By Peggy Watt

Starbucks has underscored Teavana’s role in the company by teaming with chai-loving icon Oprah Winfrey, who arrived to cheers at Starbucks’ annual shareholders meeting in Seattle March 19 to introduce Teavana Oprah Chai, a custom blend arriving in Teavana and Starbucks stores next month.

A year and a half after Starbucks bought Teavana, Starbucks CEO Howard Schultz is still touting the company’s commitment to tea – “the $90 billion global tea market,” as he told the shareholders several times.

“We’re going to do in the long term for tea what we have done for coffee,” Schultz said, noting that he sought a like-minded partner to promote Starbucks’ refocus on tea.

The introduction of Oprah Chai is not only promoting a love of tea, but also reinforces Starbucks’ charitable efforts. (At its annual meeting Schultz emphasized its recent support for veterans’ groups and hiring veterans and veterans’ families.) Because Winfrey is also known for her charitable work, sales of Teavana Oprah Chai will benefit the Oprah Winfrey Leadership Academy Foundation, which supports education programs for youth. For every two ounces sold, $1 goes to the charity.

The blend goes on sale April 29 in Teavana and Starbucks stores in the U.S. and Canada. It is described as an infusion of cinnamon, ginger, cardamom and cloves, blended with loose-leaf black tea and rooibos. Winfrey developed the blend with Teavana teaologist Naoko Tsunoda.

Baristas at the meeting offered samples of sweetened and unsweetened varieties to good reception, even for this generally coffee-focused crowd. (Starbucks annual meetings are appreciated for their generous spread of coffees and bakery items – which this year were all from La Boulange, which Starbucks acquired a year ago).
Winfrey and Schultz settled into overstuffed chairs on stage to discuss their deal.

Schultz related that he had observed Winfrey drinking tea at a wedding they both attended. “You didn’t think much of the brand,” she reminded him wryly. He didn’t, and so he sent a sampling of Teavana Chai to her hotel room, which began a conversation that led to her designing Teavana Oprah Chai with the Teavana development team.

“Starbucks is not just a coffee company. It’s about nurturing the human spirit,” Winfrey said. “And that has been my goal in life. This felt like something I really loved and I really cared about and that would be fun to do.” She said she is a longtime chai drinker and welcomed the opportunity to develop her own blend. Teavana Oprah Chai will be served to guests on “Steep your Soul,” a new segment on the OWN Super Soul Sunday show, when guests share their recharge rituals. “I offer them my chai, and they take it whether they like it or not,” Winfrey declared.

Schultz referenced both the common ground of commitments to social causes and having gone through difficult times as businesses. Headlines flashed on the display at the shareholders meeting referenced both lucrative times for Starbucks and the rocky start of the OWN cable network. He said he sought a partner who “loves tea” and “is committed to giving back.”

The packaging is distinctive, too: the canister is an attractive light olive tone with copper lid. The clever box design has an orange base but that same olive-green lid, short enough to show the orange base.

Teavana Oprah Chai will also be featured in a new store design, Teavana Fine Tea + Tea Bars, open now in Seattle and New York and scheduled to open 20 additional locations in the coming year including Chicago, Los Angeles, and New York City.

View the Starbucks product release press announcement here.

For past Tea Biz reports on Teavana/Starbucks, see Oct. 2013 First Look at Teavana Fine Tea Bar (Oct. 2013), Teavana Update (Feb. 2014), and Teavana Founder Andy Mack Leaves Starbucks (Feb. 2014)

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ATLANTA,  Ga. — In 1997 entrepreneur Andy Mack and his wife Nancy, a former Walt Disney World Resort customer service manager, opened their first Teavana storefront at Phipps Plaza (Lenox Square Mall).

During the 10 years that followed he changed the name from Elephant Tea Co., perfected the format, acquired prime retail locations in some of the most desirable malls in the country and introduced a remarkable variety of specialty tea blends.

It was always his intent to introduce conventional tea drinkers to specialty tea and the myriad gadgets on display in his stores, he told the Atlanta Journal-Constitution after opening his shop.

Fortune smiled as his business model gained traction. Investors added momentum, doubling the number of stores to more than 50 between 2005 and 2008. By July 2011 he was ringing the bell at the New York Stock Exchange and celebrating a $121 million IPO with a jubilant team. Teavana’s mall locations were earning an enviable $1,000 sq. ft. in retail sales at the time. The following spring Teavana acquired Teaopia, a Canadian-based retailer with an uncannily similar business plan. The company paid a half million each for the 46 Teaopia stores.

Mack received the Ernst & Young Entrepreneur Of The Year® 2012 Award in the Retail and Consumer Products category and by fall the company was earning $43 million a quarter and projecting revenue of $250 million per year.

Store count had risen to 284. Mack announced plans to build 500 stores. Shortly after the most successful specialty tea retailer in America discovered his pot of gold at the end of the rainbow.

In November 2012 Starbucks bought the company for $620 million paying $15.50 per share. The Macks had retained 21.5 million of the company’s shares to earn a payout of approximately $335 million. Starbucks valued the company’s blends at $13 million and the goodwill associated with Teavana, its “Heaven of Tea” slogan and business plan at an astounding $467.3 million. It was the most expensive acquisition in Starbucks Coffee Co. history.

During the past year Mack has assisted with the integration of Teavana which has continued to grow. It now numbers 366 locations including showcase concept stores in New York City and Seattle, Wash.

Last week Annie Young-Scrivner was promoted to executive vice president of Starbucks Coffee Co. and named president of Teavana today replacing Mack who announced his retirement.

“We are grateful for Andy’s leadership establishing Teavana as a world-class leader responsible for bringing premium tea to millions of customers over the past 17 years,” said Cliff Burrows, group president, U.S. Americas and Teavana.

“Under Annie’s leadership, we plan to do for tea what we did for coffee by significantly expanding the availability of new and innovative Teavana products in Starbucks and Teavana retail stores and through other channels,” he said.

Teavana is positively positioned to capture market share within the rapidly-growing $90 billion global hot and iced tea market. Young-Scrivner most recently led Starbucks Canada’s record Fiscal 2013 performance. Prior to her role leading Canada, Young-Scrivner served for three years as Starbucks global chief marketing officer and president of Tazo Tea. Before joining Starbucks in 2009, she had a successful twenty year career at PepsiCo and held positions such as chief marketing officer Quaker Foods and president  of  greater China for PepsiCo Food & Snacks. Young-Scrivner will continue to report to Burrows in her new role.

See: Teavana update.