Starbucks Corporation (NASDAQ:SBUX) can’t do the same thing with its thousands of coffee stores. It can’t make juices the centerpiece of its java havens or go for a “store within a store” redo without killing its golden caffeinated goose. There’s a reason why Starbucks is growing its purchases of Evolution Fresh and Teavana as separate businesses.
However, is Jamba making itself too loud to ignore? Will Starbucks be down to snapping up Jamba while it’s still cheap to protect and ideally expand its original fresh juice investment?
Into the Starbucks shopping bag
Starbucks has never been afraid of buying a growing if not disruptive concept while it was still in the crib, especially if it would be a natural fit to its java stronghold. Teavana was trying to do to tea culture — transform it into an upscale lifestyle — what Starbucks Corporation (NASDAQ:SBUX) successfully achieved in coffee. Evolution Fresh was a fresh juice company gaining traction. La Boulange was a bake shop specializing in French pastries and sandwiches.
Tea, juices, and baked goods also happen to be areas that Starbucks Corporation (NASDAQ:SBUX) could be doing a little better on itself. The deals made sense.
Why not smoothies? I mean, have you tried any of the limited offerings at Starbucks? They’re not very good.
Starbucks shouldn’t buy Jamba just because its own smoothies are weak. Starbucks hasn’t been able to make a dent in Green Mountain Coffee‘s Keurig empire with last year’s Verismo rollout, but it has never made a move on Green Mountain. Even now — when buying the faster-growing Green Mountain at a modest premium would still be accretive to next year’s earnings — Starbucks is going to stick to its own horses in single-serve brews.
However, just as the two cola giants have gone on to make acquisitions in water and juices, Starbucks has shown a tendency to buy beverage brands that would fit the Starbucks message. Jamba is quickly evolving as a lifestyle brand as the leader in a validated category, and now it’s moving in on the juice bar turf that Starbucks thought it could corner.
A deal makes sense if Starbucks can get it done without overpaying for Jamba.
Drink up
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The article Should Starbucks Buy Jamba? originally appeared on Fool.com and is written by Rick Aristotle, Munarriz.
Longtime Fool contributor Rick Aristotle Munarriz owns shares of Green Mountain Coffee Roasters (NASDAQ:GMCR) and Jamba. The Motley Fool recommends Green Mountain Coffee Roasters and Starbucks. The Motley Fool owns shares of Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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