Starbucks Gives Up On The Teavana "Tea Bar" Business

Spencer Platt / Getty Images

Starbucks once saw a massive future selling tea in the U.S. It acquired tea retailer Teavana in 2012, and in October 2013 opened its first Teavana Tea Bar. "Tea presents a $90 billion global market opportunity, and we are excited to celebrate the first retail example of how our two companies are coming together,” said Starbucks CEO Howard Schultz during the launch.

Now, just 27 months after opening the first of five brewed tea outlets, Starbucks is largely abandoning its tiny chain of standalone tea bars. The company announced on Friday that it will convert the three Teavana tea bar locations in New York into Starbucks stores by the end of April. It will close its Beverly Hills location. Only the Seattle location will continue to operate.

While Starbucks just reported record revenues in its most recent quarter, today's announcement reflects the coffee giant's setbacks growing its other smaller brands. Maybe Americans just aren't that excited about tea, even when it comes endorsed by Starbucks.

Teavana isn't the first retail operation Starbucks has abandoned. In July, the company announced that it was closing all 23 La Boulange stand-alone locations and the two manufacturing facilities that serve those them (La Boulange baked goods are still served in Starbucks cafes).

Starbucks also closed its Evolution Fresh retail location in San Francisco, but kept three stores open in Washington.

Howard Schultz, CEO of Starbucks, and Oprah Winfrey visit the Teavana Fine Teas + Tea Bar in New York in 2014.

Kevin Mazur / Getty Images

There are still 350 Teavana shops that sell packaged teas and gift sets, and the brewed teas are also offered in Starbucks cafes. "Focusing our investments on bringing an up-leveled tea experience to our customers through Starbucks stores and our Teavana specialty stores will allow us to reach more customers through our broad footprint," said Teavana spokeswoman Alisa Martinez in an email.

This of course, was not the plan. Starbucks was betting on a large and growing population of American tea drinkers to support the expansion of the tea bar concept.

"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 for the U.S., Americas, and Teavana in 2013.

It's possible that Teavana tea bars might find a more eager tea-drinking audience in China, Starbucks' second largest market, where Starbucks is expecting much growth in the future. If the tea chain does open in China, however, it will be far from the only tea shop around.

Spencer Platt / Getty Images

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