Starbucks is no stranger to strategy experiments, from testing the sale of beer and wine to simplifying its logo and dropping the "coffee" from the company's name. Its newest gamble: Paying out $30 million to acquire juice maker Evolution Fresh Inc. — part of a larger effort to expand past coffee and into grocery store aisles. Starbucks plans to offer Evolution juices (which Whole Foods and Costco already carry) both in their cafes and in a new chain of health and wellness stores it plans to launch next year. "We are not just acquiring a juice company," Starbucks CEO Howard Schultz says. "We are using this acquisition to position ourselves, in a broad way, to build a multibillion health and wellness business over time." Good move for Starbucks?
This makes a lot of sense: Buying Evolution "is a logical choice for the chain as it seeks to offer healthier options," says the Associated Press. Evolution is "one of the few larger juice companies that still cracks, peels, presses and squeezes its own fruits and vegetables rather than using pureed or powdered ingredients." It also pasteurizes juice with a special high-pressure process that doesn't require heating, allowing the juice to retain more nutrients. Those unique methods could give Starbucks a "competitive edge" in its drive to woo the health-conscious.
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Don't be so sure this will work: Can the company "that sells a 680-calorie Peppermint White Chocolate Mocha" really claim to be a credible player in the health and wellness sector? asks Eamon Murphy at Daily Finance. It's a risky business strategy. Clearly, Starbucks is betting "that consumers will happily pay hand over fist for a feeling of health and a taste of wellness, preferring these pleasures to the hard, unglamorous work of exercising regularly and eating right."
Starbucks will have to be smart about it: "The company faces the challenge of expanding its presence without watering down the brand," says Julie Jargon in The Wall Street Journal. Starbucks has tried, and failed, to move past its core business before — promoting films on its packaging, selling books, offering hot foods (a plan that backfired when the sandwich aroma overwhelmed the tasty coffee smell). With its latest foray, Starbucks will have "to be careful not to do too much, too soon."
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