Starbucks goes beyond coffee with first juice bar

A customer walks past the Starbucks-owned Evolution Fresh juice bar on its opening day in Bellevue, Washington March 19, 2012. REUTERS/Anthony Bolante

(Reuters) - Starbucks 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 sector.


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 represented.

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 "cleansing" diets.

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. Read More

Posted on March 20, 2012 and filed under Best Practices.