Schultz Juiced Over $30MM Evolution Fresh Acquisition

In announcing the $30-million cash acquisition of San Bernardino, Calif.-based Evolution Fresh yesterday, Starbucks chairman/CEO/sage Howard Schultz says his company is going to do for juice what it did for coffee.

"What we're saying to the market place is that our intention is to reinvent this category in the same tonality that we reinvented in the last 40 years, the basic commodity of coffee," Schultz said.

What, exactly, does he mean by tonality, you may be asking.

“Tonality in marketing is what advertisement of the brand or product communicates to potential buyers or returning customers, the feelings it may provoke or the perception it produces,” Demand Media's Vicki A. Benge writes in an article titled, "What Is Tonality in Marketing?"

Then there’s the sentiment “tonality, shmonality” as the headline on a blog post about measuring attitude in social media put it a couple of years ago. What we’re no doubt talking about here is that elusive customer “experience” that has been the secret sauce in Starbucks’ success. (Even if it is not universally appreciated: “"Let's see, we ruined coffee, now what else can we ruin?" writes one commentator to the Seattle Times coverage, setting off a firestorm of pros and cons.)



The first step in Starbucks’ strategy is to roll the juice out in its own stores nationwide, writes the Seattle Times’ Melissa Allison. It then plans to include it in a health-and-wellness retail concept it will debut in early to mid-2012. "Over time, we would have a national footprint of juice stores, positioned for health and wellness," says Schultz.

It also plans to sell Evolution Fresh juice as a packaged product in other stores, comparing its juice plans to its introduction of Via Ready Brew instant coffee, writes Andrew Edwards in the The Sun, which covers Evolution Fresh’s hometown of San Bernardino.

"They're starting a new chapter from scratch," Barclays Capital analyst Jeffrey Bernstein tells the Wall Street Journal’s Julie Jargon. "While viewed favorably by most, the primary question has been, 'Do you realize the magnitude of the task you're taking on?'"

Evolution Fresh claims a unique high-pressure pasteurization technique that allows the juice to be packaged and distributed without heating. It is distributed on the West Coast in supermarket chains such as Albertsons, Ralphs and Vons as well as specialty stores such as Whole Foods and Bristol Farms.

The brand was started in 1996 by Jimmy Rosenberg, who also founded Naked Juice in 1983 and “first distributed [it] out of a backpack ‘beach towel-to-beach towel’ on Santa Monica Beach.” Naked is now one of the North American brands in the Tropicana portfolio of PepsiCo. and is available in all 50 states, on beaches and off.

Jargon writes that Starbucks “faces the challenge of expanding its presence without watering down the brand.” Jeff Hansberry -- “an industry veteran who has sold everything from Hawaiian Punch to gin and who has established himself as a possible successor to the Starbucks founder” -- will lead the effort as president of Starbucks Channel Development although he “admits he has more experience launching new brands and expanding into new markets than doing acquisitions.”

"We have to balance growth while also protecting the heart and soul of Starbucks," he says.

How fast all this will happen is anybody’s guess.

"We suspect that Starbucks will take a patient approach," Robert W. Baird & Co. analyst David Tarantino at Robert W. Baird & Co. wrote in a research note quoted by the Seattle Times’ Allison, who points out that “the chain has proved it can be patient in rolling out new store concepts.” It opened two independent-looking cafes that did not carry the Starbucks name a couple of years ago before deciding against the idea and it has been very methodically testing the sale of wine and beer in five outlets in the Pacific Northwest.

D.A. Davidson & Co analyst Bart Glenn agrees. “I don’t think all of a sudden they’re going to have thousands of juice stores,” he tells Bloomberg’s Leslie Patton.

I’ve got a birthday coming up. I’m already wondering if I’ll be able to get a free Evolution Fresh Acai Amazon on my Starbucks card? But there are a lot more complex details than that to work out, no doubt, including how to roll this small success out on a massive scale without ruining what makes it special.

"Jamba Juice, I think, drifted into an area of commoditizing their business and no longer standing for what the independents have done so well," Schultz says. All eyes will be focused on how he tries to do it, as the late Steve Jobs would have it, different.

Next story loading loading..