Starbucks buys juice company to gain foothold in US$50bn health and wellness sector

Starbucks today announced the purchase of California juice company Evolution Fresh for US$30m, a move it said will help it in its goal of entering the health and wellness sector.

The company said that with the acquisition it would “reinvent the US$1.6bn super-premium juice segment”, which would be “a significant next step in entering the larger US$50bn health and wellness sector”.

With Evolution Fresh, Starbucks said it will bring a premium juice product to the marketplace through the creation of a differentiated brand and experience, “similar to what Starbucks pioneered 40 years ago for coffee consumers”.

Leveraging its retail footprint, CPG grocery distribution channels, digital breadth and in-depth customer engagement, the company said it “believes it will be able to take a currently undifferentiated, commoditised product segment and introduce a unique, high-quality product to redefine and grow the super-premium juice market”.

“Our intent is to build a national health and wellness brand leveraging our scale, resources and premium product expertise,” said Howard Schultz, Starbucks chairman, president and CEO. “Bringing Evolution Fresh into the Starbucks family marks an important step forward in this pursuit.

“Over the last year-and-a-half we have looked comprehensively at possible opportunities and chose Evolution Fresh because it stood above anything else in terms of premium quality, nutrition and potential for growth.”

“The acquisition of Evolution Fresh supports our growth strategy to innovate with new products, enter new categories, and expand into new channels of distribution,” said Jeff Hansberry, president, Channel Development for Starbucks.

Evolution Fresh was started by the founder of Naked Juice, Jimmy Rosenberg. According to Starbucks, it is one of the only true juiceries left in the industry that still cracks, peels, presses, and squeezes its own raw fruits and vegetables.

“Using high pressure pasteurization (HPP) to help ensure the inherent nutrients are kept intact during the juicing process is a key point of differentiation for a growing number of our juices,” said Rosenberg, the newly named chief juice officer of Evolution Fresh.

Starbucks said that it plans over time to expand beyond Evolution Fresh’s current distribution into additional channels, as well as begin to make the brand’s products available in Starbucks company-owned retail stores. To achieve this, Starbucks said it will look to make investments over time for upgrades to existing facilities as well as expansion needed for the broadened distribution of the product and for future growth plans for the brand.

The company also plans to introduce a new health and wellness retail concept “which will further redefine the super-premium juice category and experience for consumers unlike any prior existing juice retail”. It said this concept will share Starbucks’ mission and values, be pioneered by Starbucks employees, and provide a new wholesome portfolio of food and beverage offerings. The retail concept is planned for early-to-mid calendar 2012.

Based in San Bernardino, California, Evolution Fresh currently sells its products in retail stores including Whole Foods Markets and PCC, exclusively on the West Coast.