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JUICE JAMBA An Analysis of the Smoothies and Healthy Beverages Industry BUAD 307 Spring 2006 TA: JIM TALBOT (2 pm) Proudly presented by: Shintaro Chase Takagi Revinia Tanyadjaja Florence Kurniawan Wileen Kurniawan David Fong Jamba Juice is a smoothie bar franchise offering juices and freshly blended-to-order fruit smoothies. The company promotes a healthier alternative to the typical refreshment stand by placing great emphasis on natural and wholesome ingredients. Also available at Jamba Juice are "Boosts" that claim to have benefits such as energy or immunity, and they can be added to drinks upon the request of the customer. Jamba Juice offers their products through on-site kiosks in high traffic areas, like college campuses, gyms, and airports. Aside from store locations, other means of distribution, such as vending machines or pre-made bottled smoothies, are not available. Promotion of Jamba Juice includes various media advertisements and philanthropy events that focus on health and environmental issues, for example the Wildflower Triathlon and Sambazon Sustainable A ai project1. Jamba Juice currently operates in 532 locations worldwide and was recently acquired by Berrard-led Services Acquisition Inc 2. Jamba's target market is defined by its commitment to providing nutritious, vibrant foods, and its passion in celebrating the flavors of life 3. With these values in mind, Jamba Juice targets individuals who make the conscious choice to improve their lifestyle through healthy eating habits, and those who enjoy the nourishing qualities of its products. These customers are the same people who shop at all-natural shops, often paying a premium for organic, healthier, products. This is mainly because the recent trend towards healthier living has increased people's awareness of the need for nutritious products. Jamba Juice supports these customers' healthy lifestyle with their nutritious smoothies and juices made from all natural ingredients without any artificial colors, flavorings, or preservatives. Other common customers for Jamba Juice are high school and college students. Younger people are less hesitant when it comes to spending, and at the same time are also more 1 2 http://www.jambajuice.com/community/index.html http://jambajuice.com/mediacenter/jamba0306r2.html 3 http://jambajuice.com/what/missionstatement.html responsive to advertising messages and the promotion of "Boosts". This is why Jamba Juice has located their many stores on campuses. Additionally, younger generations are always on-the-go and in a-hurry, and the fast food element of Jamba Juice appeals to them; for such people, convenience is prioritized, and is often well worth any additional costs. In summary, the prototypical consumers of Jamba Juice are active and health conscious individual under the age of 25. Speaking in terms of competition, Jamba Juice has primary and secondary competitors. Their primary competitors are other smoothie shops because of the nature of the target market and product. Most notable among them are Smoothie King and Planet Smoothie, both of which offer very similar smoothies made from real fruits and promise nutritious advantages. The two shops also provide the equivalent of Jamba Juice's "Boosts"--Smoothie King offers "Enhancers", while Planet Smoothie has "Blasts". These smoothie bars all create a vibrant and energetic shop atmosphere to market their health-oriented products. Despite the many similarities, all of the smoothie bars attempt to differentiate themselves in numerous ways. In contrast to Jamba Juice, for example, Smoothie King sells supplements and vitamin products similar to those offered in nutrition centers. Besides, there are only less than a dozen Smoothie King stores in California. Planet Smoothie, too, has franchises in over twenty states but only eleven are open or "Coming Soon" in California. In addition, many of Planet Smoothie's shops are actually built as cafes, which allow customers to relax and offer sandwiches and wraps as typical coffee shops do. Jamba Juice's secondary competitors are beverages--like soft drinks, juices, and bottled smoothies--sold in convenience stores, supermarkets, and vending machines. Soft drinks are indubitably the most popular and widely available of all refreshments sold in stores. However they are high in chemical content and calories and thus, cannot meet the needs of health conscious people. On the other hand, bottled smoothies and juices, such as Naked Juice and Odwalla, target the same customer group as Jamba Juice by offering a nutritious alternative to most beverages. They are also readily available in most convenience stores and supermarkets across the country. However, due to the pre-made nature of these drinks, they cannot meet the freshness of a Jamba Juice drink. As such, Jamba Juice, is the best choice of beverage in terms of freshness and its nutritious content. Several macro-environmental factors influence Jamba Juice's marketing strategies; these include competition, resources, social and cultural determinants, and demographics. In terms of competition, larger chains are expanding while smaller, independent juice bars are opening in great frequency. This is possible due to the relatively industry's low barriers of entry; a juice bar requires little more than ingredients, a place of operation, and a low capital investment. Furthermore, once in place, juice bars benefit from ease of operation. Thus, the juice bar environment is fiercely competitive--according to Juice Gallery Multimedia, it is forecasted to grow approximately 25% in 20064. Jamba Juice, in order to survive and prosper against peers, must innovate and create new methods to reach its customers. Socio-cultural and demographic factors also have a great impact on the smoothie industry. The most important cultural influence is the recent emphasis on healthy living from every level, including the government. For instance, the government is banning soft drinks and junk food in educational institutions. The Chicago Public School District has banned the sale of junk foods, replacing them with healthier alternatives, like milk and salads 5 . obviously presents a favorable market opportunity for Jamba Juice. This trend Many have negative 4 5 http://www.juicegallery.com/content/index.cfm?page=press http://www.suntimes.com/output/education/cst-nws-isat17.html attitudes toward the high calorie content of the smoothies and the fact that they contain higher sugar content than is recommended by the USDA. In response to this issue, Jamba Juice recently introduced the "Enlightened Smoothies" which use a calorie free sugar replacement, Splenda, and non-fat milk. These smoothies have 40-50% less calories than the regular ones. Another socio-cultural trend that has recently emerged is the grab-and-go snacks and quick-fix meals to match active or busy lifestyles. According to a nationwide survey commissioned by Smoothie King, 82% of consumers today regularly spend thirty minutes or less on lunch6. Jamba Juice will be able to support this on-the-go lifestyle with its drinks because many people actually consider their smoothies as the ideal meal replacements. In addition, Jamba Juice might want to consider opening their locations late to support the 24/7 culture. Fastfood chains, for instance, actually earn much of their revenues late at night or very early in the mornings. However, a truly 24/7 store is not feasible because of possible labor limitations and security concerns. Therefore, to meet the needs of this group of customers, Jamba Juice would have to seek an alternative route or channel through which it can distribute its expanding line of products. The customers desire to customize is the next aspect to take into consideration. Cold Stone Creamery, for instance, allows customers to select amongst a variety of ice cream flavors, and then choose from an assortment of toppings. Similarly, to maintain its competitive edge, Jamba Juice needs to allow customers more freedom to individualize their products. A review of the aforementioned environmental factors reveals that vending machines will be appropriate in this constantly changing environment. Technological advancements within the vending machine industry have opened up new doors of opportunities for how products are 6 http://www.diningstl.com/News072505.htm delivered and presented to customers. Today, some vending machines accept credit and debit cards. Furthermore, improvements in temperature control have led to the possibility of storing and selling unique products, such as fried food items and ice cream. The current vending industry can be separated into three categories, which includes the manufacturing company, distributor, and vending machine operators 7 . The manufacturing company is responsible for producing the actual machine and tailoring it toward the buyer's specifications and product nature. A major manufacturer of vending machines in the United States today is Dixie-Narco Inc., which provides service to soft drink companies, like Coca-Cola and Pepsi. Such manufacturers sell their machines to distributors, who in turn lease these machines to operators interested in the business. Once in use, vending machines provide convenience through ubiquity, continuous accessibility through self-operation, and lower operating costs. The current vending process follows three distinct steps, but with some alterations, a single company could easily fulfill the needs of each role. By doing so, a company currently unaffiliated with the industry could easily enter the market with a unique machine specialized for their needs. In conclusion, to further meet customer's needs, Jamba Juice may be able to capitalize on this technology to expand distribution without changing the fundamental product. Customers today are always seeking innovative ways to meet their demands of personalization, convenience and healthier lifestyles. Jamba Juice faces stiff competition due to the lack of innovation in the industry from all parties and a shared strategy amongst them, thus the environment is ripe for Jamba Juice to try a new means of distribution. Besides, it is also in an optimal position to capitalize on the customers' demands, the stagnant industry, and environmental factors. To maintain a competitive edge, Jamba Juice would need to venture into an undeveloped market. 7 http://infotrac.galegroup.com/galenet/usocal_main

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