Starbucks Seeks Success in Tea Leaves

P O R T L A N D, Ore., April 30 -- Starbucks Corp. has taught the nation a thing or two about coffee. When it comes to tea, however, the Seattle company is in learning mode.

Two years ago, Starbucks was struggling with its Infusia teabrand, but it couldn't just drop tea from the menu because "everycoffee shop has tea," said Darren Huston, Starbucks' senior vicepresident of new ventures.

Enter Tazo, a quirky tea experiment that began in founder SteveSmith's kitchen in Portland, Ore. seven years ago. Starbucks bought Tazofor $9.1 million in 1999, and in doing so has used a New Age aurato revive its tea fortunes.

Tea blends with names like Om, Zen and Awake now appear in everyStarbucks coffeehouse. The individual teabags are stamped withtongue-in-cheek vignettes that describe the flavors in floweryprose.

Meet the Tea 'Shaman'

Smith, who calls himself a "tea shaman," has gone along hisown path since leaving a 13-year career with competitor Stash TeaCo. in 1994. He went door-to-door selling his teas before his company had aname. He described how he wanted each Tazo flavor to taste, andthen made them that way. He embraced bold and irregular ingredients— ginger, lemon grass, black pepper, cucumber juice, dried hibiscusflowers.

"I tasted teas and felt they should be stronger, gutsier andmore intense, while others needed to be subtler," he said. "Iwanted to take some risks, raise the bar."

Tazo attracted attention from industry insiders long beforeStarbucks came along. It was a stand-out at food and beverage tradeshows because of its unique packaging and Smith's extensiveknowledge of tea, market analysts said.

"Other tea companies have tried to copy New Age stuff andcutesy packaging," said Brian Keating, a tea industry expert withSage Group International in Seattle. "But Tazo's packaging lookslike a cross between 14th-century alchemy and an exotic tea estatesomewhere. It's masterful."

Those unusual designs were what attracted Ann Irving to Tazoseven years ago, and she hasn't stopped sipping it since.