(Adds analyst comment, details; updates share activity)
By Lisa Baertlein
LOS ANGELES, March 19Starbucks Corp
opened the first store in its new Evolution Fresh juice bar
chain on Monday, its biggest move outside coffee aimed at
boosting the company's position in the $50 billion health food
The juice bar business is, however, fragmented and intensely
competitive and some analysts say the Evolution Fresh shops
could have lower margins than Starbucks' coffee shops.
With Starbucks yet to detail how many juice bars it plans to
open, the popularity of its first shop, located in an upscale
shopping area in Bellevue, Washington, an affluent city just
east of Seattle, will be closely watched.
"Mixologists" at the new shop dispense a variety of juices -
including apple, coconut water, carrot and beet - from taps to
create "hand crafted" concoctions with names like "sweet burn"
and "field of greens". The 8-ounce drinks sell for $4.99 and the
16-ounce drinks are priced at $7.99.
The juice bar also sells bottled Evolution Fresh fruit and
vegetable juices, smoothies and food, such as oatmeal, wraps,
salads and soups. The menu includes vegan and vegetarian options
and so-called super foods like kale and quinoa are well
Fresh fruit and vegetable juices have gained in popularity
in the United States with some health-conscious consumers using
them as meal replacements, while others drink them as part of
The world's biggest coffee chain bought Evolution Fresh for
$30 million in cash in November to get a piece of that business.
At the time of the purchase, Starbucks Chief Executive Howard
Schultz said successful independent juice bars have annual sales
of well over $1 million per unit.
Analysts have said that is a bit less than an average U.S.
Starbucks cafe but more than a typical store for rival Jamba Inc
, a publicly held juice and smoothie chain that recently
introduced new squeezed-to-order juice blends. That move from
Jamba came months after Starbucks and McDonald's Corp
introduced their own smoothies.
"Starbucks is one of the savviest companies in terms of what
they do, of probably any company," said John Sicher, editor and
publisher of Beverage Digest.
While Starbucks ranks among the nation's best companies at
marketing and Americans are willing to spend money on healthy
beverages, he declined to predict whether consumers would
embrace the concept.
Bernstein analyst Sara Senatore noted that some of
Starbucks' recent roll-outs - particularly its Via instant
coffee and K-cups coffee refills for Green Mountain Coffee
Roasters Inc's popular Keurig one-cup brewers - have
far exceeded analysts' expectations.
"The lesson from those is not to underestimate Starbucks'
ability to execute a concept very, very well," Senatore said.
The Evolution Fresh store opening comes just ahead of
Starbucks' annual shareholder meeting on Wednesday.
Investors in Seattle-based Starbucks have seen shares in the
company soar since it restructured by slashing costs and closing
nearly 1,000 stores around the world. The stock, which was
trading at just under $10 in February 2009, was trading above
$53 on Monday.
Starbucks' purchase of Evolution Fresh was in line with its
strategy to sell a broader range of products through its own
cafes, grocery stores and other retail outlets.
Since purchasing the company, Starbucks has expanded
distribution of its bottled juices beyond a handful of retailers
that included Whole Foods Market Inc to more grocery
Evolution Fresh bottled juices will be sold in Starbucks'
company-owned stores this year, replacing Naked Juice products
from PepsiCo Inc.
Pepsi and Coca-Cola Co, owner of Odwalla, are big
players in the $5 billion packaged juice category where
Evolution Fresh competes.
San Bernardino, California-based Evolution Fresh was started
by the founder of Naked Juice. It uses a heat-free,
high-pressure pasteurization process. The company says that
process retains more of the nutrients in the juice, compared
with the conventional heat pasteurization used by some rivals in
the refrigerated juice category.
Many independent juice bars do not pasteurize their
(Additional reporting by Martinne Geller in New York and
Anthony Bolante in Seattle; Editing by Edwina Gibbs and Richard