Starbucks juices up its future with plan to open health stores
Starbucks paid $30 million in cash to acquire juice company Evolution Fresh, which it plans to feature in new stores it will open next year focused on health and wellness.
Seattle Times business reporter
1994: Coffee Connection, Boston-based roaster and chain of 23 coffee shops: Undisclosed price
1998: Tazo, a tea company based in Portland: $8.1 million
1998: Pasqua, chain of 56 coffee shops in California and New York: $9 million
1999: San Francisco-based Hear Music: $10 million
2003: Seattle's Best Coffee and Torrefazione Italia: $72 million
2005: Ethos Water: Undisclosed price
2008: Coffee Equipment Co., Ballard-based maker
of Clover brewing system: Undisclosed price
2011: Evolution Fresh: $30 million
Starbucks paid $30 million Thursday to acquire a juice company called Evolution Fresh, which it plans to feature in new stores it will open next year focused on health and wellness.
"Even though this is a small acquisition in size, it's a significant strategic decision and direction for the company," CEO Howard Schultz said in a conference call. "Our intention is to reinvent this category in the same tonality that we have reinvented over the last 40 years the basic commodity of coffee."
Founded by a creator of Naked Juice, Evolution squeezes its own raw fruits and vegetables at its juicery in San Bernardino, Calif. The juice is sold in West Coast stores, including Whole Foods and PCC Natural Markets.
Starbucks will roll the juice out in its stores nationwide and plans to include it in a health-and-wellness retail concept it will debut in early to mid-2012.
The chain, which has more than $1 billion on hand, paid cash for Evolution.
Schultz said Starbucks has been working on the retail concept for about six months. The stores will open first on the West Coast and be about the size of a Starbucks store.
"We feel strongly that we understand the beverage business perhaps better than anyone else who's been in small-box retail," Schultz said.
Although SymphonyIRI Group figures the super-premium juice market is worth $1.6 billion, the national chain Jamba Juice has run into trouble in recent years.
"Jamba Juice, I think, drifted into an area of commoditizing their business and no longer standing for what the independents have done so well," Schultz said.
Some independent juice stores have volumes over $1 million, he said, because of loyal followers including people who drink juice as meal replacements and who do cleanses.
Starbucks also is working on a "unique food opportunity" Schultz did not want to be specific about for competitive reasons.
The company declined to say how many stores it will open at first, or where on the West Coast.
"We suspect that Starbucks will take a patient approach," analyst David Tarantino at Robert W. Baird & Co. wrote in a research note Thursday.
The chain has proved it can be patient in rolling out new store concepts.
When it experimented in 2009 with independent-looking cafes that did not carry the Starbucks name, it opened only two before deciding the unmarked Starbucks were not a good idea.
Similarly, the company is adding wine and beer to menus at a very gradual pace.
It began at one of the unmarked Starbucks in Seattle a couple of years ago, and now serves alcohol at just a handful of stores.
Shares of Starbucks rose 57 cents to close at $43.52 Thursday.
It has traded between $44.69 and $29.45 a share during the last year.
Melissa Allison: 206-464-3312 or email@example.com. On Twitter @AllisonSeattle.