Starbucks/Anheuser-Busch To Bring Ready-to-Drink Tea In U.S.

Starbucks Corporation (NASDAQ:SBUX) recently announced plans to bring Teavana ready-to-drink (RTD) tea in the U.S. in partnership with Anheuser-Busch InBev SA/NV (NYSE:BUD) in the first half of 2017.

The partnership brings together Starbucks’ premium tea expertise with the Teavana brand and industry-leading retail activation along with Anheuser-Busch’s production capabilities and U.S. distribution footprint. The definitive agreement is expected to be finalized by the second half of calendar year 2016.

The premium RTD tea is a fast-growing segment in the RTD tea category, which grew at 16% CAGR over the past five years. The premium RTD tea lines will be launched across U.S. retail channels with support from Anheuser-Busch’s wholesalers’ network.

Starbucks bought the specialty tea retailer Teavana in Dec 2012. Since then Starbucks has opened Teavana tea bars in existing Starbucks stores offering an assortment of handcrafted tea beverages, premium loose leaf teas, tea-inspired food offerings and tea merchandise. Starbucks is seeing increased sales of Teavana handcrafted beverages like Teavana Shaken Iced Tea at its Starbucks stores in North America. Encouraged by its success in the U.S., Starbucks plans to bring Teavana tea beverages to Starbucks stores in the China-Asia-Pacific and Europe, Middle East and Africa regions in fiscal 2016. While Teavana tea represents a small portion of sales presently, management remains focused on growing the brand to $2 billion over the next five years.

In international markets, Starbuckswill launch ready-to-drink products in China in partnership with Tingyi this summer and in Latin America with PepsiCo, Inc. (NYSE:PEP) later this year.

Zacks Rank and Stocks to Consider

Starbucks has a Zacks Rank #3 (Hold). A better-ranked stock in the restaurant sector is Restaurant Brands International Inc. (NYSE:QSR) with a Zacks Rank #1 (Strong Buy).