Starbucks to open U.S. juice bars in 2012

Thu Nov 10, 2011 3:38pm EST

Customers are seen at a Starbucks coffee store which displays their old logo in Paris March 8, 2011.  REUTERS/Regis Duvignau

Customers are seen at a Starbucks coffee store which displays their old logo in Paris March 8, 2011.

Credit: Reuters/Regis Duvignau

(Reuters) - Starbucks Corp (SBUX.O) plans to start a chain of juice bars starting next year, venturing into territory staked out by Jamba Inc (JMBA.O), in its biggest-ever expansion beyond coffee.

The world's largest coffee chain, which has made no secret of its ambitions to expand beyond its staple business, said on Thursday it bought juice company Evolution Fresh for $30 million in cash.

Chief Executive Officer Howard Schultz hopes buying Evolution Fresh, whose products are sold by a handful of retailers including Whole Foods Market Inc (WFM.O), will give the company a meaningful foothold in the estimated $50 billion health food market.

The first juice bars will open on the U.S. West Coast in early to mid-2012, but the company would not say how many were planned. The chain's name has not been revealed and it was not immediately clear whether Starbucks' familiar Mermaid logo -- which recently dropped the word "coffee" from its design -- would be displayed by the new chain.

Schultz said the moves announced Thursday were the first of many things the company planned for the so-called health and wellness market.

"We think we can build a major business," he told reporters on a conference call.

Shares in Jamba dipped 0.6 percent to $1.65 after the announcement. Stock in Starbucks, which is up about 40 percent over the last 12 months, were up 1.1 percent at $43.43 on Thursday afternoon on the Nasdaq.

Seattle-based Starbucks recently has been selling a broader range of branded products through grocery stores and other retail outlets.

San Bernardino, California-based Evolution Fresh sells fruit and vegetable juices and was started by the founder of Naked Juice. It uses a heat-free, high-pressure pasteurization process that it says retains more of the nutrients in its products compared with using conventional heat pasteurization.

Its products are currently sold in Whole Foods and PCC Natural Markets stores on the U.S. West Coast. Starbucks plans to expand distribution into additional retail channels and sell the products in its own retail stores.

Over time, Starbucks said it plans to invest in Evolution Fresh's facility upgrades, as well as its distribution business.

Starbucks expects Evolution Fresh to operate at a modest loss in fiscal 2012 before breaking even in fiscal 2013. The company, which returned to profit growth in 2010 after a painful two-year restructuring, said its forecasts for fiscal 2012 are unchanged as a result of the acquisition.

(Editing by Edwin Chan and Gerald E. McCormick)

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Comments (2)
LordPadriac wrote:
Awesome. Soon my juice will be just as much out of my price range as my coffee became and probably turn into the same mass produced, sugary, milkshake version of itself, mess of a concoction at the same time. Of course ordering a cup of juice will now also require me to master an entirely new psedo language instead of allowing me to order in English without even the option pressing ’1′. And trying to order a “simple” orange juice will probably get you the same blank stare as having the temerity to ask for a plain, simple, no cream, no sugar, no mocha, no shot of whatever gawd-awful thing was shipped for the holidays, cup of joe.

Nov 10, 2011 3:08pm EST  --  Report as abuse
Mariah wrote:
Wow, a little cynical, are we? Lighten up! It’s just juice. It’s not the end of the world. Hey, they’ll be building new stores and bringing in jobs. And having a little fun with juice and smoothies. Next up, baby bashing????

Nov 10, 2011 9:35pm EST  --  Report as abuse
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