Hot and iced matcha & espresso fusion, left, with hot and iced ruby grapefruit and honey.
Coffee is a status symbol in China’s largest urban areas – Shanghai has more Starbucks locations than any city in the world – but it is more a curiosity than necessity in third-tier cities, and rural China.
That is one reason why Starbucks announced it will bring western-style tea to 6,200 stores in 16 Asian and Pacific countries. The reasoning is that China will view drinks like prickly pear flavored iced tea and hibiscus tea with pomegranate pearls as familiar but non-tea category.
“This is tea reimagined,” said John Culver, group president Starbucks Global Retail. The launch “brings an entirely new and modern tea experience specifically developed for our customers, who increasingly want new and different tastes and experiences.”
Innovations in flavor and method of preparation (Teavana iced teas are shaken 10 times by hand) contrast with the Chinese-inspired emphasis on small servings of largely unblended teas that are generally served by trained tea artists.
Demand for tea is growing throughout Asia.
China’s tea market is estimated at $9.5 billion. There are 60,000 (largely independent) tea rooms and many more retail locations selling tea. It is a market 10 times larger than coffee but traditional tea is mature – even stodgy. Ready-to-drink tea is a vibrant category with 10,000 local bottlers producing an astounding range of flavors.
The $125 billion global tea market represents an important growth opportunity and Starbucks is “leveraging its internal expertise, including knowledge in creating best-in-class retail experiences and handcrafted beverages, to create a new premium tea experience for customers,” according to the company.
China is Starbucks’s second largest and fastest growing region. The company will open 500 stores in China this year and by 2019 will have 3,400 locations – many in smaller towns.
Making Teavana a core offering throughout Asia follows two years of strong growth in the US, where Teavana handcrafted beverages and full leaf tea sachets lifted sales across the breadth of the company’s 11,000 coffee shops. In 2015, Starbucks grew its tea business 12% across all tea categories, posting an unusually strong 29% in iced teas sales at a time when tea sales overall are growing 4% nationally. Building on this success in North America and other parts of the world, “Starbucks aims to increase its global tea business to $3 billion over the next five years,” according to the release.
The fact that British teas are selling well in China is a good sign that the Teavana selections will be welcome.
Ultimately black tea flavored with ruby grapefruit, green tea with aloe, and cactus fruit iced tea may be viewed as a Western fad, generating lower sales than anticipated, but in regions where the smell of roasting coffee is considered odd and even offensive, the familiarity of fresh-brewed tea will prove a lot more enticing than espresso.