Tazo Tea

Tazo Tea is a US specialty tea brand founded in Portland, Oregon in 1994, known for a range of flavoured and blended teas including Zen, Calm, and Passion and for a brand identity built around faux-mystical “ancient tea” mythology. The brand was acquired by Starbucks in 1999 for approximately $8 million, becoming the coffee chain’s signature tea offering for over a decade before Starbucks sold Tazo to Unilever in 2017 for $384 million — a valuation leap that reflects the dramatic growth of premium tea in US consumer culture. After the Starbucks acquisition, co-founder Steve Smith eventually departed to found Steven Smith Teamaker in Portland in 2009, continuing the Pacific Northwest specialty tea tradition independently while Tazo became a mainstream consumer brand within two of the world’s largest FMCG companies.

In-Depth Explanation

Tazo Tea’s trajectory is one of the most commercially instructive stories in modern specialty tea: a small Portland brand with a distinctive identity, acquired cheaply at the beginning of premium tea’s US growth period, riding that wave inside Starbucks to become one of the most recognised tea names in America, and then sold at enormous profit once the category had matured. The financial arc — from an approximately $8 million acquisition to a $384 million sale — traces the monetisation of US specialty tea almost perfectly.

The Portland Founding and Mystical Branding

Tazo was founded in Portland in 1994 by Steve Smith — who had previously been involved in the early development of Stash Tea — along with co-founders who shared an interest in building a tea brand that stood apart from both the commodity tea bag market and the more serious, educational tone of specialty tea importers. The approach Tazo chose was distinctive: rather than emphasising provenance, craftsmanship, or tea culture authenticity, Tazo built an identity around invented mysticism — the brand claimed ancient and exotic origins in marketing copy that was designed to intrigue rather than inform.

The iconic Tazo branding included claims about a tea tradition stretching back over three thousand years, the use of a made-up seal and invented historical narrative, and a visual identity drawing on Tibetan and Pan-Asian mystical imagery. The approach was deliberately theatrical — a postmodern marketing game played knowingly with cultural mystique. This was unusual in the specialty food market, where authenticity and provenance claims are typically taken seriously, but it worked: the brand identity was memorable and differentiated Tazo from everything else in the tea aisle.

Signature Blends

Tazo’s most recognised products are a set of branded blends with names designed to evoke sensation rather than describe content:

Zen — green tea with spearmint and lemongrass; bright, clean, aromatic
Calm — chamomile-based herbal blend; the core sleepy tea
Passion — hibiscus, rose hips, and citrus herbal blend; deep red, tart, caffeine-free
Awake — an English Breakfast-style black tea blend; strong, straightforward
Wild Sweet Orange — herbal citrus blend; bright and naturally sweet
Tazo Chai — a masala chai concentrate designed for Starbucks’ Chai Tea Latte, which became one of the chain’s most popular drinks

The Chai concentrate is perhaps Tazo’s most commercially significant product: the Starbucks Chai Tea Latte, made from Tazo Chai concentrate and steamed milk, introduced millions of Americans to the chai format and drove broader cultural awareness of masala chai as a category.

Starbucks Acquisition (1999)

Starbucks acquired Tazo in 1999 for approximately $8 million — a relatively modest sum that reflected both the brand’s size at the time and Starbucks’ own uncertainty about how central tea would be to its business. The acquisition gave Starbucks an immediate, credible specialty tea offering without the years of development required to build a tea programme from scratch. Tazo became the official tea of Starbucks stores globally, bringing the brand to an entirely new scale of consumer exposure.

Under Starbucks, Tazo expanded rapidly — new blends, new formats (sachets, concentrates, ready-to-drink), and international distribution through the Starbucks retail network. The brand’s faux-mystical identity was retained and even amplified; Tazo became a genuine cultural presence in the US market, associated with the Starbucks experience and reaching consumers who would not otherwise have encountered a specialty tea brand.

The Unilever Sale (2017) and Steve Smith’s Departure

Steve Smith departed Tazo following the Starbucks acquisition — by 2009 he had founded Steven Smith Teamaker in Portland, a return to the serious, provenance-focused specialty tea model that Tazo had deliberately moved away from. Steven Smith Teamaker positions itself in the premium end of the US specialty tea market and has a strong reputation among enthusiasts.

In 2012, Starbucks acquired Teavana — a tea retail chain — for $620 million, signalling a much larger commitment to tea and the beginning of the transition away from Tazo as the primary in-store offering. The decision to sell Tazo became logical as Teavana absorbed the strategic role Tazo had played. Starbucks subsequently closed all Teavana standalone stores in 2017 and sold Tazo to Unilever that same year for $384 million — a 48-fold return on the original $8 million acquisition.

Under Unilever — which also owns PG Tips, Lipton, and other major tea brands — Tazo continues as a mainstream consumer tea brand in North America and selected international markets.

History

1994: Tazo Tea founded in Portland, Oregon by Steve Smith and co-founders; faux-mystical brand identity established as a deliberate marketing choice.
1999: Starbucks acquires Tazo for approximately $8 million; brand becomes Starbucks’ official tea, rapidly scaling consumer exposure across thousands of global locations.
1999–2012: Tazo is Starbucks’ primary tea offering; Chai Tea Latte becomes one of the chain’s most popular drinks; brand awareness grows enormously.
2009: Steve Smith departs and founds Steven Smith Teamaker in Portland, returning to serious single-origin specialty tea.
2012: Starbucks acquires Teavana for $620 million; transition away from Tazo as strategic tea brand begins; Tazo’s in-store role diminishes.
2017: Starbucks sells Tazo to Unilever for $384 million; Unilever continues the brand alongside its existing tea portfolio including PG Tips and Lipton.

Social Media Sentiment

General US tea consumers: Tazo is a familiar, nostalgic brand for a generation of US consumers who encountered it through Starbucks — the Chai Tea Latte in particular carries strong affective associations. It is not positioned as a serious specialty brand and is not discussed in enthusiast communities with particular reverence.
Specialty tea community: Tazo is regarded as a commercially successful mainstream brand rather than a genuine specialty tea producer; the faux-mystical branding is treated with affectionate amusement by knowledgeable consumers. Steve Smith’s post-Tazo work at Steven Smith Teamaker is generally held in much higher regard by enthusiasts.
Chai community: Tazo Chai concentrate and the Starbucks Chai Tea Latte are cited as the mainstream US introduction to the chai format for millions of consumers; the blend is considered an accessible starting point, with more authentic masala chai available from specialty brands.
Brand acquisition discussions: The Tazo story ($8 million to $384 million) is frequently cited in food brand and startup communities as one of the most successful specialty food brand acquisitions in US history.

Last updated: 2026-06

Related Terms

Research

Tazo Tea founding and brand identity: Portland 1994, Steve Smith, faux-mystical marketing approach.
Summary: Documents the founding of Tazo in Portland in 1994, Steve Smith’s background in US specialty tea (Stash Tea), the deliberate choice of faux-mystical invented-history branding as a market differentiation strategy, and the development of the core blend range — Zen, Calm, Passion, Awake, and the Chai concentrate.

Starbucks acquisition of Tazo Tea (1999): transaction details and strategic rationale.
Summary: Covers the approximately $8 million acquisition of Tazo by Starbucks in 1999, the strategic rationale of acquiring a credible specialty tea brand rather than building a programme internally, Tazo’s role as Starbucks’ official tea and the contribution of the Chai Tea Latte to both brands’ commercial success.

Starbucks sale of Tazo to Unilever (2017): $384 million transaction and brand valuation context.
Summary: Documents the 2017 sale of Tazo to Unilever for $384 million, the preceding acquisition of Teavana in 2012 as the strategic shift that made Tazo disposable to Starbucks, and the financial arc from a $8 million purchase to a $384 million sale as an illustration of premium tea’s value growth in US consumer culture over 18 years.

Steve Smith: Stash Tea, Tazo, and Steven Smith Teamaker — Portland specialty tea lineage.
Summary: Traces Steve Smith’s career through Stash Tea, the founding of Tazo Tea in 1994, his eventual departure following the Starbucks acquisition, and the founding of Steven Smith Teamaker in Portland in 2009 as a return to serious single-origin specialty tea — illustrating the tension between the commercial mainstream and the specialty end of the US tea market.