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SBUX Brings Healthy Drinks, Opens Juicery

Zacks Equity Research

Non-alcoholic beverages remain a sweet spot for U.S. eateries. The market has further potential for growth through innovation, especially when it comes to healthy solutions. Be it coffee giant Starbucks Corp. (SBUX) or juicing giant Jamba Inc. (JMBA) – all are geared up to leverage the trend by adding more healthy drinks to their line-up.

Starbucks entered the juice industry with the acquisition of Evolution Fresh, Inc. in Nov 2011. Evolution Fresh beverages are expected to be available in more than 8000 U.S. Starbucks stores and grocery retailers by the end of 2013. Starbucks, which is set to try its luck in the healthy beverage category, opened its first Evolution Fresh juice store in Bellevue, WA in Mar 2012, four months after the acquisition.

Recently, in a bid to ramp up its juice production, Starbucks unveiled a new state-of-the-art Evolution Fresh juicery in Rancho Cucamonga, CA. The new 264,000 sq. ft. factory is said to quadruple the brand’s manufacturing capacity. Management expects the new juicery to expand its share in the 1.6 billion super-premium juice industry. The facility cost Starbucks $70 million.

To capitalize on the growing demand for juices, last month, Starbucks announced that its Evolution Fresh line of premium juices will now be available at Whole Foods Market Inc. (WFM).

Evolution Fresh offers premium juices made from fresh, natural ingredients as well as other food items like wraps, salads, soups, vegetarian and vegan dishes and others. The juices are never heated and are made using High Pressure Processing (HPP) technology, which preserves flavors, vitamins and nutrients of vegetables and fruits.

Of late, Starbucks has been striving hard to meet the needs of health-conscious Americans. As per management, Evolution Fresh juices preferably use locally grown produce. This made Rancho Cucamonga the perfect location for a juicery site. The location of juiceries in close proximity to fruit and vegetable farms significantly reduces transportation time and also helps to maintain nutrition levels.

Starbucks currently carries a Zacks Rank #2 (Buy). Another retailer in the same industry, Green Mountain Coffee Roasters Inc. (GMCR) is also similarly placed with a Zacks Rank #2.

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