By Julie Jargon
November 10, 2011
Starbucks Corp. is branching out in a new
direction with the acquisition of Evolution Fresh Inc., a premium juice brand
carried in West Coast supermarkets.
The Seattle-based coffee giant,
which is expected to announce on Thursday that it just closed the $30 million
all-cash deal, is trying to do with juice what it has done with coffee, by
turning a commodity-like product into an experience. To do that, the company
plans to open a separate retail concept centered around juice, as well as
health foods, next year, a company spokesman says.
The company has not yet decided
how many juice bars there will be, where the first ones will open or whether
they will carry the Starbucks logo. Starbucks earlier this year debuted a new
logo featuring a larger siren figure without the words "Starbucks coffee,"
a sign of the company's ambitions to move beyond its signature coffee shops.
Starbucks also is seeking to
become more of a consumer products company, selling more items in grocery
stores as a way to boost overall sales. Starbucks says its consumer products
business will one day rival its coffee shops, in terms of sales.
Evolution Fresh, started by the
founder of Naked Juice, is a line of fresh fruit and vegetable juices made
using a process called high pressure pasteurization, in which the juice isn't
heated, thus helping it retain the nutrients and flavors. The company peels,
presses and squeezes the produce itself rather than using pureed or powdered
fruits and vegetables. The brand, which will not feature the Starbucks logo, is
currently carried in Whole Foods, Safeway,
Costco and Trader Joe's stores on the West Coast. Starbucks plans to broaden
distribution of the juice into other supermarkets and to begin carrying them in
Starbucks stores starting next year.
(Jimmy Rosenberg, the Evolution
Fresh founder who also founded Naked Juice, is no longer involved in Naked
Juice. Starbucks currently carries Naked Juice in its stores but will replace
it with Evolution Fresh juice.)
This is the first packaged
product Starbucks has acquired since 2005, when it bought Ethos Water, a brand
of bottled water carried only in Starbucks stores, for an undisclosed sum. In
1999, Starbucks acquired Tazo Tea Company, also for an undisclosed sum, a line
of loose leaf, bagged and bottled teas sold in both Starbucks stores and
supermarkets.
"The acquisition of
Evolution Fresh supports our growth strategy to innovate with new products,
enter new categories, and expand into new channels of distribution," Jeff
Hansberry, president of Channel Development for Starbucks, said in a statement.
"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."
On a conference call, Starbucks
Chief Financial Officer Troy Alstead said prior acquisitions have ranged in
size from less than $10 million to less than $100 million, putting its
acquisition of Evolution Fresh in the mid-range.
Starbucks Chief Executive Howard
Schultz said, "Even though this is a small acquisition in size, it is a
significant and strategic decision for the company."
San Bernardino, Calif.-based
Evolution Fresh will be a wholly owned subsidiary of Starbucks. The deal does
not change Starbucks's 2012 financial targets, disclosed on Nov. 3 when the
company reported fourth-quarter and year-end earnings.
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