Starbucks Acquires Evolution Fresh to Enter Wellness Space

With this acquisition, Starbucks will reinvent the $1.6 billion super-premium juice segment, its significant next step in entering the larger $50 billion Health and Wellness sector.

Nov 11 2011 --- As part of its commitment to evolve and enhance the Customer Experience with innovative and wholesome products, Starbucks Coffee Company has announced the acquisition of Evolution Fresh, Inc. Starbucks has seen success with expanded healthier menu items to deliver the nutritious, on-the-go options consumers are seeking. With this acquisition, Starbucks will reinvent the $1.6 billion super-premium juice segment, its significant next step in entering the larger $50 billion Health and Wellness sector.

With Evolution Fresh, Starbucks will bring a unique, premium juice product to the marketplace through the creation of a differentiated brand and experience, similar to what Starbucks pioneered 40 years ago for coffee consumers. Leveraging Starbucks unique business model – retail footprint, CPG grocery distribution channels, digital breadth and in-depth customer engagement – the company believes it will be able to take a currently undifferentiated, commoditized product segment and introduce a unique, high-quality product to redefine and grow the super-premium juice market.

“Our intent is to build a national Health and Wellness brand leveraging our scale, resources and premium product expertise. Bringing Evolution Fresh into the Starbucks family marks an important step forward in this pursuit,” said Howard Schultz, Starbucks chairman, president and ceo. “Over the last year-and-a-half we have looked comprehensively at possible opportunities and chose Evolution Fresh because it stood above anything else in terms of premium quality, nutrition and potential for growth.”

The introduction of Starbucks VIA Ready Brew changed the way consumers thought of and experienced instant coffee. Similar to VIA’s successful introduction, Starbucks recognizes an opportunity to attract new customers as well as meet needs of existing customers looking for nutritious beverage and food options.

“The acquisition of Evolution Fresh supports our growth strategy to innovate with new products, enter new categories, and expand into new channels of distribution,” said Jeff Hansberry, president, Channel Development for Starbucks. “Not only are we able to tap into the $1.6 billion super-premium juice market, but the acquisition of Evolution Fresh marks an important milestone for us within the $50 billion Health and Wellness sector.”

Evolution Fresh was started by the original founder of Naked Juice, Jimmy Rosenberg. He decided to get back into the premium juice business to found Evolution Fresh, one of the only true juiceries left in the industry that still cracks, peels, presses, and squeezes its own raw fruits and vegetables. This was an opportunity to raise the quality and nutritional benefits in the juice category. Using an innovative technology new to juice called High Pressure Pasteurization (HPP), Evolution Fresh is able to deliver one of the only “never heated” juice products for an increasingly larger number of its offerings, ensuring fresh tasting and nutritious juices.

“Using High Pressure Pasteurization (HPP) to help ensure the inherent nutrients are kept intact during the juicing process is a key point of differentiation for a growing number of our juices,” said Jimmy Rosenberg, founder of Evolution Fresh, Inc. and the newly named chief juice officer of Evolution Fresh. Mr. Rosenberg, who will lead product innovation and development for the brand continued, “Consumers trust the Starbucks brand to deliver on superior best-in-category quality and taste. On behalf of all of us at Evolution Fresh, we are proud to join the Starbucks organization.”

Over time, Starbucks plans to expand beyond Evolution Fresh’s current distribution into additional channels, as well as begin to make Evolution Fresh products available in Starbucks company-owned retail stores providing nationwide presence and awareness. In order to achieve this, Starbucks will look to make investments over time for upgrades to existing facilities as well as expansion needed for the broadened distribution of the product and for future growth plans for the brand.

Additionally, to showcase Starbucks growing portfolio, and as consumers become increasingly aware of Evolution Fresh, the company plans to introduce a new health and wellness retail concept which will further redefine the super-premium juice category and experience for consumers unlike any prior existing juice retail. It will share Starbucks mission and values, be pioneered by Starbucks partners (employees), and provide a new wholesome portfolio of food and beverage offerings. The retail concept is planned for early-to-mid calendar 2012.

Starbucks acquired Evolution Fresh for $30 million in cash, and the transaction closed today. While additional financial terms of the transaction were not disclosed, Starbucks Fiscal 2012 financial targets provided on November 3 in conjunction with the company’s 2011 fourth-quarter and fiscal year-end earnings, are unchanged as a result of this acquisition. Evolution Fresh is expected to operate at a modest loss in Fiscal 2012 then reach breakeven in Fiscal 2013.

Based in San Bernardino, California, Evolution Fresh currently sells its products in retail stores including Whole Foods Markets and PCC, exclusively on the West Coast. Evolution Fresh, Inc. will be a wholly-owned subsidiary of Starbucks Corporation.