Starbucks Looks To Reinvent Juice Segment With Acquisition

After buying Evolution Fresh Inc., Starbucks vows to create a never before seen retail model as it introduces a new health and wellness business based around the juice brand.

Starbucks Corp. has acquired the San Bernadino, Calif.-based juice business Evolution Fresh Inc. for $30 million as part of a larger effort to move beyond just offering coffee and into a health and wellness initiative, the Boston Globe reported.

Starbucks aims to “reinvent” the $1.6 billion super-premium juice segment, opening a new chain of health and wellness stores in 2012 that will feature Evolution products, such as juices and simple foods.

Starbucks noted its plans are for a retail model that has never been seen before.

“We are not just acquiring a juice company,” said Starbucks CEO Howard Schultz. “We are using this acquisition to position ourselves, in a broad way, to build a multibillion health and wellness business over time.”

The move comes as consumers demand healthier products and its competitors McDonald’s and Dunkin’ Donuts are stepping up the competition.

Evolution was started by the founder of Naked juice, and currently makes fresh fruit and vegetable juices sold at Whole Foods, Safeway, Costco and other select retailers on the West Coast. Evolution still makes its juice fresh squeezed from fruits and vegetables rather than using pureed or powdered ingredients, and relies on a process called high-pressure pasteurization to make the juice without heating it. Starbucks hopes this will give it a competitive edge over juice makers such as Odwalla or Naked juice, which it currently carries in its stores, the Boston Globe reported.

The new chain is expected to launch on the West Coast and be roughly the size of a traditional Starbucks café. In addition, Starbucks also plans to upgrade some of its existing stores to make room for the Evolution products and distribute Evolution’s products to other retailers.

Schultz dismissed analyst concerns that Starbucks might follow after Jamba Juice, which has struggled with sales. He said Starbucks will be creating an entirely different type of store. “We understand the beverage business better than anyone else,” Schultz told investors Thursday. “We are replicating the understanding we have about beverage capability and adding the theater and romance (of our coffee stores).”

 

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