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Starbucks buys Evolution Fresh, plans chain of juice stores

With the market for coffee shops nearly saturated, Starbucks is looking for a new arena to grow and is eyeing natural foods. It buys fruit- and vegetable-juice maker Evolution Fresh for $30 million.

November 10, 2011|By Shan Li and Tiffany Hsu, Los Angeles Times
  • Starbucks plans to carry Evolution Fresh juices, which can already be found at grocery stores on the West Coast, at its coffee shops next year. Above, a Starbucks in Little Rock, Ark.
Starbucks plans to carry Evolution Fresh juices, which can already be found… (Danny Johnston, Associated…)

Coffee king Starbucks Corp. is gunning for the health food industry.

The Seattle company announced Thursday the $30-million, all-cash acquisition of San Bernardino-based Evolution Fresh Inc., a natural fruit and vegetable juice maker created by Jimmy Rosenberg, who also founded the Naked Juice brand.

With Starbucks coffee shops as ubiquitous as hamburger joints, the company is looking to target a new market by opening a chain of stores next year centered on "wholesome" beverages and food.

Starbucks Chief Executive Howard Schultz said Thursday that acquiring Evolution Fresh, which offers juices such as tangerine and organic ginger limeade, is an important step toward entering the $1.6-billion premium juice business and the $50-billion health foods market.

"Our intention is, over time, we would have a national footprint of juice stores positioned for health and wellness," Schultz said in a conference call.

With the market for coffee shops nearly saturated, Starbucks is looking for a new arena to grow and is eyeing natural foods. Analysts said the expansion comes at a period of high growth for the health food industry, and one that could be hugely lucrative if handled properly by Starbucks.

"Juice and health food is somewhat related to what Starbucks already offers now, and it's a growing and attractive industry," said Kurt Frederick, a health and wellness analyst with Wedbush Securities. "Many people are interested in natural and organic food now."

Grocery chains such as Whole Foods and juice stores like Jamba Juice and Smoothie King are also angling for the wallets of organic health food lovers. But what Starbucks is aiming to do, analysts predict, is to create hip, fun juice shops that will transform juice much the way the company did with coffee.

Starbucks has the clout, marketing savvy and name recognition to make its juice and health foods a premium brand and take market share from competitors, said Nima Samadi, a restaurant analyst with research firm IBISWorld.

"They will put a Starbucks spin on it," Samadi said. "They'll create the atmosphere that will draw customers into the drink arena like they did with coffee."

Samadi said that expansion was a smart move for the company, which has struggled in the past with an oversaturation problem, with some city blocks containing multiple Starbucks shops. Several years ago, the company closed hundreds of stores after the chain's growth began to dilute the power of the brand, taking the focus off the coffee.

Starbucks has sought to expand beyond coffee and into food such as sandwiches, salads and baked goods. Earlier this year, the company signaled its expanding ambitions by rolling out a new logo featuring the familiar sea siren, but without the words "Starbucks Coffee."

Starbucks plans to carry Evolution Fresh juices, which can already be found at grocery stores on the West Coast, at its coffee shops next year.

The company has yet to reveal many details about the juice shops, including whether they will carry the Starbucks name.

The coffee chain can count on some loyal customers, such as Jerick Dizon, 24, to test out its juice.

The photo editor from Westchester, who is a coffee drinker, said it might be "tricky" for Starbucks to perfect its juice formula.

"But if there's a Starbucks around — and there usually is — I'd probably give it a try," he said.

shan.li@latimes.com

tiffany.hsu@latimes.com

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