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EVOLUTION FRESH

JULY 2012

545 BELLEVUE WAY NE, BELLEVUE, WA

Starbucks is searching for new growth opportunities outside of its core business and has found potential in the health and wellness market. It acquired Evolution Fresh (a brand of premium juice) in 2011, and has opened a new store/café concept selling the healthy beverages to shoppers. It plans to have 4 locations by the end of the year. Additionally, it is expanding the distribution of the pre-packaged juices to supermarkets, specialty stores, and Starbucks nationwide.

WHY TO SEE IT

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EVOLUTION FRESH

EVOLUTION FRESH | JULY 2012

Here’s a snapshot of some other growth initiatives:

»  It acquired Tazo Tea in 1999 and will open its first retail store in the 4th quarter of 2012.

»  In June 2012 it acquired Bay Bread LLC, a bakery that manufacturers high quality bread, pastries, and sandwiches. Starbucks will replace its current food offering with these higher quality products.

»  It has focused on expanding its consumer packaged business, such as ice cream and K-cups.

The store is small and accessible from an adjacent Starbucks store. There’s a display for pre-packaged juice and sandwiches for shoppers who want to grab and go. Two separate ordering lines let shoppers order at the juice bar or the café. Tables in the center invite shoppers to stay a while (and enjoy free wifi).

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EVOLUTION FRESH

EVOLUTION FRESH | JULY 2012

At the juice bar, a large LCD screen displays bold, colorful images and helpful tips about the health benefits of fruits and vegetables.

To see the drink menu, push the button and it will display on the LCD screen.

Shoppers can order off the menu or order a custom drink blended by “Juice Tenders.”

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EVOLUTION FRESH

EVOLUTION FRESH | JULY 2012

Unlike other juice brands, Evolution Fresh uses a no-heat manufacturering process, allowing the ingredients to preserve their rich flavors and nutrients (that would otherwise get destroyed with heat). It uses signage in the store to describe this differentiating point.

“Cold-pressed”

Messaging is all about health.

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EVOLUTION FRESH

EVOLUTION FRESH | JULY 2012

There is no mention of the Starbucks brand, other than the coffee on its menu.

At the café, shoppers can order healthy food items like yogurt, oatmeal, wraps, etc.

WHAT WORKS:

»  Tapping into the health and wellness market as a way to grow beyond coffee.

»  The retail concept is new, unique, and relevant to the growing population of health conscious shoppers.

»  Selling healthy foods alongside healthy beverages will increase order sizes.

»  Starbucks has experience taking a commodity (coffee) and turning it into a successful global premium brand. Can it do the same with fresh juice?

WHAT DOESN’T WORK:

»  If a shopper wants to order fresh juice and a food item, she/he needs to wait in two lines and place two separate orders.

»  Will shoppers see the value in paying $7.99 for 16 ounces of juice?

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CONTACT ELIZABETH NEAGLE @ ENEAGLE@WSLSTRATEGICRETAIL.COM FOR QUESTIONS OR ADDITIONAL INFORMATION ABOUT THIS RESEARCH