Peet's Coffee & Tea, Inc. (Nasdaq:PEET), a specialty coffee roaster and marketer, yesterday announced an agreement with Larry's Markets of Seattle, Wash., one of the premier grocery operators in the Pacific Northwest. Under the agreement, Larry's will convert its Lorenzo's Coffee kiosks to Peet's Coffee & Tea branded stores inside each of its six locations.

Peet's will sell fresh whole bean coffees, hand-selected teas and brewed coffee and tea beverages from each branded store, which will be managed and operated by Peet's employees. The goal of the partnership is to provide Larry's customers with an authentic Peet's experience that meets the high quality and standards of every Peet's retail store. The grand opening of the six locations is scheduled for September 2001.

"We are extremely excited and proud to be entering the Seattle market with a quality partner such as Larry's Markets," commented Chris Mottern, chief executive officer and president of Peet's. "Seattle is already a strong Peet's market, with a solid base of customers through our mail order business. With this partnership, Peet's gains access to potential customers who are attracted to the outstanding products and customer service offered by Larry's."

"At Larry's Markets, we are constantly looking to provide our customers with not only the best products and customer service possible, but also with exciting and new products that give them something original to enjoy," said Mark McKinney, president and chief executive officer of Larry's Markets. "We know that Peet's Coffee & Tea will bring our customers the freshest and highest quality coffee and unique tea products. We are excited that Peet's will be entering the Seattle market through our partnership."

The partnership with Larry's Markets supports Peet's multi-channel business strategy that targets customers such as premier grocery operators, fine restaurants and office accounts. Peet's is highly selective in developing its wholesale partners. These partners must adhere to the company's strict freshness and brewing standards to ensure that their customers enjoy Peet's coffees and teas at their best.

About Peet's Coffee & Tea, Inc.

Founded in Berkeley, Calif. in 1966, Peet's Coffee & Tea, Inc. is a specialty coffee roaster and marketer of fresh, deep-roasted whole bean coffee for home and office enjoyment. Peet's fresh-roasted coffee, hand-selected tea and related items are sold in several distribution channels including specialty grocery and gourmet food stores, online and mail order, office and restaurant accounts and 59 company-owned stores in four states. Peet's is committed to strategically growing its business and to maintaining a unique culture and focus on customer satisfaction. For information about Peet's Coffee & Tea, visit www.peets.com or call 1-800-999-2132. Peet's Coffee & Tea, Inc. shares are traded under the symbol PEET.

About Larry's Markets

Family-owned for over 50 years, Larry's Markets are considered the first and foremost of premier grocery operators in the Pacific Northwest with a tradition of superior customer service and high quality products at competitive prices. Their commitment to the community includes buying fresh produce from local growers, supporting Northwest food producers and wine makers and offering environmentally friendly foods and household products. Larry's Markets fosters relationships with small purveyors such as Wilcox Farms Dairy, Snoqualmie Farms Ice Cream and Full Circle Farms Organic Vegetables. Larry's Markets are locally and family owned since 1945. For more information on Larry's Markets, visit them on the web at www.larrysmarkets.com.

This press release contains statements that are not based on historical fact and are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Because of the uncertainties inherent in these forward-looking statements, our actual results could differ materially form those set forth in forward-looking statements. The Company's estimates regarding our operations and financial results are based on currently available operating, financial and competitive information. Actual future results and trends may differ materially depending on a variety of factors including but not limited to, coffee and other raw material prices and availability, successful execution of strategies and plans for expansion, competition, general economic conditions, the popularity of specialty coffee due to consumer trends, health factors or other issues, as well as other risk factors as described more fully in the Company's filings with the Securities and Exchange Commission, including our final prospectus filed on January 25, 2001.