Do you juice?
By ROBIN GOLDWYN BLUMENTHAL
America is finally eating its vegetables — from a bottle. How fresh juice is becoming big business for Starbucks and your local juice bar.
Bill Clinton does. So do actresses Jennifer Aniston and Gwyneth Paltrow, hip-hop mogul Russell Simmons, and Yankees first baseman Mark Teixeira, along with millions of hedge-fund managers, homemakers, and health nuts across the country and even around the world.
We’re not talking here about that kind of juice — steroids that boost athletic performance. We’re speaking of spinach slurpies, kale cocktails, super-fruit smoothies, and all sorts of other nutrient-packed libations that have become not just drinks but an impassioned cause among a growing cadre of health-, diet-, and nutrition-obsessed consumers. Whether bought off the shelf or custom-blended in hipness-drenched juice bars, super-premium vegetable juices, in particular, are taking America’s trend-setting cities and well-heeled suburbs by storm, lending new meaning to the age-old concept of a liquid lunch. In certain precincts of Manhattan and Los Angeles, almost everyone, it seems, is clutching a bottle of the brackish-looking stuff.
Juicing, as a meal replacement or mere refreshment, has become a $5 billion business, and is projected to grow by 4% to 8% a year. While juice fasts, or cleanses, have long been used to shed unwanted pounds, the latest craze is best viewed as part of a national move, especially among people in their 20s and 30s, toward healthier eating and greater consumption of raw and organic produce — in this case, conveniently packaged and easily quaffed on the run. The habit doesn’t come cheap: A 17-ounce bottle of cucumber, celery, parsley, kale, dandelion, Swiss chard, lemon, and ginger juice will set you back $13.07 at Juice Press, a raw-juice bar with four outposts in New York and a busy mail-order business. Then again, Americans spent $22 billion last year on bottles of water — the world’s most plentiful liquid, and readily available free.
THE U.S. MARKET FOR FANCY JUICES is highly fragmented, encompassing both super-premium chilled products sold at retail outlets and fresh-pressed and blended concoctions available at more than 6,200 juice bars and smoothie shops nationwide. To be sure, the business in all forms is but a sliver of the total $258 billion U.S. market for nonalcoholic beverages. But it’s an exciting sliver that has beverage and packaged-foods giants, food-service companies, venture capitalists, and entrepreneurs seeing green.
Two weeks ago, for example, Campbell Soup (ticker: CPB) announced it will buy Bolthouse Farms, a seller of produce and premium juices, from the private-equity firm Madison Dearborn, for $1.55 billion, in a bid to boost its presence in higher-margin refrigerated foods. Sales of Campbell’s traditional, shelf-stable V8 vegetable juice have stagnated in recent years, although the company has generated growth by extending the V8 brand to jazzier fruit and vegetable beverages.
In most chilled-juice aisles, Bolthouse Farms shares shelf space with Coca-Cola‘s (KO) Odwalla brand of super-premium juices, and PepsiCo‘s (PEP) Naked juices. Coke, in the vanguard of most beverage trends, snapped up Odwalla in 2001 for $181 million, while Pepsi dived into the market in 2006, buying Naked Juice for an estimated $450 million from North Castle Partners, another private-equity firm.
Irma Shrivastava, vice president, marketing, for Odwalla says the company is introducing a new line of organic veggie and fruit juices this week, available first atWhole Foods Market (WFM). She says the category is growing even faster in traditional grocery channels than in the market overall. Pepsi executives declined to comment.
Sales of bottled super-premium fruit and veggie juices totaled $2.25 billion last year, and are up 58% since 2004, according to Beverage Marketing, a research and consulting firm. Sales of more traditional juice products such as orange and apple juice have been flat or lower in recent years, while annual sales of carbonated soft drinks plateaued at around $71 billion in 2007, and haven’t moved much since.
A juice quake could be coming to the premium-juice market now that Starbucks (SBUX) has entered the fray, threatening to revolutionize the way America gets its greens. In November the company bought Evolution Fresh, a line of cold-pressed vegetable and fruit juices, for $30 million from Jimmy Rosenberg, founder of the Naked brand. Four months later the Seattle-based coffee giant opened its first Evolution Fresh store in nearby Bellevue, Wash., selling bottled and personalized beverages, sandwiches, soups, and salads, all with a healthful twist.
The focal point of the 1,100-square-foot store is an 11-foot-high “juice wall,” with electronic art and spigots that dispense nine juice mixtures, including single-vegetable beverages, blends such as Field of Greens, and handcrafted, fruit-based smoothies. Friday, Starbucks opened its first Evolution Fresh store in downtown Seattle, and said it plans more in Seattle and San Francisco this fall.
Earthbar, started by Noah Bubman and his father Bernie, a pharmacist who once operated more than 200 Great Earth health-food stores, is planning to open 15 stores in Singapore and Malaysia in the next six months. Juice Generation is adding a ninth store in September. The company opened its first store, in Manhattan, in 1999.
JAMBA JUICE (JMBA) is the only publicly traded pure play in the juice-bar business, but there is nothing tasty about its shares’ performance. They peaked in 2006 at $12.25 and now change hands at $2.61, endowing the Emeryville, Calif.-based company with a meager market value of $181 million. Jamba is shifting its business model to 60% franchise-owned stores from 70% company-owned outlets in order to, yes, juice results.
Jamba began life in 1990 on a California beach as Juice Club, and today operates or franchises 773 juice and smoothie shops, mostly in the U.S. In March the company, known for its fruit smoothies, announced plans to launch a new concept store focused on healthier raw juices. Fruit-laden smoothies generally pack far more sugar and calories than juices made from leafy greens.
Scott Van Winkle, an analyst at Canaccord Genuity, notes Jamba’s company-owned same-store sales are expected to grow 4% to 6% this year. “You won’t find a food or beverage company that isn’t either doing something or thinking about doing something related to the health trend,” says the analyst, who rates Jamba Juice a Buy.
Juice It Up!, an Irvine, Calif.-based smoothie chain, is doing and thinking. The company said in January that it plans to retrofit its 90 stores with raw juice bars to capture the growing demand for nutritional juices. “We have been known as a smoothie chain that sells juice; now we want to be a juice bar that sells smoothies,” Carol Skinner, senior director of marketing and business development at owner Balboa Brands, told Nation’s Restaurant NewJust what are all these people drinking? Russell Simmons, co-founder of Def Jam Recordings, thinks he knows. “People are concerned about their health,” he says. “Food is a drug, and green juice promotes clarity and gives you energy.”
Simmons, whose Rush Communications invests in entertainment, media, fashion, and lifestyle projects, also says he has been studying the raw-juice business for six months with an eye toward a possible investment. “Just like Starbucks blew up, so could juices,” he says. (For the uninformed, the Urban Dictionary defines “blow up” as a hip-hop term for “becoming famous, successful, and respected within a short period of time.”)
Fashion designer Norma Kamali is another fresh-juice devotee. She adopted a raw and juice-based diet two years ago, and has been selling fresh-pressed juice at the Wellness Cafe in her midtown Manhattan store since 2009. “Customers love the juice,” she says. “It slows down the aging process and boosts your immune system.
FRESH VEGETABLE AND FRUIT JUICE might do all this and more — or not. The medical research is incomplete and inconclusive. Some health experts still question the role of nutrition in fighting diseases like cancer, and others worry about what’s missing when produce is pulverized and reduced to its liquid essence. Robert Post, deputy director of the Center for Nutrition Policy and Promotions at the U.S. Department of Agriculture, says “there is no compelling evidence” or settled science that juicing is healthier than simply eating raw fruits and vegetables.
One concern about fresh-pressed juices, in particular, is that they aren’t pasteurized. This increases the potential for contamination by pathogens, which can cause illness. Although many smaller juice bars abide by strict sanitary guidelines and label refrigerated bottles with sell-by dates, not all outlets follow these procedures. Evolution Fresh uses high-pressure processing, a nonthermal pasteurizing process that can extend the shelf life of fresh-pressed fruit and vegetable juices to about 45 days from the typical two or three for unpasteurized products. The company claims the juice loses none of its taste or enzymes and micronutrients.
Only this much is certain: Juicing is a lot better for you than eating a Big Mac and fries or Taco Bell’s carne asada. “The closer you can get to a plant-based diet, the healthier it is for you,” says Dr. Woodson Merrell, chairman of the Department of Integrative Medicine at Beth Israel Medical Center in New York. “Juicing is a nice way to do that.”
A Matter of Taste
Just how shocking is it? Barron’s ran an admittedly unscientific taste test last week, in which 17 staff members sampled an array of fresh vegetable juices, ranked them on taste and overall appeal, and supplied additional commentary about the experience. We initially had planned to do a three-day office juice cleanse, a liquid-diet regimen that supposedly goes down easier when the other folks at the water cooler are in on the plan. But common sense prevailed, given the unknown effects of solid-food deprivation on magazine production.
Barron’s staffers sampled green-vegetable combinations from Jamba Juice, Juice Generation, Naked Juice, Organic Avenue, and the Juice Press. Not surprisingly, the sweeter smoothie products — Green Machine from Naked and Apple ‘n Greens from Jamba, which doesn’t have a pure vegetable potion — won hands down in the taste department.
Some folks go bananas over vegetable juice, but many who try it agree it’s an acquired taste. “Your taste buds adapt,” says the designer Norma Kamali, a green-juice devotee. “Most people absorb the shock of a new taste called real food.”