Investors Mixed on Starbucks’ Bet on Juice Maker

by Lauren Todd
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Starbucks (NASDAQ:SBUX) is looking to increase the strength of its company-owned stores and packaged coffee divisions.  Starbucks recently purchased Evolution Fresh, a company started by the founder of PepsiCo’s (NYSE:PEP) Naked Juice, for $30 million.  Retail juice bars may be opening up as soon as next year featuring a super-premium juice offering.  Starbucks hopes to strengthen the company-owned store revenues that drive nearly 50% of the Starbucks stock price according to Trefis estimates. However, some analysts worry that this move may be too far outside of Starbucks’ expertise to execute well. [1]

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Hoping to Emulate Seattle’s Best Coffee Success

Starbucks can only hope that Evolution Fresh fares as well as Seattle’s Best Coffee, another Starbucks acquisition.  Seattle’s Best Coffee has experienced double-digit growth in the office coffee marketplace during the last year, a large fete in an economy where companies and employees are looking to cut costs anywhere possible.  Seattle’s Best Coffee has moved into corporate offices, commercial spaces and government buildings with their single-cup system behind most of the demand.  [2]

Starbucks’ acquisitions and movement into new markets indicate a strong desire to continue to grow revenues, despite the heavy saturation of the US coffee market.  Starbucks will need to demonstrate an ability to adapt to new market and market demands as it furthers investments into broader food and beverage categories.

The Trefis price estimate for Starbucks’ stock is about $40, slightly behind the current market price.

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  1. Starbucks’ Darwinian Twist, contributor Alyce Lomax []
  2. Seattle’s Best Coffee Finds Major Growth in the Office Coffee Market, Starbucks Press Release []
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