Jamba Tests JambaGo, Expands Product Line

While Starbucks is moving into the juice category, with plans for a chain and retail products, major smoothie player Jamba Juice also has plans for growth, including a smaller, express prototype and which it revealed this week.

Jamba is testing a new express version of its brand called JambaGo, which could be used to move the chain into non-traditional locations like elementary and secondary schools and college campuses, the company said Wednesday.

The Emeryville, Calif.-based Jamba Inc., parent to the smoothie chain, announced the JambaGo test after reporting third-quarter results that swung from a year ago loss to a $4.1 million profit.

Jamba's growth plans were discussed just ahead of Thursday's news that Starbucks Coffee Co. will open a new juice bar concept as well as sell Evolution Fresh juices in its coffeehouse locations and build a consumer-packaged goods line of juice products. The move – spurred by Starbucks' $30 million acquisition of Evolution Fresh – pits the coffee giant more directly against Jamba Juice, which has been working to build its presence in the health-and-wellness category.

James White, Jamba Inc.'s chair, president and chief executive, said in a statement Thursday that Starbucks' move "validates the health and wellness strategy and mission that Jamba Juice has been executing against for the past 20-plus years."

Third-quarter results indicate that Jamba Juice is "strong and strengthening," said White.

"We are growing globally and we remain a top-of-mind health-and-wellness brand among consumers," he said. "We will continue to accelerate our product innovation and, while we welcome new entrants to the marketplac, we will adjust our strategy as needed, just as we have done successfully in the past to meet changing business requirements."

Conrad Lyon, an analyst with B. Riley & Co. in Los Angeles, said he didn't think Jamba Juice would be too concerned about Starbucks' entry into the juice business, as more movement in the segment likely will only "bring more eyeballs to the space and better educate consumers."

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Jamba officials said its efforts to build the Jamba Juice brand into a healthy lifestyle company have been paying off.

Systemwide same-store sales increased 3.7 percent for the Oct.4-ended quarter, with a 3.3-percent increase at company-owned locations. It was the fourth consecutive quarter of positive sales growth for company-owned locations, Jamba said.

Revenue fell 13.6 percent for the quarter to $57.1 million, primarily because of the company's ongoing refranchising efforts, it said.

White said the chain has seen sales increases across all four dayparts, driven in part by innovations like new Probiotic Yogurt smoothies, as well as Fruit & Veggie smoothies and Coconut Water Fruit Refreshers.

The roll out of breakfast wraps to 270 stores has helped build sales in the mornings, for example, and the offer of frozen yogurt, now available in 157 locations, has helped in the evenings, he said. Both will continue to be added to new stores in 2012.

"Our attachment rate for a beverage with another item was approximately 20 percent for the third quarter of 2011, and we continue to make significant progress toward our goal of a 30 percent attachment rate," he said.

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The new JambaGo locations will help build franchising opportunities as Jamba Juice moves into non-traditional locations, White said.

"This format allows us to rapidly expand our presence through multi-unit launches and locations, such as K-12 schools, college campuses and other similar venues," he said. "It gives us an easy and simple way to deliver our healthier beverage option and introduce our brand to thousands of new consumers."

Jamba has also been building its consumer products business, which in 2012 is expected to generate about $3 million in revenue.

Most recently, it signed an agreement with Bare Fruit LLC to develop and launch a new line of Jamba-branded fruit chip snacks, which will be available in stores before year's end, he said.

Jamba is expecting same-store sales for the year to grow between 2 percent and 4 percent.

For fiscal 2012, Jamba is projecting same-store sales growth of between 3 percent and 4 percent, along with the opening of 40 to 50 new domestic store locations and 10 to 15 new international locations, not including JambaGo outlets, the company said.

At the end of the third quarter, Jamba operated or franchised 752 units, of which 310 are company-owned.

Contact Lisa Jennings at lisa.jennings@penton.com.
Follow her on Twitter: @livetodineout