Should Starbucks buy Jamba Juice?
Currently Starbucks is the leading force in coffee shops across North America & growing around the globe. Starbucks consumer base enjoys their coffee and is willing to pay a premium. However the food department of the Starbucks stores is subpar to say the least. Most of the food menu is croissants, brownies, cookies and other quick eat foods. Aside from coffee and Teavana tea, Starbucks has not made a strong push into other beverage categories such as smoothies & other healthy food choices similar to what Jamba Juice offers. Starbucks started selling smoothies with the evolution fresh brand with its separate stand alone stores, but that failed to gain a loyal customer base of smoothie drinkers like Jamba Juice has already gained. If Starbucks were to purchase Jamba Juice and utilize Jamba’s food category and premium smoothie brand reputation into Starbucks scale and store count. Customer traffic could rise substantially with these options. Starbucks knows they cannot solely rely on coffee for the next decade of growth. They have made tremendous strides in mobile pay and it’s app to make the Starbucks purchase experience smooth and efficient for loyal customers but their food efforts have lacked.
Jamba Juice is currently valued at a little more than $100 million dollars. The Starbucks company is valued at nearly $80 billion. A small purchase of the brand with a large premium could be extremely beneficial to Starbucks shareholders seeking growth and improvement of its current in-store experience.
Adding the menu of Jamba juices smoothies into Starbucks stores does not appear it would be A difficult task. Additional food options are necessary for Starbucks to grow whether that purchase is Jamba Juice or another brand it will need to happen soon as more competition in the coffee space emerges.
Starbucks paid over 600 million for Teavana several years ago. So an acquisition of a company for a few hundred million dollars like this doesn’t seem unlikely. Other companies that we feel could be on the radar are smaller food brands. Starbucks could purchase or brand its own nutrition bars to sell in store. Another possibility for the company is to expand into gourmet pastries by purchasing a brand like Baked by Melissa or another similar food group to expand its gourmet options into its menu. New food choices like these being added to Starbucks menu could bring years of growth to the already enormous brand. Currently the brand is just a premium coffee shop but in time Starbucks could become a go to choice for consumers to get quality breakfast or lunch choices.
