Starbucks in Whole Foods: Just the Beginning

The company's been working hard to move beyond coffee

   
Starbucks in Whole Foods: Just the Beginning

Next time you go shopping at Whole Foods (WFM), you’ll be able to grab some Starbucks (SBUX).

No, not a cup of coffee like you can snag at your local Safeway (SWY). Instead, some of the company’s Evolution Foods products — including Evolution Fresh juices and its Evolution Harvest snack bars — will be making their debut at the premium supermarket.

The move sums up the big expansion dreams the big coffee chain has and is part of the reason Starbucks is in many ways a “corporate paradox,” as Fast Company aptly put it. The company is a giant, yet still is growing at a rapid clip — something behemoths like Walmart (WMT) haven’t been as successful at.

Starbucks has been improving its current locations with more offerings and more rewards programs — a push that’s been helped by its recent acquisition obsession. Besides buying Evolution Fresh in late 2011, Starbucks has also snatched up La Boulange BakeryTazo tea, Teavana and Ethos Water.

On top of that, the coffee chain is moving to new markets overseas. Starbucks is opening its first cafe in Colombia next year and hopes to add 50 there over next five years, while also focusing heavily on China.

The move to your grocery aisle is the cherry on top — “one big step in its march to become a consumer product giant,” says USA Today.

By the end of the year, Starbucks expects the aforementioned Evolution products to be in roughly 8,000 U.S. cafes and grocery stores, while the Whole Foods partnership in particular is expected to grow to include trail mixes, freeze-dried fruit and fruit snacks, according to The Wall Street Journal. The Evolution juices will also replace the PepsiCo (PEP) Naked Juice it’s currently selling in its cafes.

While the new diversity of Starbucks might be interpreted as a lack of focus — or even a backward move considering breakfast rival Dunkin Donuts (DNKN) has been trying to focus more on beverages — it has its advantages.

The main one: Starbucks can expand without watering down its existing presence.

And the partnership with Whole Foods feels natural considering both popular companies emphasize premium, health-conscious products. In fact, Starbucks CEO Howard Schultz told Fast Company recently that the company is seeking to build an entire new store concept out of that focus:

“We are opening a whole new retail store — a a brand-new retail concept around health and wellness that’s never been done before. Because we think we can create a national retail brand.”

Until then, Starbucks will just continue with its current national retail brand, while piggybacking on that of Whole Foods — not a bad recipe in itself.

As of this writing, Alyssa Oursler did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/2013/08/starbucks-evolution-fresh-whole-foods-sbux/.

©2014 InvestorPlace Media, LLC

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