Does Starbucks Have the Juice to Take on Jamba?

Coffeehouse powerhouse acquires juice maker; will roll out retail store concept in 2012

SEATTLE -- Starbucks Coffee Co. has acquired Evolution Fresh Inc., a maker of premium juice products, for $30 million in cash. With this acquisition, Starbucks said that it "will reinvent the $1.6 billion super-premium juice segment," its next step in entering the health and wellness sector. Starbucks plans to launch a retail concept in early-to-mid 2012. Such a concept, backed by Starbucks, could pose a threat to Jamba Juice's retail dominance.

Starbucks plans to expand beyond Evolution Fresh's current distribution into additional channels, as well as begin to make Evolution Fresh products available in Starbucks company-owned retail stores providing nationwide presence and awareness. The company will look to make investments over time for upgrades to existing facilities as well as expansion needed for the broadened distribution of the product and for future growth plans for the brand.

Additionally, to showcase Starbucks growing portfolio, and as consumers become increasingly aware of Evolution Fresh, the company plans to introduce a new health and wellness retail concept which will further redefine the super-premium juice category and experience for consumers unlike any prior existing juice retail.

With Evolution Fresh, Starbucks will hopes to bring a unique, premium juice product to the marketplace through the creation of a differentiated brand and experience, similar to what Starbucks pioneered 40 years ago for coffee consumers. Leveraging Starbucks unique business model--retail footprint, CPG grocery distribution channels, digital breadth and in-depth customer engagement--the company said that it believes it will be able to take a currently undifferentiated, commoditized product segment and introduce a unique, high-quality product to redefine and grow the super-premium juice market.

"Our intent is to build a national health-and-wellness brand leveraging our scale, resources and premium product expertise. Bringing Evolution Fresh into the Starbucks family marks an important step forward in this pursuit," said Howard Schultz, Starbucks chairman, president and CEO. "Over the last year-and-a-half, we have looked comprehensively at possible opportunities and chose Evolution Fresh because it stood above anything else in terms of premium quality, nutrition and potential for growth."

Jeff Hansberry, president of channel development for Starbucks, added, "The acquisition of Evolution Fresh supports our growth strategy to innovate with new products, enter new categories, and expand into new channels of distribution. Not only are we able to tap into the $1.6 billion super-premium juice market, but the acquisition of Evolution Fresh marks an important milestone for us within the $50 billion health-and-wellness sector."

Evolution Fresh was started by the original founder of Naked Juice, Jimmy Rosenberg. He decided to get back into the premium juice business to found Evolution Fresh, one of the only true juiceries left in the industry that still cracks, peels, presses and squeezes its own raw fruits and vegetables, he said. Using technology new to juice called high-pressure pasteurization (HPP), Evolution Fresh is able to deliver one of the only "never heated" juice products for an increasingly larger number of its offerings, ensuring fresh tasting and nutritious juices.

Rosenberg is the newly named chief juice officer of Evolution Fresh. He will lead product innovation and development for the brand.

Based in San Bernardino, Calif., Evolution Fresh currently sells its products in retail stores including Whole Foods Markets and PCC, exclusively on the West Coast. Evolution Fresh will be a wholly owned subsidiary of Starbucks Corp.

Seattle-based coffee roaster and coffeehouse chain Starbucks has more than 17,000 retail locations in 55 countries, including more than 11,000 in the United States.