A look at Starbucks' tea shop competitors

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Starbucks is taking a bigger step into the tea world with a new Tazo Tea concept to debut later this year.

Starbucks has been selling Tazo Tea in its coffeehouses and grocery stores for years, but the new concept will be the tea brand’s first outlet.

Though the coffeehouse giant is not talking about a nationwide chain of tea shops just yet, the move draws attention to the niche tea category, where a small but growing number of concepts are offering a modern take on what is becoming an increasingly popular beverage.

One of the biggest tea retailers is Teavana Inc., with more than 200 mostly mall-based stores. Argo Tea is a tea shop/café concept that is also growing its grocery store and foodservice presence. Jamba Juice last year acquired the premium Talbott Tea brand with plans to grow tea options in its smoothie shops as well as a packaged product in grocery and other retail outlets. And tea wholesaler Stash Tea is planning to open a tea bar location in Portland later this year.

Tea is among the top five fastest growing beverages on restaurant menus, according to market research firm The NPD Group. The beverage fits what research says consumers are looking for today: Tea is low in calories and has a healthful profile; it can be both soothing or refreshing; and it's becoming increasingly innovative with exotic blends and flavorings.

Tazo Tea is already a $1.4 billion brand for Starbucks, considering revenues from the sale of tea in coffeehouse locations and through Consumer Packaged Goods, or CPG, channels.

Tazo is among Starbucks’ “emerging brands,” which includes the recently acquired Evolution Fresh juice maker and Seattle’s Best Coffee, both of which also have retail locations, as well as a presence in grocery stores and in Starbucks coffeehouse units.

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