Jamba Juice tries something new: Serious juicing; Whether consumers will kale up to the bar is another matter. Will enough consumers choose to spend $5 to $7 for a feel-good jolt?

Jamba Juice tries something new: Serious juicing

January 29, 2014: 11:38 AM ET

Whether consumers will kale up to the bar is another matter.

By Beth Kowitt, writer

FORTUNE — There’s one major juice-related trend that Jamba Juice (JMBA) has missed over the past half-decade or so — and that’s serious juicing. Now, the $230 million-a-year purveyor of fruit smoothies says it’s pushing hard into the pulverization business.

The Emeryville, Calif. company, which has long sold the staples of the fresh-squeezed realm — orange and carrot juices — is rolling out a new whole-food blending and juicing platform that will let customers sip custom-order concoctions of things like ginger, kale, chia seeds, beets, and wheat grass to their hearts’ content. The new offerings should be available in more than 300 of Jamba’s 800 locations within the next year, the company says.

That, according to Jamba CEO James White, would make it the largest enterprise to date to fully incorporate the juicing of whole food produce onto its menu. Starbucks (SBUX) got into the market in a big way when it acquired juice company Evolution Fresh in 2011, but its cold-pressed juices are sold bottled in its coffeehouses rather than made to order.

“It gives us the opportunity to democratize this really healthy trend that is largely unattainable for most consumers because of either availability or cost,” says White. By pricing its new juiced drinks at $5 to $6 for 12 ounces and $6 to $7 for a 16-ounce cup, the company is hoping to position itself a few dollars bellow most of its juicing competitors, who are primarily independent chains with only a handful of locations.

White says the move is a return to Jamba’s roots. The company did more juicing in the 1990s when it started as Juice Club, but it eventually turned more toward smoothies. “If you think some of the juicing is niche today, you can imagine what it would look like in 1990,” White says.

The reason for Jamba’s current shift is clear in the industrywide numbers. U.S. Juice sales in 2013 totaled $15.5 billion, according to market research firm Mintel, a 4% drop from their level in 2008. Mintel food and drink analyst Beth Bloom says the decline in part stemmed from health concerns over the often-high sugar content in juice.

Bloom, however, thinks that an expansion into the health food store-type juicing could reinvigorate the category. So does Harry Balzer of consumer market research firm NPD Group, who draws parallels to the coffee category — which reached its peak in terms of U.S. consumption way back in 1946, when Americans on average drank a stunning 48 gallons of joe a year. (We now drink less than half that amount, per capita — about 23 gallons a year — according to the U.S. Department of Agriculture.)

Balzer says consumers have stayed interested in coffee because of innovation in the category — pumpkin spice latte, anyone? The same could happen with juice. “We all demand novelty in our diet,” he says, “but new things will be variations of things you already know.”

In Jamba’s case, so far, such variation has met with at least modest success. In the 50 Jamba stores that have rolled out the expanded whole food blending and juicing menu, sales have increased 3% to 4%.

Whether consumers beyond affluent coastal pockets want to drink kale on any real scale, of course, is still a very big unknown.

Though the juicing move hits the right marks for a company that aims to appeal to younger, health-minded consumers, the big issue will be price: Will enough consumers choose to spend $5 to $7 for a feel-good jolt? Darren Tristano of food industry consultancy Technomic believes the answers are likely to be “yes” for the top layer of the economy, but not the bottom. “The real question of success,” he says, “will come in the middle income group.”


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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