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Getting All Juiced Up : Hot Sector of Retail Beverage Trade Hopes to Emulate Starbucks' Success

May 17, 1997|DIANE SEO | SPECIAL TO THE TIMES

Step inside and see frothy drinks with alluring names being whirred by shiny machines. Hear upbeat music playing in the background, and notice the vibrant interior colors that give off a warm, energetic feel.

Sound a lot like Starbucks? Well, it's not, but there's a reason it should.

After Starbucks revolutionized the coffee business by making cafe lattes a must for millions of Americans, the trendy juice bar has arrived with plans to make wholesome, fruit smoothies the country's new "it" beverage.

Capitalizing on the growing demand for nutritious foods, hundreds of juice bars have opened in California and beyond, spawning a multimillion-dollar industry.

Because Southern California's warm weather and penchant for healthy products make it a natural place for juice companies to thrive, new stores are opening every month, both mom-and-pop shops and stylish chain businesses with ambitious goals of expanding nationally.

"This is going to be bigger than frozen yogurt ever was," said Dan Titus, who consults with prospective juice bar owners through his Chino Hills business, the Juice Gallery.

Last year, total juice bar sales reached an estimated $340 million, according to figures Titus compiled from juice companies and other sources. As of January, California had 275 juice bars, far more than any other state and already too conservative a count, considering the many store openings in recent months, Titus said.

Indeed, consumers can't seem to get enough fresh-squeezed juices and slushy drinks with catchy names such as Razzmataz, Boysenberry Bliss and Femme Phenom. Smoothies are hardly new inventions, but today's health-conscious customers see them as a way of enhancing their well-being, not just as frozen treats. Ranging in price up to $5, juice bars offer fresh-blended drinks made from fresh fruits, juices, crushed ice and nonfat frozen yogurt or sherbet, along with a wide assortment of add-ins such as protein powder, calcium and Ginkgo biloba, which is said to boost memory.

"I love the whole idea," said Jennifer Koshatka, 27, who visits the Jamba Juice in Hancock Park at least three times a week for her favorite smoothie, Raspberry Rush. "They really are good, and they're so healthy. It's like having ice cream but not feeling bad about it."

Jamba Juice is the premier juice bar chain--even some of its competitors credit it with transforming the so-what smoothie into the hottest drink from San Jose to Santa Monica.

Jamba Juice earned its reputation by offering high-quality juice drinks at clean, cheerful outlets in prime commercial areas such as Beverly Hills' Rodeo Drive, Montana Avenue in Santa Monica and Pasadena's Colorado Boulevard.

"Getting good real estate is half the game," said David Robertson, president of Robeks, which has three Westside juice bars and two more under construction in West Los Angeles.

Along with Jamba Juice and Robeks, numerous other chains also have popped up in Southern California, including Juice Stop and Juice It Up, both based in Orange County, Arizona's Surf City Squeeze and the Danville, Calif.-based Fresh Blend. These companies have a total of 265 stores, 132 in Southern California. By the end of the year, they will add more than 60 new sites.

Almost every juice bar chain is undergoing rapid growth, but none has attracted as much attention from investors as Jamba Juice.

Indeed, Kirk Perron, Jamba Juice's founder and chief executive, said raising money has been the least of his company's challenges. Howard Schultz, Starbucks' founder and chief executive, personally invested in the company, along with several prominent venture capital groups, including Technology Venture Investors in Menlo Park, Trinity Ventures in San Mateo and San Francisco's Rosewood Capital.

"I came across one of the stores shortly after it opened in Palo Alto, and I had to fight my way to get to the line," said Bob Kagle, a general partner of Technology Venture Investors and Benchmark Capital, which has invested about $7 million in Jamba Juice.

"I wandered into the store and bought a smoothie, and of course it tasted delicious. But the thing that really captured my attention was that the people were real zealots about this thing. It seemed like everyone had a tremendous sense of affirmation about buying this smoothie."

Kagle praised the Jamba Juice team for maintaining tight control of its operations, staying attuned to consumer demands and being passionate about its products--factors that could catapult it to Starbucks-type success.

In the next five years, Perron plans to open Jamba Juice stores in every major U.S. market, including airports and college campuses. It is likely Jamba Juice will go public to fund its expansion goals, but Perron stresses that there is no time-line or guarantee.

"We would be public if we felt we were ready," he said.

Because the competition among juice bars already is fierce, proprietors say they cannot adopt slow-growth plans and expect to build brand loyalty.

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