LOS ANGELES (Reuters) - Starbucks Corp will open the first store in its new Evolution Fresh juice bar chain on Monday, its biggest move outside coffee and one it hopes will boost the company’s position in the $50 billion health food sector.
The juice bar business is, however, fragmented and intensely competitive and some analysts say the Evolution Fresh shops could have lower margins than Starbucks’ coffee shops.
With Starbucks yet to detail how many juice bars it plans to open, the popularity of its first shop, located in Bellevue, Washington, an upscale city just east of Seattle, will be closely watched.
It will sell fresh and bottled fruit and vegetable juices, smoothies and food, such as wraps, salads and soups. The menu will include vegan and vegetarian options.
The world’s biggest coffee chain bought Evolution Fresh for $30 million in cash in November and at the time, Starbucks Chief Executive Howard Schultz said successful independent juice bars have annual sales of well over $1 million per unit.
Analysts have said that is a bit less than an average U.S. Starbucks cafe but more than a typical store for rival Jamba Inc, a publicly held juice and smoothie chain which has struggled in recent years after Starbucks and McDonald’s Corp introduced competing products.
The Evolution Fresh store opening comes just ahead of Starbucks’ annual shareholder meeting on Wednesday.
Investors in Seattle-based Starbucks have seen shares in the company soar since it restructured by slashing costs and closing nearly 1,000 stores around the world. The stock, which was trading at just under $10 in February 2009, closed at $53.21 on Friday.
Starbucks’ purchase of Evolution Fresh was in line with its strategy to sell a broader range of branded products through its own cafes, grocery stores and other retail outlets.
Since purchasing the company, Starbucks has expanded distribution of its bottled juices beyond a handful of retailers that included Whole Foods Market Inc to more grocery sellers.
The juices will also be sold in Starbucks’ company-owned stores this year.
Fresh fruit and vegetable juices have gained in popularity in the United States with some health-conscious consumers using them as meal replacements, while others drink them as part of “cleansing” diets.
San Bernardino, California-based Evolution Fresh was started by the founder of Naked Juice, which is now owned by PepsiCo Inc. It uses a heat-free, high-pressure pasteurization process that it says retains more of the nutrients in its products compared with using conventional heat pasteurization.
Editing by Edwina Gibbs