Starbucks Gets Into the Juice Business

Java Giant Buys Evolution Fresh for $30 Million

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Starbucks, the world's biggest coffee-shop operator, acquired juicemaker Evolution Fresh for $30 million and will open new retail stores selling juice next year to broaden its scope beyond coffee.

The cash purchase of Evolution closed today, Seattle-based Starbucks said in a statement. San Bernardino, California-based Evolution sells organic and fresh-squeezed juices at grocery stores in the U.S., according to its website.

Starbucks, which more than tripled its store count to 17,000 worldwide in the past decade, will "reinvent" the juice category by using its existing distribution channels to sell Evolution, Chief Executive Officer Howard Schultz said today on a conference call and webcast. "We're going to be able to draft off the success of the Starbucks brand," he said. The size and scale of the juice stores will be a "mirror image" of Starbucks cafes, he said.

Jamba, operator of the Jamba Juice chain, commoditized its business and has lost the aspects of a small company that appeal to customers, Mr. Schultz said.

Starbucks likely will take its time opening the juice outlets, said Bart Glenn, a Lake Oswego, Oregon-based analyst at D.A. Davidson & Co. "I don't think all of a sudden they're going to have thousands of juice stores," he said.

In 2008 and 2009 Starbucks shuttered hundreds of its cafes after overbuilding and a consumer-led recession prompted sales and profit declines. Mr. Schultz became CEO for the second time in 2008 to help turn around the flagging company. Revenue rose 9.3% to $11.7 billion worldwide in the year ended Oct. 2, the company said last week."Given the size of the Starbucks business, I don't really see this being a needle-mover for the next couple of years," Mr. Glenn said.

The juice retail store, which also will sell food and other beverages, will most likely open in the middle of 2012, said Alan Hilowitz, a company spokesman. Mr. Schultz also said he's confident in the company's partnership with Green Mountain Coffee Roasters to sell K- Cup single-serve coffee pods. Grocery and mass retail stores began selling Starbucks brand K-Cups earlier this month.

-- Bloomberg News

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