SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement

[_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to 14a-12

Peet's Coffee & Tea, Inc.
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(Name of Registrant as Specified In Its Charter)

Not Applicable
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

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[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
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PEET'S COFFEE & TEA, INC.
1400 Park Avenue,
Emeryville, California 94608-3520

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 24, 2001

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To The Shareholders Of Peet's Coffee & Tea, Inc.:

Notice Is Hereby Given that the Annual Meeting of Shareholders of Peet's
Coffee & Tea, Inc., a Washington corporation (the "Company"), will be held on
Thursday, May 24, 2001 at 10:00 a.m., local time at The Claremont Hotel, 41
Tunnel Road, Berkeley, California 94705, for the following purposes:

1. To elect two directors to hold office until the 2004 Annual Meeting of
Shareholders.

2. To ratify the selection of Deloitte & Touche LLP as independent auditors
of the Company for the year ending December 30, 2001.

3. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.

The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.

The Board of Directors has fixed the close of business on April 2, 2001 as
the record date for the determination of shareholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement thereof.

By Order of the Board of Directors

/s/ JAMES A. REYNOLDS

James A. Reynolds
Secretary

Emeryville, California
April 19, 2001

ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO
ENSURE YOUR REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS
POSTAGE PREPAID IF MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT
PURPOSE. EVEN IF YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON
IF YOU ATTEND THE MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE
HELD OF RECORD BY A BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT
THE MEETING, YOU MUST OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR
NAME.

PEET'S COFFEE & TEA, INC.
1400 Park Avenue,
Emeryville, California 94608-3520

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PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS

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April 19, 2001

INFORMATION CONCERNING SOLICITATION AND VOTING

General

The enclosed proxy is solicited on behalf of the Board of Directors of
Peet's Coffee Tea, Inc., a Washington corporation ("Peet's" or the "Company"),
for use at the Annual Meeting of Shareholders to be held on May 24, 2001, at
10:00 a.m., local time (the "Annual Meeting"), or at any adjournment or
postponement thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting. The Annual Meeting will be held at The Claremont
Hotel, 41 Tunnel Road, Berkeley, California 94507. The Company intends to mail
this proxy statement and accompanying proxy card on or about April 19, 2001, to
all shareholders entitled to vote at the Annual Meeting.

Solicitation

The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
card and any additional information furnished to shareholders. Copies of
solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of Common Stock
beneficially owned by others to forward to such beneficial owners. The Company
may reimburse persons representing beneficial owners of Common Stock for their
costs of forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or
other regular employees for such services.

Voting Rights and Outstanding Shares

Only holders of record of Common Stock at the close of business on April 2,
2001 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on April 2, 2001, the Company had outstanding and entitled to
vote 8,147,856 shares of Common Stock.

Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.

All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes and
abstentions. Brokers have discretionary authority to vote on proposals 1 and 2.
Abstentions will be counted towards the tabulation of votes cast on proposals
presented to the shareholders, but are not counted in determining whether a
matter has been approved.

Voting Via the Internet or by Telephone

Shareholders may grant a proxy to vote their shares by means of the
telephone or on the Internet.

The telephone and Internet voting procedures below are designed to
authenticate shareholders' identities, to allow shareholders to grant a proxy
to vote their shares and to confirm that shareholders' instructions have been
recorded properly. Shareholders granting a proxy to vote via the Internet
should understand that there may be costs associated with electronic access,
such as usage charges from Internet access providers and telephone companies,
that must be borne by the shareholder.

For Shares Registered in Your Name

Shareholders of record may go to http://www.eproxyvote.com/peets to grant a
proxy to vote their shares by means of the Internet. They will be required to
provide the company number and control number contained on their proxy cards.
The voter will then be asked to complete an electronic proxy card. The votes
represented by such proxy will be generated on the computer screen and the
voter will be prompted to submit or revise them as desired. Any shareholder
using a touch-tone telephone may also grant a proxy to vote shares by calling
1-877-PRX-VOTE (1-877-779-8683) and following the recorded instructions.

For Shares Registered in the Name of a Broker or Bank

Most beneficial owners whose stock is held in "street name" receive
instructions for granting proxies from their banks, brokers or other agents,
rather than using the Company's proxy card.

A number of brokers and banks are participating in a program provided
through ADP Investor Communication Services that offers the means to grant
proxies to vote shares by means of the telephone and Internet. If your shares
are held in an account with a broker or bank participating in the ADP Investor
Communications Services program, you may grant a proxy to vote those shares
telephonically by calling the telephone number shown on the instruction form
received from your broker or bank, or via the Internet at ADP Investor
Communication Services' web site at http://www.proxyvote.com.

General Information for All Shares Voted Via the Internet or By Telephone

Votes submitted via the Internet or by telephone must be received by 11:59
p.m. on May 23, 2001. Submitting your proxy via the Internet or by telephone
will not affect your right to vote in person should you decide to attend the
Annual Meeting.

Revocability of Proxies

Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 1400 Park
Avenue, Emeryville, California 94608-3520, a written notice of revocation or a
duly executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.

Shareholder Proposals

The deadline for submitting a shareholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2002 annual
meeting of shareholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission ("SEC") is December 20, 2001. Shareholders wishing to submit
proposals or director nominations that are not to be included in such proxy
statement and proxy must do so not later than February 23, 2002 nor earlier
than January 24, 2002. Shareholders are also advised to review the Company's
Amended and Restated Bylaws, which contain additional requirements with respect
to advance notice of shareholder proposals and director nominations.

A copy of the Company's Amended and Restated Bylaws is available without
charge upon written request to: Corporate Secretary, Peet's Coffee & Tea, Inc.,
1400 Park Avenue, Emeryville, California 94608-3520.

PROPOSAL 1

ELECTION OF DIRECTORS

The Company's Amended and Restated Articles of Incorporation and Amended and
Restated Bylaws provide that the Board of Directors shall be divided into three
classes, each class consisting, as nearly as possible, of one-third of the
total number of directors, with each class having a three-year term. Vacancies
on the Board may be filled only by persons elected by a majority of the
remaining directors unless the Board determines by resolution that such
vacancies shall be filled by the shareholders. A director elected to fill a
vacancy (including a vacancy created by an increase in the number of directors)
shall serve for the remainder of the full term of the class of directors in
which the vacancy occurred and until such director's successor is elected and
qualified.

The Board of Directors is presently composed of five members. There are two
directors in the class whose term of office expires in 2001, Christopher P.
Mottern and Laurence B. Mindel. Mr. Mindel has decided not to stand for re-
election. The Board of Directors has nominated Jean-Michel Valette to fill the
vacancy left by Mr. Mindel. If elected at the Annual Meeting, each of the
nominees would serve until the 2004 annual meeting and until his or her
successor is elected and has qualified, or until such director's earlier death,
resignation or removal.

Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld, for the
election of the two nominees named below. If any nominee should be unavailable
for election as a result of an unexpected occurrence, such shares will be voted
for the election of such substitute nominee as management may propose. Each
person nominated for election has agreed to serve if elected, and management
has no reason to believe that any nominee will be unable to serve.

Set forth below is biographical information for each person nominated and
each person whose term of office as a director will continue after the Annual
Meeting.

Nominees for Election for a Three-year Term Expiring at the 2004 Annual Meeting

Christopher P. Mottern

Christopher P. Mottern has served as President and Chief Executive Officer
and as a director of the Company since May 1997. From 1992 to 1996, Mr. Mottern
served as President of The Heublein Wines Group, a manufacturer and marketer of
wines and now a subsidiary of United Distillers & Vintners Ltd. From 1986
through 1991, he served as President and Chief Executive Officer of Capri Sun,
Inc., one of the largest single-service juice drink manufacturers in the United
States. Mr. Mottern currently serves as a director, member of the compensation
committee and Chairman of the audit committee of Valley Media, Inc.

Jean-Michel Valette

Jean-Michel Valette has worked as an independent advisor to branded consumer
companies since June 2000. From August 1998 to May 2000, he was Chief Executive
Officer and President of Franciscan Vineyards, Inc., a premium wine company
with operations in California and Chile. Prior to joining Franciscan Vineyards,
Mr. Valette was a Managing Director of Hambrecht & Quist, Inc., a San
Francisco-based investment bank and venture capital company. Mr. Valette
currently serves as a director of Select Comfort, Inc.

THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.

Directors Continuing in Office Until the 2002 Annual Meeting

H. William Jesse, Jr.

H. William Jesse, Jr. has served as Chairman of the Board since January 2001
and as a director of the Company since August 1998. Mr. Jesse is Chairman of
Jesse.Hansen&Co, strategic and financial advisors to high-growth consumer
companies. He founded the firm in 1986, and served as its President and Chief
Executive Officer through March 1998. Since 1988, Mr. Jesse has served as
Chairman and Chief Executive Officer of Vineyard Properties Corporation, a
developer of wine grape vineyards. In 1998, he also served as interim Chairman
and Chief Executive Officer of Food.com, Inc. Mr. Jesse currently serves as a
director of the 3DO Company.

Gordon A. Bowker

Gordon A. Bowker has served as a director of the Company from 1971 to 1987
and from September 1994 to the present. Since 1986, Mr. Bowker has been a
principal and investor of Apanage Inc., a real estate development company. Mr.
Bowker has 20 years of experience with publicly traded and private companies as
an investor, founder, director and marketing advisor. He co-founded Starbucks
Coffee Company, Redhook Ale Brewery, Incorporated and Seattle Weekly.

Director Continuing in Office Until the 2003 Annual Meeting

Gerald Baldwin

Gerald Baldwin has served as a director of the Company since 1971 and as
Chairman of the Board from 1994 through January 2001. From 1971 until 1994, Mr.
Baldwin was President and Chief Executive Officer of the Company, which he co-
founded in 1971.

Board Committees and Meetings

During the year ended December 31, 2000, the Board of Directors held three
meetings and acted by unanimous written consent four times. The Board has an
Audit Committee and a Compensation Committee.

The Audit Committee meets with the Company's independent auditors at least
annually to review the results of the annual audit and discuss the financial
statements; recommends to the Board the independent auditors to be retained;
oversees the independence of the independent auditors; evaluates the
independent auditors' performance; and receives and considers the independent
auditors' comments as to controls, adequacy of staff and management performance
and procedures in connection with audit and financial controls. The Audit
Committee is composed of three directors: Messrs. Mindel, Jesse and Bowker. It
did not meet or act during such fiscal year. All members of the Company's Audit
Committee are independent (as independence is defined in Rule 4200(a)(15) of
the NASD listing standards). The Audit Committee has adopted a written Audit
Committee Charter that is attached hereto as Appendix A.

The Compensation Committee makes recommendations concerning salaries and
incentive compensation, awards stock options and stock purchase rights to
employees and consultants under the Company's stock option and stock purchase
plans and otherwise determines compensation levels and performs such other
functions regarding compensation as the Board may delegate. The Compensation
Committee is composed of two outside directors: Messrs. Mindel and Jesse. It
did not meet during such fiscal year but it did act by unanimous written
consent three times.

During the year ended December 31, 2000, each Board member attended all of
the meetings of the Board and of the committees on which he served, held during
the period for which he was a director or committee member, respectively.

Report of the Audit Committee of the Board of Directors*

The Audit Committee reviews the Company's financial reporting process on
behalf of the Board of Directors. Management is responsible for the Company's
internal controls and the financial reporting process. The independent auditors
are responsible for performing an independent audit of the Company's
consolidated financial statements in accordance with auditing standards
generally accepted in the United States of America and to issue a report
thereon.

In this context, the Committee has met and held discussions with management
and Deloitte & Touche LLP, the Company's independent auditors. Management
represented to the Committee that the Company's consolidated financial
statements were prepared in accordance with accounting principles generally
accepted in the United States of America, and the Committee has reviewed and
discussed the consolidated financial statements with management and the
independent auditors. The Committee discussed with the independent auditors
matters required to be discussed by Statement on Auditing Standards No. 61
(Communication With Audit Committees).

In addition, the Committee has discussed with the independent auditors, the
auditors' independence from the Company and its management, including the
matters in the written disclosures required by the Independence Standards Board
Standard No. 1 (Independence Discussion With Audit Committees).

In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors, and the Board has approved, that the
audited financial statements be included in the Company's Annual Report on Form
10-K for the year ended December 31, 2000, for filing with the Securities and
Exchange Commission. The Committee and the Board also have recommended, subject
to shareholder approval, the selection of the Company's independent auditors.

THE AUDIT COMMITTEE

H. William Jesse, Jr.
Laurence B. Mindel
Gordon A. Bowker

- --------
* The Report of the Audit Committee is not "soliciting material," is not deemed
"filed" with the SEC, and is not to be incorporated by reference into any
filing of the Company under the Securities Act of 1933 or the Securities
Exchange Act of 1934, whether made before or after the date hereof and
irrespective of any general incorporation language contained in such filing.

PROPOSAL 2

RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

The Board of Directors has selected Deloitte & Touche LLP as the Company's
independent auditors for the year ending December 30, 2001 and has further
directed that management submit the selection of independent auditors for
ratification by the shareholders at the Annual Meeting. Deloitte & Touche LLP
has audited the Company's financial statements since 1996. Representatives of
Deloitte & Touche LLP are expected to be present at the Annual Meeting, will
have an opportunity to make a statement if they so desire and will be available
to respond to appropriate questions.

Shareholder ratification of the selection of Deloitte & Touche LLP as the
Company's independent auditors is not required by the Company's Amended and
Restated Bylaws or otherwise. However, the Board is submitting the selection of
Deloitte & Touche LLP to the shareholders for ratification as a matter of good
corporate practice. If the shareholders fail to ratify the selection, the Audit
Committee and the Board will reconsider whether or not to retain that firm.
Even if the selection is ratified, the Audit Committee and the Board in their
discretion may direct the appointment of different independent auditors at any
time during the year if they determine that such a change would be in the best
interests of the Company and its shareholders.

The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and voting at the Annual Meeting will be
required to ratify the selection of Deloitte & Touche LLP. For purposes of this
vote, abstentions will not be counted in determining whether this matter has
been approved. Shares represented by executed proxies will be voted, if no
abstention or vote against is marked, for the ratification of Deloitte & Touche
LLP as the Company's independent auditors.

Audit Fees. During the year ended December 31, 2000, the aggregate fees
billed by Deloitte & Touche LLP, the member firms of Deloitte & Touche
Tohmatsu, and their respective affiliates ("Deloitte") for the audit of the
Company's financial statements for such year and for the nine months ended
October 1, 2000 and for the reviews of the Company's interim financial
statements were approximately $180,000.

Financial Information Systems Design and Implementation Fees. There were no
fees billed by Deloitte for professional services rendered for information
technology services relating to financial information systems design and
implementation for the year ended December 31, 2000.

All Other Fees. The aggregate fees billed by Deloitte for services rendered
to the Company, other than services described above under "Audit Fees" and
"Financial Information Systems Design and Implementation Fees," for the year
ended December 31, 2000 were approximately $450,000, including approximately
$400,000 for services provided in connection with the initial public offering
of the Company's Common Stock.

The Audit Committee has determined the rendering of the information
technology consulting services and all other non-audit services by Deloitte &
Touche LLP is compatible with maintaining the auditors' independence.

THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information with respect to the Company's
directors, nominees for election as director and executive officers:

Name Age Position
- ---- --- --------

Christopher P. Mottern.. 57 Chief Executive Officer, President and Director
William M. Lilla........ 45 Executive Vice President
Mark N. Rudolph......... 42 Chief Financial Officer, Vice President and Assistant
Secretary
Peter B. Mehrberg....... 42 Vice President, Business Development and General Counsel
James A. Reynolds....... 62 Vice President, Coffee and Tea, and Secretary
Deborah McGraw.......... 59 Vice President, Retail Operations
Bruce A. MacLaren....... 54 Vice President, Direct Delivery
Michael J. Cloutier..... 46 Chief Information Officer and Vice President, Information
Systems
Gerald Baldwin.......... 58 Director
Gordon A. Bowker........ 58 Director
H. William Jesse, Jr. .. 49 Director and Chairman of the Board
Jean-Michel Valette..... 40 Nominee for Election as Director

Set forth below is the biographical information for the Company's executive
officers.

Christopher P. Mottern (see Nominees for Election above).

William M. Lilla has served as Executive Vice President since December 2000.
He served as Vice President, Marketing and Strategy from April 1998 to December
2000. Before joining Peet's, Mr. Lilla was employed by The Heublein Wines Group
as Vice President of Strategy from October 1997 to April 1998, Vice President
of Marketing from September 1994 to October 1997, and Director of Marketing
from September 1993 to September 1994.

Mark N. Rudolph has served as Chief Financial Officer since September 1988.
He was appointed Vice President and Assistant Secretary in September 1994.

Peter B. Mehrberg has served as Vice President, Business Development since
October 1999 and as General Counsel since September 1994. Mr. Mehrberg served
as Vice President, Real Estate from June 1997 to 1999 and as Director of Real
Estate from July 1994 to June 1997.

James A. Reynolds has served as Vice President, Coffee and Tea since
February 1994, and as Secretary since February 1988. He also served as a
director from 1985 to 1997. He joined Peet's in 1984.

Deborah McGraw has served as Vice President, Retail Operations since October
1995. She has worked for Peet's in various capacities since 1983. Ms. McGraw
became a store manager in 1989 and was promoted to District Manager in March
1989, to Regional Director in January 1994, and to Director of Retail
Operations in September 1994.

Bruce A. MacLaren has served as Vice President, Direct Delivery since July
1999. From 1993 until February 1999, he served as Director of Information
Systems for The Heublein Wines Group.

Michael J. Cloutier has served as Vice President, Information Systems since
August 1999. He was a Systems Manager for Peet's from August 1999 to December
1999. Between October 1997 and August 1999, Mr. Cloutier founded and ran two
computer consulting businesses, 1.2.1 Solutions and Pleasanton Partners, Inc.
From April 1996 to October 1997, Mr. Cloutier served as Vice President,
Operations of M1 Software, Inc., a software development company. From 1993 to
April 1996, Mr. Cloutier was the Deputy Business and Strategic Planning Officer
at the Mare Island Naval Shipyard.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table indicates information as of April 2, 2001 regarding the
beneficial ownership of the Company's Common Stock by:

. Each person known to the Board of Directors to own beneficially 5% or
more of Common Stock;

. Each of the Company's directors and nominees for election as a director;

. Each of the named executive officers (identified in the Summary
Compensation table under "Executive Compensation"); and

. All of the Company's directors and executive officers as a group.

Information with respect to beneficial ownership has been furnished by each
director, officer or 5% or more shareholder, as the case may be. Except as
otherwise noted below, the address for each person listed on the table is c/o
Peet's Coffee & Tea, Inc., 1400 Park Avenue, Emeryville, California 94608-3520.
Applicable percentages are based on 8,147,856 shares outstanding on April 2,
2001, adjusted as required by the rules promulgated by the SEC.

Beneficial ownership is determined in accordance with the rules of the SEC
which generally attribute beneficial ownership of securities to persons who
possess sole or shared voting power or investment power with respect to those
securities and includes shares of Common Stock issuable pursuant to the
exercise of stock options or warrants that are immediately exercisable or
exercisable within 60 days of April 2, 2001. These shares are deemed to be
outstanding and to be beneficially owned by the person holding those options or
warrants for the purpose of computing the percentage ownership of that person,
but are not treated as outstanding for the purpose of computing the percentage
ownership of any other person. Unless otherwise indicated, the persons or
entities identified in this table have sole voting and investment power with
respect to all shares shown as beneficially owned by them, subject to
applicable community property laws.

Principal Shareholders Table

Number of Shares Percentage of
Name of Beneficial Owner Beneficially Owned Beneficial Ownership
- ------------------------ ------------------ --------------------

Directors and Executive Officers:
Gerald Baldwin........................ 1,041,697 12.78%
Christopher P. Mottern (1)............ 318,334 3.78%
H. William Jesse, Jr. (2)............. 263,580 3.15%
Gordon A. Bowker (3).................. 134,342 1.64%
Mark N. Rudolph (4)................... 115,977 1.40%
William M. Lilla (5).................. 80,000 *
Peter B. Mehrberg (6)................. 68,633 *
Laurence B. Mindel (7)................ 32,776 *
Jean-Michel Valette (8)............... 0 *
All directors and officers as a group
(13 persons)(9)...................... 2,419,987 26.21%
5% Shareholders:
The TCW Group, Inc. (10).............. 997,665 12.24%
865 South Figueroa Street
Los Angeles, California 90017

- --------
* Less than 1%.

(1) Includes 265,000 shares issuable upon the exercise of vested stock
options.

(2) Includes 200,000 shares issuable upon the exercise of a warrant issued to
Jesse.Hansen&Co and 22,776 shares issuable upon the exercise of vested
stock options.

(3) Includes 32,776 shares issuable upon the exercise of vested stock options.

(4) Includes 108,745 shares issuable upon the exercise of vested stock
options.

(5) Includes 67,500 shares issuable upon the exercise of vested stock options.

(6) Represents shares issuable upon the exercise of vested stock options.

(7) Represents shares issuable upon the exercise of vested stock options.

(8) Mr. Valette is a nominee for election as a director at the Annual Meeting.

(9) Includes 883,976 shares issuable upon the exercise of vested stock options
and 200,000 shares issuable upon the exercise of a warrant.

(10) Based on information contained in Schedule 13G jointly filed by The TCW
Group ("TCW") and Robert Day on February 12, 2001, TCW and Mr. Day (an
individual who may be deemed to control TCW) have shared power to vote or
to direct the vote, and shared power to dispose or direct the disposition,
of 997,665 shares. These shares are held by subsidiaries of TCW (Trust
Company of the West, TCW Asset Management Company, and TCW Investment
Management Company) and Robert Day (Oakmont Corporation). TCW and Mr. Day
disclaim beneficial ownership of such shares.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of the Company. Officers, directors and
greater than ten percent shareholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.

To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the year ended December 31, 2000, all Section
16(a) filing requirements applicable to its officers, directors and greater
than ten percent beneficial owners were complied with.

EXECUTIVE COMPENSATION

Compensation of Directors

Each non-employee director of the Company receives a fee of $1,000 per
meeting. In the year ended December 31, 2000, the total compensation paid to
non-employee directors was $9,000. The members of the Board of Directors are
also eligible for reimbursement for their expenses incurred in connection with
attendance at Board meetings in accordance with Company policy.

2000 Non-Employee Director Stock Option Plan

The Board adopted a 2000 Non-Employee Director Stock Option Plan (the
"Directors' Plan") effective upon the completion of the Company's initial
public offering of its Common Stock. The plan provides for the automatic grant
of nonstatutory stock options to purchase shares of Common Stock to the
Company's non-employee directors. The aggregate number of shares of Common
Stock that may be issued pursuant to these options under the plan is 330,000
shares.

The Board of Directors administers automatic option grants to non-employee
directors. Options granted to non-employee directors will generally be subject
to the following terms:

. The exercise price of options granted will be equal to the fair market
value of the Common Stock on the date of grant;

. The options will have a term of no more than ten years from the date they
are granted;

. Options granted are not transferable other than by will, by the laws of
descent and distribution, by instrument to an intervivos or testamentary
trust, and by gift to a member of the optionee's immediate family and are
exercisable during the life of the optionee only by the optionee;

. An optionee may designate a beneficiary who may exercise the option
following the optionee's death; and

. An optionee whose service relationship with Peet's or any affiliate
(whether as a non-employee director of Peet's or subsequently as an
employee, director or consultant of either Peet's or an affiliate) ceases
for any reason may exercise vested options for the term provided in the
option agreement (3 months generally, 12 months in the event of a
disability, 18 months in the event of death).

Upon the completion of the Company's initial public offering, subject to
certain exceptions, each non-employee director was automatically granted an
option to purchase 25,000 shares of Common Stock, which options vest monthly
over 36 months. Any individual who becomes a non-employee director for the
first time after the Company's initial public offering will automatically
receive this initial grant upon being elected or appointed to the Board of
Directors. On the day following each annual meeting of Peet's shareholders,
commencing in 2001, any person who is then a non-employee director will
automatically be granted an option to purchase 10,000 shares of Common Stock,
provided that in the case of a non-employee director who had not served in that
capacity for the entire period since the preceding annual meeting, then the
number of shares subject to the annual grant shall be reduced, pro rata, for
each full month the person did not serve during the previous period. Initial
grants and annual grants vest over a period of three years from their date of
grant.

Prior to the completion of the Company's initial public offering, the
Company from time to time granted options to non-employee directors under its
1993 Stock Option Plan, 1994 California Stock Option Plan and/or 1997 Equity
Incentive Plan. During 2000, the Company did not grant any options to non-
employee directors. As of April 2, 2001, no options had been exercised under
the Directors' Plan and no options had been exercised by a non-employee
director under the 1993 Stock Option Plan, the 1994 California Stock Option
Plan or the 1997 Equity Incentive Plan.

Mr. Jesse, a member of the Compensation Committee, is the Chairman of
Jesse.Hansen&Co, a strategic and financial advisor to Peet's pursuant to an
engagement letter dated as of December 9, 1996 between Jesse.Hansen&Co and
Peet's. The Company paid Jesse.Hansen&Co $60,000 ($5,000 per month) in fiscal
2000 for advisory services rendered.

Compensation of Executive Officers

The following table shows the compensation paid by the Company during the
fiscal years ended January 2, 2000 (fiscal year 1999) and December 31, 2000 to
the Chief Executive Officer and the other four most highly compensated
executive officers whose total salary and bonus exceeded $100,000. These
executive officers are referred to herein as the "named executive officers."

Summary Compensation Table

Annual Long Term
Compensation Compensation
------------------ ------------
Securities Other
Fiscal Salary Underlying Compensation
Name and Principal Position Year ($)(2) Bonus ($) Options ($)(3)
- --------------------------- ------ -------- --------- ------------ ------------

Christopher P. Mottern..... 2000 $350,000 -- -- $5,250
President and Chief 1999 $257,742 -- -- $5,000
Executive Officer

Gerald Baldwin............. 2000 $250,000 -- -- $5,000
Chairman of the Board (1) 1999 $250,000 $63,750 -- $5,000

William M. Lilla........... 2000 $164,000 -- 20,000 $4,550
Executive Vice President 1999 $160,712 $29,036 -- $3,635

Mark N. Rudolph............ 2000 $155,000 -- 20,000 $5,250
Chief Financial Officer 1999 $150,154 $27,418 -- $3,828
and Assistant Secretary

Peter B. Mehrberg.......... 2000 $144,803 -- 20,000 $5,250
Vice President, Business 1999 $136,692 $26,737 -- --
Development and General
Counsel

- --------
(1) Mr. Baldwin resigned as Chairman of the Board in January 2000 but remains a
director and remains employed in a reduced capacity by the Company.

(2) Includes amounts deferred at the election of the named executive officer
pursuant to a plan established under Section 401(k) of the Internal Revenue
Code.

(3) Amounts include matching 401(k) plan contributions. As permitted by rules
promulgated by the SEC, no amounts are shown for 1999 or, with respect to
certain "perquisites," where such amounts do not exceed the lesser of 10%
of bonus plus salary or $50,000.

STOCK OPTION GRANTS AND EXERCISES

Prior to the completion of the initial public offering, the Company granted
options to its executive officers under its 1993 Stock Option Plan, 1994
California Stock Option Plan and 1997 Equity Incentive Plan. Effective upon the
completion of the initial public offering, the Board adopted the 2000 Equity
Incentive Plan. As of April 2, 2001, options to purchase a total of 2,037,856
shares were outstanding under all of the Company's plans and options to
purchase 317,809 shares and 2,262 shares remain available for grant under the
2000 Equity Incentive Plan and the 1997 Equity Incentive Plan, respectively.
Although no further options will be granted under the 1993 Stock Option Plan
and 1994 California Stock Option Plan, options currently outstanding under
those plans will continue in effect under the terms of those plans until such
outstanding options are exercised or terminated in accordance with their terms.

The following tables show for the year ended December 31, 2000, certain
information regarding options granted to, and held at year end by, the named
executive officers. No named executive officer exercised any stock options
during the year ended December 31, 2000.

Option Grants in Last Fiscal Year

Individual Grants (1) Potential Realizable
--------------------- Value at Assumed
Number of % of Total Annual Rates of
Securities Options Stock Price Appreciation
Underlying Granted to Exercise Fair Market for Option Term(3)
Options Employees or Base Value on Expiration -------------------------
Name Granted in 2000 Price(2) Grant Date Date 0% 5% 10%
- ---- ---------- ---------- -------- ----------- ------------- ------- -------- --------

Christopher P. Mottern.. -- -- -- -- -- -- -- --
Gerald Baldwin.......... -- -- -- -- -- -- -- --
Mark N. Rudolph......... 20,000 7.1% $6.375 $7.50 Feb. 18, 2010 $22,500 $116,834 $261,561
William M. Lilla........ 20,000 7.1% $6.376 $7.50 Feb. 18, 2010 $22,500 $116,834 $261,561
Peter B. Mehrberg....... 20,000 7.1% $6.375 $7.50 Feb. 18, 2010 $22,500 $116,834 $261,561

- --------
(1) All options granted to the named executive officers during 2000 were non-
statutory stock options granted pursuant to the Company's 1997 Equity
Incentive Plan. Twenty-five percent (25%) of the shares represented by each
such grant vested immediately with the remaining shares vesting monthly
over the three (3) years following the date of grant (February 18, 2000),
provided the grantee continues to be employed by the Company.

(2) The exercise price per share of each option was equal to 85% of the fair
market value of the Common Stock on the date of grant as determined by the
Board of Directors after consideration of a number of factors, including,
but not limited to, the Company's financial performance, market conditions,
the preferred rights and privileges of shares of equity securities sold to
or purchased by outside investors, and third-party appraisals.

(3) The potential realizable value is calculated based on the terms of the
option at its time of grant (10 years). It is calculated assuming that the
fair market value of the Company's Common Stock on the date of grant
appreciates at the indicated annual rate compounded annually for the entire
term of the option, and that the option is exercised and sold on the last
day of its term for the appreciated stock price. No gain to the option
holder is possible unless the stock price increases over the option term.
The 5% and 10% assumed rates of appreciation are derived from SEC rules and
do not represent the Company's estimate or projection of future Common
Stock price.

Fiscal Year End Option Values

Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Options at
December 31, 2000 December 31, 2000(1)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------

Christopher P. Mottern..... 265,000 45,000 $530,000 $90,000
Gerald Baldwin............. -- -- -- --
Mark N. Rudolph............ 101,277 18,985 $297,331 $32,960
Peter B. Mehrberg.......... 61,115 18,985 $135,473 $32,960
William M. Lilla........... 57,916 22,084 $112,395 $40,105

- --------
(1) Assuming an $8.00 fair market value at December 31, 2000 equal to the
Company's initial public offering price.

Employment, Severance and Change of Control Arrangements

Change of Control Option Acceleration Plan

In November 1998, the Company established the Change in Control Option
Acceleration Plan. The plan provides for the acceleration of vesting of shares
covered by outstanding options held by all of the Company's employees in the
event of a change in control of the Company. Employees shall have the right to
exercise their options immediately before the change in control. If any
surviving or acquiring corporation assumes or substitutes such options, then to
the extent the options are not exercised before the change in control, such
assumed or substituted options shall be fully vested on and after the change of
control.

Key Employment Severance Plan

In November 1998, the Company adopted the Key Employee Severance Benefit
Plan to provide for the payment of severance benefits to the chairman of the
board (if employed by the Company) and chief executive officer, all employees
holding the position of vice president, and any other individual designated as
an eligible employee under a Key Employee Agreement. Under the plan, if the
employee's employment is, within 12 months after a change of control,
involuntary terminated without cause or voluntarily terminated for good reason
(a "change of control termination"), or the employee's employment is
involuntarily terminated without cause at any other time, the employee will
receive severance payments determined based on the employee's position and
terms of service:

. Two years of pay for the chairman of the board and the vice president of
coffee;

. One year of pay plus up to an additional one year of pay based on the
term of the employee's employment with the Company (two years of pay in
the event of a change of control termination) for the chief executive
officer;

. Six months of pay plus up to an additional 18 months of pay based on the
term of the employee's employment with the Company (one year of pay in
the event of a change of control termination) for each other vice
president; and

. Eight weeks of pay plus up to an additional 16 weeks of pay based on the
term of the employee's employment with the Company (six months of pay in
the event of change of control termination) for each designated eligible
employee.

In addition, the employee will receive an amount equal to the target bonus
amount for the employee for the relevant period in which the employee's
termination of employment occurs, prorated on a daily basis through the
termination date. The Key Employment Severance Plan also provides for certain
other benefits, including medical, disability and life insurance and
participation in outplacement programs.

Employment Agreements

In 1999 and 2000, the Company entered into Key Employee Agreements with each
of the named executive officers. These agreements provide for an initial base
salary of (i) $250,000 for Messrs. Baldwin and Mottern, (ii) $148,000 for Mr.
Rudolph, (iii) $155,000 for Mr. Lilla, and (iv) $134,000 for Mr. Mehrberg.
These salary amounts are subject to annual adjustment at the discretion of the
Compensation Committee of the Board of Directors. These agreements also provide
for an annual performance bonus based on the achievement of certain performance
objectives established by the Company, the amount of which bonus will be
determined by the Board of Directors in its sole discretion.

In addition, the agreements provide that if the executive is involuntarily
terminated by the Company without cause or if the executive voluntarily
terminates employment due to a "constructive termination," then the vesting of
all of the executive's outstanding options to purchase Common Stock of the
Company will accelerate and become fully exercisable upon the executive's
termination of employment. Under the agreements, executives also are entitled
to receive benefits to the extent provided under the Key Employee Severance
Benefit Plan and the Change of Control Option Acceleration Plan.

REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION*

The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. The Committee currently
consists of H. William Jesse and Laurence B. Mindel, neither of whom is an
employee of the Company. The Committee is responsible for setting the Company's
policies regarding compensation and benefits, and administering the Company's
employee stock option and stock purchase plans. In particular, the Committee
evaluates the performance of management and determines the compensation and
benefits of executive officers.

The Company's executive management program is designed (i) to attract and
retain outstanding executive officers capable of leading the Company to
fulfillment of its business objectives and (ii) to establish an appropriate
link between executive compensation and achievement of the Company's strategic
and financial performance goals, including the enhancement of shareholder
value. To that end, the Company's compensation program offers competitive
compensation opportunities that reward individual contributions as well as
corporate performance, based on the following policies and principles:

. Implementation of competitive pay practices, taking into account the pay
practices of other companies of comparable size and stage of development
with which the Company competes for talented executives.

. Emphasis on pay-for-performance as a component of compensation through
annual incentive programs designed to reward executives for achievement
of annual corporate financial performance goals.

. Use of equity-based incentives designed to motivate executives to focus
on long-term strategic objectives, to align the interests of management
and the shareholders and to provide opportunities for management to share
in the benefits that they achieve for the Company's shareholders.

For 2000, the Company's executive compensation program included the
following components: (i) base salary, (ii) annual incentives in the form of
cash bonuses and (iii) long-term incentives in the form of options to purchase
Common Stock. In establishing the size of an executive's opportunity for
incentive compensation, including bonus and stock options, the Committee takes
into account, in addition to general comparative information, the individual
performance of the executive and the financial performance and strategic
achievements of the Company during the prior year, the executive's level of
responsibility and potential to influence or contribute to the Company's
operations and direction and the quality of the executive's long-term strategic
decisions made during the year. The Committee generally does not base its
considerations on any single performance factor nor does it specifically assign
relative weights to factors, but rather considers a mix of factors and
evaluates Company and individual performance against that mix. To the extent
that qualitative factors are involved in the determination, the Committee must
necessarily make a subjective assessment of performance.

Base Compensation

Base salaries for executives were initially set in the key employment
agreements between the executives and the Company. These base salaries are
subject to annual review and adjustment. The Committee evaluates executive
performance on the basis of a variety of factors, both individual and
corporate, as well as level of responsibility, competitive factors and the
Company's internal policies regarding salary increases. For 2000, the base
salary of Christopher P. Mottern, the Company's President and Chief Executive
Officer, was increased to $350,000, largely reflecting his contributions toward
the Company's long-term strategic objectives, particularly
- --------
* The Report of the Compensation Committee is not "soliciting material," is not
deemed "filed" with the SEC, and is not to be incorporated by reference into
any filing of the Company under the Securities Act of 1933 or the Securities
Exchange Act of 1934, whether made before or after the date hereof and
irrespective of any general incorporation language contained in such filing.

his performance in leading the Company's expansion during a period of
restructuring. The base salaries paid to other executives were increased for
2000 by amounts ranging up to 16%, reflecting primarily changes in position and
responsibilities and their contributions to the Company in connection with the
execution of the Company's long-term strategic initiatives.

Annual Incentive Compensation

Annual bonuses are intended to reward executives for achievement of targeted
corporate financial performance goals. At a meeting in November 1999, the
Committee established the bonus potential for 2000 for each executive. Mr.
Mottern elected to receive accelerated stock options for achieving performance
goals in lieu of a cash bonus. The Compensation Committee met in December 2000
and approved a cash bonus plan for Mr. Mottern up to 40% of his annual salary
effective in 2001. Executive Officers excluding Mr. Mottern were eligible to
receive bonuses ranging from 25% to 30% of their respective base salaries if
the Company achieved certain financial and individual performance goals. The
goals, and the relative weights attributable to each, varied for each
executive. The financial goal required to fund the bonus program was based on
the achievement of a targeted level of pre-tax income established by the Board
in the Company's operating plan. With respect to any target, bonuses are
typically not paid unless the particular target is achieved in full, with the
result that a substantial portion of each executive's compensation is "at
risk." In all cases, the targeted financial goal for 2000 was not met, and,
other than the acceleration of Mr. Mottern's options discussed below, no
bonuses were awarded.

Long-Term Compensation

Stock options under the Company's stock option plans are used to underscore
the common interests of shareholders and management. Options are granted to
executives to provide a continuing financial incentive to maximize long-term
value to shareholders and to help make the executive's total compensation
opportunity competitive. Options may be tax-qualified or nonstatutory. Prior to
the Company's initial public offering, options typically had exercise prices
set at 85% of the fair market value of the Common Stock on the date of the
grant as determined by the Board of Directors. The Compensation Committee
believes that options granted after the Company's initial public offering will
typically have exercise prices set at the fair market value of the Common Stock
on the date of grant. In addition, because stock options generally become
exercisable over a period of several years, options encourage executives to
remain in the long-term employ of the Company. In 1997, Mr. Mottern was granted
an option to purchase 310,000 shares of Common Stock vesting over six years
ending in 2002. During 2000, 30,000 of these shares vested. Under Mr. Mottern's
Key Employee Agreement, the vesting of this option may be accelerated based on
Mr. Mottern's performance. In 2000, the Board elected to accelerate the vesting
of 45,000 of the shares covered by this option in lieu of a cash bonus. All
other executive officers were granted an option to purchase 10,000 shares
during 2000.

THE COMPENSATION COMMITTEE
H. William Jesse
Laurence B. Mindel

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

As noted above, the Compensation Committee consists of Messrs. Jesse and
Mindel. Mr. Jesse is also the Chairman of Jesse.Hansen&Co, which provides
strategic and financial advice to the Company pursuant to an engagement letter
dated as of December 9, 1996. The Company paid Jesse.Hansen&Co $60,000 ($5,000
per month) in fiscal 2000 for advisory services rendered. In addition, on May
23, 1997, the Company issued to Jesse.Hansen&Co a warrant to purchase up to
200,000 shares of Common Stock at an adjusted exercise price of $7.50 per
share.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

As discussed above under the "Compensation Committee Interlocks and Insider
Participation" and elsewhere in this proxy statement, Mr. Jesse, a member of
the Compensation Committee, is the Chairman of Jesse.Hansen&Co, to which the
Company paid $60,000 ($5,000 per month) in fiscal 2000 for advisory services
rendered.

Mr. Mindel, a member of the Compensation Committee, is also the Chairman of
Il Fornaio (America) Corporation, from which the Company purchased pastries and
other food products for $262,000 during fiscal 2000.

The Company believes that the terms of each of these transactions were at
least as favorable as the terms that would have been obtained from an
unaffiliated third party.

The Company has entered into indemnity agreements with certain officers and
directors. These agreements, among other things, provide for indemnification of
the Company's directors and executive officers for expenses, judgments, fines
and settlement amounts incurred by any such person in any action or proceeding
arising out of such person's services as a director or executive officer or at
the Company's request to the full extent permitted by Washington law. The
Company believes that these provisions and agreements are necessary to attract
and retain qualified persons as directors and executive officers.

OTHER MATTERS

The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.

By Order of the Board of Directors

/s/ JAMES A. REYNOLDS

James A. Reynolds
Secretary
April 19, 2001

A copy of the Company's Annual Report to the Securities and Exchange Commission
on Form 10-K for the year ended December 31, 2000 is available without charge
upon written request to: Corporate Secretary, Peet's Coffee & Tea, Inc., 1400
Park Avenue, Emeryville, CA 94608-3520.

APPENDIX A

CHARTER OF THE AUDIT COMMITTEE OF

THE BOARD OF DIRECTORS OF

PEET'S COFFEE & TEA, INC.

Purpose and Policy

The Audit Committee of the Board of Directors of Peet's Coffee & Tea, Inc.,
a Washington corporation (the "Company") shall provide assistance and guidance
to the Board of Directors in fulfilling its oversight responsibilities to the
Company's shareholders with respect to the Company's corporate accounting and
reporting practices as well as the quality and integrity of the Company's
financial statements and reports. The policy of the Audit Committee, in
discharging these obligations, shall be to maintain and foster an open avenue
of communication between the Audit Committee and the independent auditors, the
Company's financial management and internal auditors.

Composition and Organization

The Audit Committee shall consist of at least three members of the Board of
Directors. The members of the Audit Committee shall satisfy the independence
and experience requirements of the Nasdaq National Market. The members of the
Audit Committee will be appointed by and serve at the discretion of the Board
of Directors. The operation of the Audit Committee shall be subject to the
Bylaws of the Company as in effect from time to time and Section 23B.08.250 of
the Revised Code of Washington.

Responsibilities

1. In fulfilling its responsibilities, the Audit Committee believes that its
functions and procedures should remain flexible in order to address changing
conditions most effectively. To implement the policy of the Audit Committee,
the Committee shall be charged with the following functions:

2. To recommend annually to the Board of Directors the firm of certified
public accountants to be employed by the Company as its independent auditors
for the ensuing year, which firm is ultimately accountable to the Audit
Committee and the Board, as representatives of the Company's shareholders.

3. To review the engagement of the independent auditors, including the
scope, extent and procedures of the audit and the compensation to be paid
therefor, and all other matters the Audit Committee deems appropriate.

4. To evaluate, together with the Board, the performance of the independent
auditors and, if so determined by the Audit Committee, to recommend that the
Board replace the independent auditors.

5. To receive written statements from the independent auditors delineating
all relationships between the auditors and the Company consistent with
Independence Standards Board Standard No. 1, to consider and discuss with the
auditors any disclosed relationships or services that could affect the
auditors' objectivity and independence and otherwise to take, and if so
determined by the Audit Committee, to recommend that the Board take,
appropriate action to oversee the independence of the auditors.

6. To review, upon completion of the audit, the financial statements to be
included in the Company's Annual Report on Form 10-K.

7. To discuss with the independent auditors the results of the annual audit,
including the auditors' assessment of the quality, not just acceptability, of
accounting principles, the reasonableness of significant judgments, the nature
of significant risks and exposures, the adequacy of the disclosures in the
financial

A-1

statements and any other matters required to be communicated to the Committee
by the independent auditors under generally accepted auditing standards.

8. To evaluate the cooperation received by the independent auditors during
their audit examination, including any restrictions on the scope of their
activities or access to required records, data and information.

9. To confer with the independent auditors and with the senior management
of the Company regarding the scope, adequacy and effectiveness of internal
accounting and financial reporting controls in effect.

10. To confer with the independent auditors and senior management in
separate executive sessions to discuss any matters that the Audit Committee,
the independent auditors or senior management believe should be discussed
privately with the Audit Committee.

11. To review with counsel any significant regulatory or other legal
matters that could have a material impact on the Company's financial
statements, if, in the judgment of the Audit Committee, such review is
necessary or appropriate.

12. To investigate any matter brought to the attention of the Audit
Committee within the scope of its duties, with the power to retain outside
counsel and a separate accounting firm for this purpose if, in the judgment of
the Audit Committee, such investigation or retention is necessary or
appropriate.

13. To prepare the report required by the rules of the Securities and
Exchange Commission to be included in the Company's annual proxy statement.

14. To review and assess the adequacy of this charter annually and
recommend any proposed changes to the Board for approval.

15. To report to the Board of Directors from time to time or whenever it
shall be called upon to do so.

16. To perform such other functions and to have such powers as may be
necessary or appropriate in the efficient and lawful discharge of the
foregoing.

Meetings

The Audit Committee will hold at least one regular meeting per year and
additional regular or special meetings as its members deem necessary or
appropriate. Officers of the Company may attend these meetings at the
invitation of the Audit Committee.

Minutes and Reports

Minutes of each meeting of the Audit Committee shall be kept and
distributed to each member of the Audit Committee, members of the Board of
Directors who are not members of the Audit Committee and the Secretary of the
Company. The Chairperson of the Audit Committee shall report to the Board of
Directors from time to time, or whenever so requested by the Board of
Directors.

A-2

DETACH HERE

PROXY

PEET'S COFFEE & TEA, INC.

PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 24, 2001

The undersigned hereby appoints Christopher P. Mottern, William M. Lilla
and Mark N. Rudolph, and each of them, as attorneys and proxies of the
undersigned, with full power of substitution, to vote all of the shares of stock
of Peet's Coffee & Tea, Inc. to be held at The Claremont Hotel, 41 Tunnel Road,
Berkeley, California 94705 on Thursday, May 24, 2001 at 10:00 a.m. (local time),
and at any and all postponements, continuations and adjournments thereof, with
all powers that the undersigned would possess if personally present, upon and in
respect of the following matters and in accordance with the following
instructions, with discretionary authority as to any and all other matters that
may properly come before the meeting.

UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED "FOR"
ALL NOMINEES LISTED IN PROPOSAL 1 AND "FOR" PROPOSAL 2, AS MORE SPECIFICALLY
DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS
PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.

- ----------- -----------
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
- ----------- -----------

- ------------------- ------------------
Vote by Telephone Vote by Internet
- ------------------- ------------------

It's fast, convenient, and immediate It's fast, convenient, and your vote
Call Toll-Free on a Touch-Tone Phone is immediately confirmed and posted
1-877-PRX-VOTE (1-877-779-8683)

- ---------------------------------------- ----------------------------------------
Follow these four easy steps: Follow these four easy steps:

1. Read the accompanying Proxy Statement 1. Read the accompanying Proxy Statement
and Proxy Card. and Proxy Card.

2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/peet

3. Enter your 14-digit Voter Control 3. Enter your 14-digit Voter Control
Number located on your Proxy Card Number located on your Proxy Card
above your name. above your name.

4. Follow the recorded instructions. 4. Follow the instructions provided.
- ---------------------------------------- ----------------------------------------

Your vote is important! Your vote is important!
Call 1-877-PRX-VOTE Go to http://www.eproxyvote.com/peet

Do not return your Proxy Card if you are voting by Telephone or Internet

DETACH HERE

ZPTC?A
[X] Please mark
votes as in
this example.

MANAGEMENT RECOMMENDS A VOTE "FOR" THE NOMINEES FOR DIRECTOR LISTED BELOW, AND A VOTE "FOR" PROPOSAL 2.

1. To elect two directors to hold office until the 2002 FOR AGAINST ABSTAIN
Annual Meeting of Shareholders. 2. To ratify selection of Deloitte & [_] [_] [_]
Touche LLP, as independent auditors
Nominees: (01) Christopher P. Mottern of the Company for its fiscal year
(02) Jean-Michel Valette ending December 30, 2001.

FOR [_] [_] WITHHELD In their discretion, the proxies are authorized to vote
ALL FROM ALL upon such other business as may property come before the
NOMINEES NOMINEES meeting or any adjournments thereof.
MARK HERE [_]
[_] ___________________________________ FOR ADDRESS
(INSTRUCTION: To withhold authority to vote for any CHANGE AND
individual nominees write that nominee's name in NOTE BELOW
the space provided above) MARK HERE IF YOU PLAN TO ATTEND THE MEETING [_]

Please vote, date and promptly return this proxy in the
enclosed return envelope which is postage prepaid if mailed
in the United States.

Please sign exactly as your name appears hereon. If stock is
registered in the names of two or more persons, each should
sign Executors, administrators, Trustees, guardians and
attorneys-in-fact should add their titles. If a signer is a
partnership, please sign in partnership name by authorized
person.

Signature: _________________________________ Date: ____________ Signature: _________________________________ Date: ____________