Everyone is always looking for the next big thing. A few years back, “craft tea” was supposed to be just that. Boutique tea shops began popping up around the world, and it seemed to have a vibe similar to the rise of third-wave coffee. Kevin Rose, for example, has long been a lover and advocate for tea.
But yesterday Starbucks announced it was closing all of its 300-plus Teavana locations, which may be a harbinger for this niche market. In its earnings report, Starbucks explained that “mall-based Teavana retail stores have been persistently underperforming.”
Despite the fact that business is booming for the coffee giant, the segment that accounts for the 300-plus Teavana stores saw a decrease in revenue compared to 2016, as well as a marked increase in operating loss. In short, tea isn’t the hip moneymaker Starbucks thought it could be. While this case is specific to Starbucks, I myself have anecdotally noticed the decline of hip tea-only vendors, while a market report from September of last year warned that the specialty tea market in the U.S. and Canada was “sluggish.”
Of course, it should be noted that the tea market is huge—in fact, it’s global consumption numbers are much bigger than coffee, according to Statista. But the craft part of it, which has received much fanfare for years, may just not be the next big thing. At least not for Starbucks.