Starbucks Starts Juicing
Starbucks has become the definition of the ubiquitous store. Comedian Lewis Black even did a bit about how he saw a Starbucks across the street from a Starbucks, which, according to him, was the end of the universe.
Given that Starbucks has created a product around a seemingly bland and cheap product (coffee), and turned it into the venti-mocha-soy-frappa-vanilla-decaf experience that has people paying 4 or 5 bucks for something that costs pennies to produce, it is easy to see how they have found a pretty fantastic and solid business model.
Now, what if I told you that Starbucks was going to strive to become the next Jamba Juice? It appears that is where the coffee company is now headed: The juice bar market.
In a press release, Starbucks proclaimed its intention to “reinvent the $1.6 billion super-premium juice segment, its significant next step in entering the larger $50 billion Health and Wellness sector.”
Starbucks’ juice bar openings will be incorporated with Evolution Fresh, a fruit and vegetable juice maker that Starbucks bought last week for $30 million cash.
Starbucks is smart. They know that health and wellness are great buzzwords for the current trend of overpriced products that claim to give you such health benefits as vitality, detoxification, immune booster, or probiotics (the so-called ‘good bacteria’). The only real difference is of course a smaller profit margin with fruit drinks, assuming you use real fruit. A papaya, apple, or cranberry costs more than coffee beans but people will still pay 4 bucks for a smoothie.
McDonalds is one of the major companies that have been trying to capitalize the frozen fruit drink market, and while their drink costs way less than 4 bucks, lord knows how the quality of their smoothie is in comparison to say, a typical smoothie at Jamba Juice. (Don’t even get me started on the quality of a smoothie at Taco Bell!) Nevertheless, these restaurant chains are trying to do things that at least appear to be healthful choices. This means a lot since the consumers of fast food eateries have never been known to be particularly health conscious.
Again, Starbucks is smart. You don’t have to be a health food place to make money from health foods, as it turns out. Starbucks has never been considered a place for nutrition, even though they have made mild attempts at the specialty market with all the milk substitutes or ‘light’ versions of their drinks.
“Starbucks’ idea of nutrition is nutrients in products, not real foods,” says Marion Nestle, professor of nutrition, food studies and public health at New York University, and author of Food Politics and What to Eat, among other publications. “Starbucks would be a doing a lot more for the health of its customers if it reduced the sizes of its food offerings, and increased the proportion of real foods,” says Dr. Nestle.
Why wouldn’t Starbucks do just that? It’s not good business. Consumers won’t pay 4 bucks for a piece of fruit, unless it is in beverage form.
Starbucks CEO Howard Schultz said in an interview with CNBC that the company plans to
“capture the romance and theater of juice beverages.”
While this feat may seem ambitious, we need to remind ourselves of what Starbucks has accomplished. If they can do what they did to coffee to juice, then we are in for a whole new chain of stores, at every corner, probably in every major town.
Whether or not Starbucks will be able to turn the juice bar market into an experience that people will overpay for is yet to be seen.
“It has interesting potential, but I don’t know if it has the broad appeal that coffee has,” Bob Goldin, executive vice president at foodservice consultancy Technomic Inc., told Reuters.
Starbucks has likely done all sorts of research on this market, so I wouldn’t be surprised if they squeeze millions from those oranges, apples, and bananas. I would, however, be nervous if I worked for Jamba Juice.