Tuesday, May 13, 2008

STARBUCKS SMOOTHIES: Modo Exec Comments on Smoothie Market

Read today's Seattle Post-Intelligencer to see our client, George Murphy's take on the latest spot to get smoothies:

Smoothie market is heating up
Emerald City awaits competition
Last updated May 12, 2008 9:59 p.m. PT
Emerald City Smoothie has said that it wants to be the Starbucks of smoothies. But now, Starbucks says it wants to be the Starbucks of smoothies.
What does a business development executive say when his chain of 61 franchises is now competing with more than 11,000?
"I think it's great, I really do," said John Trautman, vice president of business development. "It's just exciting. They're a giant. It's a compliment."
In April, Seattle-based Starbucks Corp. said that it hopes to expand its customer base by serving blended fruit and protein beverages, energy drinks and healthy foods. (It's rolling out the energy drinks Tuesday.)
Mercer Island-based Emerald City Smoothie said last week that it is not swayed from its aggressive growth plan, hoping to serve meals of blended fruit and vitamins in more than 1,000 locations by 2017. If anything, competing with Starbucks is good news, Trautman said.
"There's lots of room for smoothies out there. With Starbucks doing it, it just further validates what we've been doing for years," said Trautman, who also owns three franchise stores.
An outside consultant agrees with him. The same way that Starbucks created a market for the small coffee shop, it could generate more buzz for smoothies, said George Murphy, managing partner of Modo Group, a Seattle-based marketing and brand consultancy.
"There's plenty of room in the marketplace for a small competitor. Starbucks has proven that in the coffee category," Murphy said. "They raise awareness for the category so all consumers understand what's out there -- that creates opportunity for other small companies to fill niche elements on the side of the category leader."
The biggest challenge will be competing with Starbucks for real estate, he said.
Emerald City already faces smoothie competition from market leader Jamba Inc. The Emeryville, Calif.-based company has more than 700 Jamba Juice stores.
As business fate would have it, Jamba Juice got its start with the help of Starbucks Chief Executive Howard Schultz, who was an original investor and had served as board member of the company, according to a February 1997 article in The New York Times. In June 1998, Forbes magazine reported that a venture capital group that included Schultz bankrolled Jamba with $47 million in venture funding.
Other smoothie competitors include Greenwood Village, Colo.-based Maui Wowi Inc., Covington, La.-based Smoothie King Franchises Inc. and Atlanta-based Planet Smoothie Franchises LLC.
Emerald City has recently launched a marketing campaign, which includes commercials and Internet advertisements. The commercial now airing shows people drinking smoothies and working out -- a flash of jumping rope, pumping biceps, mountain biking, playing basketball and golfing.
"We'll serve more than 2 million smoothies this year," Trautman said to show the popularity of the drinks. "We'll use over 1 million-and-a-half pounds of strawberries."
The company is also going to start promoting a reusable cup in the next month. (It currently serves up smoothies in foam cups.)
While rising gas and food prices have caused Starbucks' profit to decline, Trautman said that consumers have not flocked away from Emerald City. A smoothie isn't an "extra," he explained as a possible reason, but an investment in one's health.
"We haven't seen an impact; if anything, we're seeing a bigger growth," he said. "People are looking inward. We're seeing gyms pop up everywhere. People want to take care of themselves and do something good for themselves."
Trautman said that Emerald City would not start selling coffee any time soon -- the company wants to preserve the smoothie smell in stores. That said, he was careful not to criticize his new hometown competitor: "We haven't started selling coffee -- not that coffee's a bad thing, we all like a cup of coffee now and then."
P-I researcher Marsha Milroy and P-I reporter Daniel Lathrop contributed to this report. P-I reporter Andrea James can be reached at 206-448-8124 or andreajames@seattlepi.com.
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