Starbucks: Can the coffee brand conquer tea?

Since its inception in 1971, Starbucks has grown from a small coffee shop in the heart of Seattle to a global empire, encapsulating over 20,800 stores in 62 countries. It has conquered the world of coffee and now sets its eyes on breaking into the $90 billion global tea market with the acquisition of Teavana, a standalone venture purely focused on specialty tea. With a history of aggressive expansion and competitive business strategies, Starbucks is sure to press Teavana on the world and do to tea what they have done for coffee.Starbucks is aligned with global market trends as sales of sodas continue to fall and the consumption of teas and water based beverages rise. Whilst tea is the most consumed beverage behind water globally, coffee is still the king of sales and the Teavana brand will have to work hard to capture a loyal audience.Whilst initially growing its footprint in United States, Teavana looks set to grow internationally too, introducing the world to an array of trendy tea blends and a zen-like experience. With Starbucks being built around drinks on the go, Teavana will offer a more relaxed environment, and an experience that pays homage to tea. All this sounds very promising to the Singaporean consumer, but in a region where tea is omnipresent, is there value in the branded experience coming to Asia – and in particular Singapore?The Singapore tea market has seen a 3.7% growth rate annually for the past three years and this growth shows no sign of waning. Whilst there are some brands with a presence in Asia-Pacific like TWG, T2 and Mariage Frère with a focus on specialist teas, there has been little sign of a master tea brand throughout Asia, and there may be a good reason for this. Within Asia tea has a rich history and purpose, not only in the art of brewing but also its role in culture and society. Further commercialising this commodity to the mainstream market runs the risk of rejection from passionate consumers who are conscious that this particular beverage is more than a morning wake up drink.However, Starbucks could have in fact pulled a very shrewd move in developing its foundation solely in America to begin with. Singapore is, to an extent, a market of adoption and success in America will raise the value of the brand in the eyes of Singaporean consumers. If Teavana resonates with its audience and proves to be highly relevant, whilst also being fully differentiated in the market, then the brand’s value will soon rise. Brand relevance and differentiation are two key leading indicators of future growth, and will be essential attributes to the Teavana brand if they wish to expand internationally and succeed in markets like Singapore.This piece was co-written by Thomas Child & Victoria McKellar, Landor Associates.