Business blog

Starbucks acquisition provides the base for entry into the juice bar market

A great example to use here which combines takeovers/mergers and also Ansoff’s Matrix.  Starbucks has used a recent takeover as the platform for the launch of a new store concept which it hopes will generate sales and profit growth outside of the core coffee market.

Starbucks Corp has opened the first store in its new Evolution Fresh juice bar chain, its biggest move outside coffee aimed at boosting the Starbucks position in the US $50 billion health food sector. This market is already highly competitive, and Starbucks will find themselves competing against the likes of Pepsi and Coca-Cola.

The world’s biggest coffee chain bought Evolution Fresh for $30 million in November 2011 as a way of establishing a base in the juice bar market. At the time of the takeover, Starbucks Chief Executive Howard Schultz said successful independent juice bars have annual sales of well over $1 million per unit.

The expansion into juice bars is just one part of a transformation plan overseen by Schultz which has been tremendously successful. Starbucks shareholders have seen their share price soar since the firm brought Schultz back as CEO. He responded by initially implementing a significant retrenchment strategy, slashing costs and closing nearly 1,000 Starbucks outlets around the world.  Starbucks shares, which traded at just under $10 in February 2009, had reached $53 by March 2012 - a significant improvement in shareholder value.

This video from Starbucks provides a preview of the new store concept, filmed just before it launched:

The original Starbucks takeover of Evolution Fresh is outlined in this video;

 

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