Starbucks Ropes in Celebrity Partner - Analyst Blog

At its recently held annual meeting of shareholders, Starbucks Corporation SBUX announced an unusual collaboration with global media leader and philanthropist Oprah Winfrey, to create Teavana Oprah Chai Tea. At the meeting, Howard Schultz, chairman, president and chief operating officer CEO of Starbucks also discussed the company's plans to increase focus on tea and its aim to double market cap.

Starbucks/ Oprah Team Up

Teavana Oprah Chai Tea will be available at all Starbucks and Teavana stores from April 29. The product has been created in collaboration with Oprah Winfrey who has personally crafted the beverage with Teavana's leading teaologist. Starbucks will donate a portion of the proceeds from the sales of the chai drink to the Oprah Winfrey Leadership Academy Foundation which provides funding for education of the youth.

Focus on Tea

Starbucks believes tea is the world's second most widely consumed beverage and offers a large scope for innovation. A year after it acquired tea retailer Teavana in Dec 2012, Starbucks plans to further exploit the$90 billion global tea market.

The company has already opened nearly 40 new mall-based Teavana stores and has plans to open more than 20 additional stores through the rest of fiscal 2014. Also, Starbucks has opened two Teavana tea bars, one each in New York City and Seattle, which offer an assortment of handcrafted tea beverages, premium loose leaf teas, tea-inspired food offerings, and tea merchandise. These products will soon be available in Starbucks stores as well. Moreover, Starbucks plans to open tea bars in Chicago, Los Angeles, and additional locations in New York City later this year.

As competition grows in the coffee market, Starbucks is trying to sell non-coffee products like juices, energy drinks, food, and tea to expand sales in its U.S. stores.

Double Market Cap

The company is aiming to double its market capitalization from $57 billion at present to more than $100 billion as it consistently delivers strong revenues and profits.

Updated iPhone App Launched

Starbucks launched its previously announced, updated mobile app for Apple, Inc.'s AAPL iPhone as it aggressively expands its digital business. The new app includes a digital tipping feature that will allow customers to leave tips to Starbucks baristas from the app.

Other Stocks to Consider

Starbucks carries a Zacks Rank #3 (Hold). Better-ranked stocks in the retail-restaurants sector include The Wendy's Company WEN and  Buffalo Wild Wings Inc. BWLD. Both these stocks hold a Zacks Rank #2 (Buy).