Is Teavana Owned by Starbucks? Ownership and Financial Insights

Teavana was once a standalone specialty tea retailer before being acquired by Starbucks. The acquisition expanded Starbucks’ presence in the premium tea market, complementing its dominance in coffee.

Understanding how Teavana fits into Starbucks’ financial and operational structure offers insight into corporate strategy and revenue streams.

Ownership Arrangement

Starbucks acquired Teavana in December 2012 for approximately $620 million in cash, securing full ownership of its assets, intellectual property, and retail operations. The buyout made Teavana a wholly owned subsidiary of Starbucks Corporation.

With full control, Starbucks managed branding, product development, and retail strategy. Initially, it maintained Teavana’s standalone stores, but by 2018, all company-operated locations were closed. Instead, Starbucks focused on selling Teavana-branded products through its stores and external distribution channels.

Teavana’s assets and liabilities were absorbed into Starbucks’ consolidated balance sheet. Its trademarks, patents, and proprietary blends became part of Starbucks’ intellectual property portfolio, reinforcing its position in the tea market.

Consolidation in Financial Reports

After the acquisition, Teavana’s financial results were incorporated into Starbucks’ consolidated financial statements. Under Generally Accepted Accounting Principles (GAAP), wholly owned subsidiaries must be fully integrated into the parent company’s financial reporting. Teavana’s revenue and expenses were merged into Starbucks’ income statement, balance sheet, and cash flow statement.

Revenue from Teavana-branded products was included in Starbucks’ total net revenue rather than as a distinct line item. Starbucks did not provide a separate breakdown of Teavana’s performance unless disclosed voluntarily.

Teavana’s assets, including inventory and intellectual property, were added to Starbucks’ balance sheet. Any goodwill from the acquisition—the premium paid over Teavana’s net asset value—was recorded under Starbucks’ total assets and subject to annual impairment testing under Accounting Standards Codification (ASC) 350. If Teavana’s brand value declined, Starbucks would have to recognize an impairment loss.

Cash flow reporting also changed. Operating cash flows from Teavana-related sales were included in Starbucks’ overall operating cash flow. Any restructuring costs, such as lease termination fees from closing Teavana stores, were classified under investing or operating cash flows, depending on their nature. This integration made it difficult for external stakeholders to assess Teavana’s standalone financial performance.

Product Line Integration

Rather than maintaining Teavana as a separate retail brand, Starbucks incorporated its products into its existing beverage lineup. Teavana-branded teas replaced previous tea selections, offering a wider range of premium loose-leaf and handcrafted tea beverages.

Starbucks reformulated several tea-based drinks using Teavana blends, optimizing recipes for mass production while maintaining quality. This included Teavana Shaken Iced Teas and Teavana Tea Lattes, designed to appeal to both casual tea drinkers and connoisseurs. By integrating Teavana’s blends, Starbucks expanded its tea offerings without the overhead costs of standalone stores.

Beyond in-store beverages, Starbucks introduced Teavana-branded bottled teas in partnership with distributors, making them available in grocery stores and convenience retailers. This strategy mirrored Starbucks’ approach with its ready-to-drink coffee products, allowing the brand to reach consumers beyond its cafes.

Revenue Classification

Starbucks categorizes revenue into distinct segments, ensuring transparency in how different product lines contribute to overall earnings. Teavana-branded products fall under the “Beverage” and “Channel Development” revenue streams, depending on where sales occur.

Teavana hot teas and iced tea beverages sold in Starbucks stores are classified under the “Beverage” category, which consistently represents the largest portion of Starbucks’ total revenue. Packaged Teavana teas sold in grocery stores, online retailers, and other external channels are reported under “Channel Development,” which includes Starbucks’ consumer-packaged goods and licensing arrangements.

The profitability of these segments differs. Beverages sold in Starbucks stores generate higher margins due to direct pricing control and the ability to bundle products with other offerings. In contrast, Channel Development revenue is influenced by wholesale pricing agreements, distribution costs, and licensing fees, resulting in lower margins despite expanding brand reach. Starbucks’ financial disclosures, particularly in its Form 10-K filings with the SEC, provide insight into how these segments perform, though specific contributions from Teavana products are not itemized separately.