Why The Oprah/Starbucks Brew Could Revolutionize The Business Of Tea

Can Oprah help Starbucks SBUX +0.28% do for tea what it did for coffee?

Teavana Oprah Chai Tea bowed in Starbucks stores and its Teavana chain yesterday, potentially ushering in an unprecedented surge in the popularity of the ancient drink — not only at the ubiquitous chain but also across the nation.

And if that all sounds like hyperbole, consider this:

Winfrey’s influence is incalculable. Her book club sent sales of dusty classics through the roof. Consumer products she oohed and ahhed over during her iconic talk show, her “favorite things,” were routinely cleaned off retail shelves.

When in 2008 she called the Amazon Kindle “her favorite new gadget,” the endorsement helped catapult that device to star status while unwittingly helping to change how people read.

But Oprah’s influence extends far deeper than getting people to buy stuff. She’s her own movement.

Starbucks CEO Howard Schultz and Oprah Winfrey.

Winfrey has alternately served as the nation’s therapist, a spiritual guide and a life coach to countless people – a complex role for which there is no cultural or social precedent for a television personality.

That influence will be put to a new test: The Starbucks tea partnership marks the first time Winfrey has put her name on a product of any kind.

With Starbucks’ CEO Howard Schulz, who’s made “conscious capitalism” and cause-related marketing a centerpiece of his corporate strategy, Oprah, who preaches the gospel of service and “living your best life,” appears to have met her spiritual business match.

Proceeds from every Oprah tea product sold will benefit the Oprah Winfrey Leadership Academy Foundation.

A Tea Shop On Every Corner? 

Beyond sharing philanthropic sensibilities, Oprah’s Chai Tea seems to be the anchor of Starbucks’ mission to blow up the tea business.

“We will do for tea what we did for coffee,” Schultz said in 2012, the year Starbucks bought the 300-store Teavana tea chain. Plans are to open at least 1,000 more Teavana stores in North America, and many more internationally.

Schultz is seeing to it that a tea revolution is part of his legacy, Brian Sozzi, CEO and chief equities strategist of Belus Capital Advisors, told Forbes.

“Howard Schultz has two acts left as CEO of Starbucks: to truly unleash the power of mobile, and make folks care about premium tea as much as they care about premium coffee,” he said.

Enter Oprah, who continues to be “extraordinarily influential. Whenever you involve Oprah, it’s big, so yes, this could impact the world of tea greatly,” Peter Goggi, president of the Tea Association of the U.S.A., told Forbes.

“As any marketer can tell you, when you have a star and key influencer like Oprah generating interest, it’s great for your brand and the [tea] category,” which has been riding a growth wave.

In the U.S., the tea market surged from $1.84 billion in sales in 1990 to $10.41 billion in 2013, according to the association.

The combination of Oprah’s brand equity and Starbucks’ execution savvy – from marketing to operational expertise — lays the groundwork for a potential windfall in tea sales for the chain and beyond.

“I believe that Starbucks intends to drive Teavana using the same principles it did for its own growth.  And we know how successful that’s been,” Goggi said.

“The Oprah Chai presents Starbucks an opportunity to juice sales through multiple avenues: sales of hot and cold premium drinks, loose leaf tea, and Oprah themed gift sets. So by doing this, Starbucks has created a new sales channel just by using the Oprah name,” Sozzi said.

In addition, “Many are watching to see if the venture into tea is both successful in terms of sales and margins, then, like what happened with coffee, smaller chains will open,” he said.  “You could also see a Dunkin’ Donuts, McDonald’s, doing premium tea if Starbucks develops a new market.”

Added Goggi: “I’m sure that others, ranging from the small mom and pop tea shops to the large international players will be watching closely.”

Oprah tea products rolled out to 12,000 Starbucks and 300 Tevana Stores in the U.S. and Canada, and were developed by Winfrey herself, a longtime tea-devotee, along with a “teaologist.”

They include Handcrafted Teavana Chai Latte, Brewed Teavana Oprah Chai Tea, Teavana Oprah Chai Loose-Leaf Tea and Teavana Oprah Chai Tea Gift Sets.

Oprah Or Not, Tea Is Not Coffee

But even Oprah’s magic wand doesn’t necessarily mean tea has a shot at rivaling coffee sales in the U.S. market.

Tea is “the second most consumed beverage in the world after water, and is a growing category in the U.S. But here, it still has a way to go to catch up to coffee’s consumption level,” Goggi said.

Sozzi suspects that “tea for Starbucks will be a smaller opportunity than Starbucks for one reason: caffeine — the product just doesn’t have the hook, that thing that makes people crave it daily.”

What’s more, the tea-store model is “both different and more difficult,” said Goggi. “There are challenges around preparation, educating consumers about the different types of tea and total foot traffic.

“But these are opportunities that Starbucks, and other entrepreneurs, have solved before,” he said.

And who better than Winfrey, whose OWN media empire is a promotional engine in itself, to take a shot at it? The association of Oprah’s name and tea, with its perceived health and wellness benefits, makes uncanny branding sense, Andrea Weiss, founding partner of a consumer brands and retail consultancy the O Alliance, told Forbes.com.

Promoting physical and mental well being is “embedded” in her brand DNA.  She’s gone from taking a “leadership position around her own health and weight loss” to launching the T.V. careers of personalities like talk therapist Dr. Phil and cardiac surgeon Dr. Oz.

So in the realm of health and tea, “she has tremendous credibility,” Weiss said.

But it’s not just tea that’s getting sprinkled with Oprah fairy dust at Starbucks.

This non-tea drinking reporter bought a Caffe Grande with a shot of vanilla the day the Oprah Chai launched.

The message on the coffee sleeve: “Steep Your Soul. Teavana and Oprah invite you to take a few moments to pause and reflect each day. Your own personal ‘steep time.”

Flip the sleeve, and there was Oprah’s familiar circular signature, with a personal message from Winfrey herself: “Follow your passion. It will lead you to your purpose.”

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