A look at Starbucks' tea shop competitors

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Scheduled to open in October in Seattle, the Tazo Tea concept will be a 1,700-square-foot shop where customers can choose from more than 80 varieties of loose-leaf tea. Guests will be able to create their own personalized blend, or find equipment or tea-related merchandise.

The shop will also have a Tea Bar that serves hand-crafted tea drinks — from iced teas to tea lattes — as well as tea-friendly foods such as pastries, baked goods, chocolates or infused sugars, said Holly Hart, Starbucks spokesperson.

“It will be a playground for tea customers,” said Hart. “But it will be just one of the ways we’re looking to elevate the tea experience because we know that’s what customers are looking for.”

In a recent report, Sharon Zackfia, an analyst with William Blair & Co., predicted that Starbucks will take learnings from the Tazo location test to enhance its tea-beverage platform within its coffeehouse units.

Here's a closer look at what brands Starbucks' new tea concept is up against.

Teavana

Starbucks’ largest tea competitor is Atlanta-based Teavana, a chain of upscale tea shops offering loose-leaf teas and accessories — as well as beverages served in house — in 223 company-owned locations in the U.S. and Canada and 18 franchised locations, mostly in Mexico.

The concept aims to translate the rituals and culture behind teas from around the world with the use of in-store “teaologists.”

Teavana is growing. Earlier this month, parent company Teavana Holdings Inc. through a subsidiary acquired Teaopia Limited, a mall-based specialty tea retailer in Canada with 46 locations, for $26.9 million.

Starbucks’ Tazo Tea store will likely have a more-hybrid beverage/merchandise mix, while Teavana currently generates less than 5 percent of revenues from beverages, noted Zackfia of William Blair & Co. Tazo will also likely focus on more street and neighborhood locations, while Teavana is largely mall based.

“It also remains a question as to how effective Tazo’s selling and educational techniques will be for a U.S. customer base that remains largely untutored in the art of tea, whereas Teavana’s intensive training processes are well proven, given incredibly high sales productivity of nearly $1,000 per square foot,” Zackfia wrote.

The publicly traded company was founded in 1997 by Andrew Mack and his wife Nancy Mack.

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