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TheStreet Open House

Starbucks' Tea Idea Will Fall Flat -- Now Bring Back the Sonics

SEATTLE (TheStreet) -- You'd think that I would be biased against Starbucks (SBUX) CEO Howard Schultz, former owner of the Seattle SuperSonics. I'm a sports fan living in the Northwest, still angry that Schultz shipped our team away to Oklahoma City. Now we get to watch our Sonics compete for a NBA championship from somewhere in the Midwest. 

As for his coffee, Schultz has me for life. It's a rare day that I don't have my Venti-Vanilla Mocha. (Please, don't judge me.) I love how you can count on the taste of that particular drink to be the same in Seattle as it is in Phoenix, or Oklahoma City. Like clockwork, I can always depend on sitting in a loungy earth-toned chair with just a hint of pretentious ambiance, drinking my gallon of caffeine while catching up on all the Facebook/Twitter posts I've missed during the previous few hours.

It's my moment of Zen. Also, how can you not respect a guy who has built an empire out of a commodity that is largely water?

Starbucks recently opened its 20,100th store. That's quite a footprint, as the marketing executives like to say. There are few markets on the globe that haven't been sucked into Starbucks' caffeinated vortex of awesomeness. Just think, right now there are people in Europe, Asia and Africa all ordering the very same drink I did at a Starbucks store nearly identical to my own. It's nothing short of global peace through caffeine. 

But while Starbucks' net profit rose a handsome 11% during its recently completed fiscal second-quarter, I have to question the company's move into selling tea. Irish Coffee is one thing -- I do like the proposal to start serving alcohol -- but I can't get my head around the mainstreaming of tea. Sure, Oprah Winfrey has been touting the benefits of tea from her many public platforms, but I can't image that there are really aren't enough tea drinkers out there to make it sensible for a global retailer like Starbucks to get into that business. 

When Schultz spun coffee into a way of life, it was something people that already had wide appeal; it was simply hard to find a good cup of coffee once anyone left an urban center, or the college neighborhood of any urban center. Schultz made it better for the mainstream and most importantly, created a culture around it. When it comes to tea, though, Schultz appears to be assuming that Americans will change their drinking tastes or that tea drinkers will come out of the woods for a daily cup.

Howard, the U.S. is just not a tea-drinking nation. Even those who drink tea are usually coffee drinkers as well. There's a good chance the market share that Starbucks has identified is the international tea world -- but such a move risks cannibalizing coffee sales, will take away from their coffee sales. Will anyone pay $5.13 for a cup of tea along the lines of my Venti-Vanilla Mocha? Doubtful.

Pour me a coffee, my friendly barista. Good luck, Howard. And while you're at it, can you make a call to the NBA to get Seattle a new team? Maybe even the Clippers?

Starbucks shares have lost 9.5% in 2014, trailing the S&P 500 Index  which has gained 1.6%. 

At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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