million.
While Schultz knew that offering Starbucks tea on the menu board would indeed help him break into the Asian market, he didn’t want to stray too far from his coffee roots. Yes, he wanted to expand into China, but he wanted to do so not just with Starbucks tea, but also with the ride range of coffee drinks that the company is famous for throughout the rest of the world. In essence, Schultz wanted to convert a nation of tea drinkers into coffee addicts.
Starbucks first entered the Chinese market in 1999, and it now has over 120 stores throughout mainland China and close to 200 in Hong Kong and Taiwan. These Asian-based outlets now serve just three or four varieties of Starbucks tea, in addition to its vast coffee choices.
“Executives didn’t think the coffee part stood in their way,” writes the Wall Street Journal about Starbucks’ Asian expansion. Indeed, as president of Starbucks Greater China Wang Jinlong says, “Coffee represents the change.”
However, that is the great thing about the company, which has fueled its success thus far; whether you want Starbucks tea or coffee, the choice is available and it’s yours to make.
- To learn more about this author, visit Starbucks Starbucks's Website.
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