Added On: Thursday, March 13, 2008

Grocery sales boost operations

By Richard A. Webster Contributing writer

15 Feb 2008

In the second quarter of 2008, a new line of fruit drinks in multicolored bottles will hit the shelves of supermarkets throughout the western United States. Featuring flavors such as Banana Berry, Mango Orange Peach and Orange Strawberry Banana, they represent the first foray into the world of packaged goods by smoothie-giant Jamba Juice.

Paul Coletta, vice president of marketing and brand development for Jamba Juice, said the company resisted the call of supermarkets for years, but when Nestle came forward as a partner and distributor it decided to pull the trigger.

"There’s always the concern about losing quality in the translation, but Nestle didn’t get to be the biggest food and beverage company in world without understanding what they’re doing," Coletta said. "There’s a concern when you’re taking a freshly made-to-order product, that you won’t get that kind of quality and consistency in a packaged-good offering. But I think we’ve done as good a job as any in the industry."

Jamba Juice is just one in a long line of restaurant chains to take its signature product and package it for sale in grocery stores. The Emeryville, Calif.-based company joins other notable brand names such as White Castle, Chili’s Grill & Bar, Starbucks, TGI Friday’s and California Pizza Kitchen in the quest for grocery store sales.

In 2005, Caribou Coffee expanded into supermarkets with whole bean and ground coffee products and is going national this month with a 10-ounce canned iced coffee product through a distribution partnership with Coca-Cola. Caribou, in conjunction with General Mills, also has a breakfast granola bar product available in grocery stores.

The move into retail makes sense for smaller chains that haven’t saturated the market with their own stores, said Henry Stein, Caribou’s vice president of business development and commercial sales.

"Consumption trends say seven of 10 people are brewing at home," Stein said. "So it stands to reason if you’re not a retailer like Starbucks, but you are more of a regional or seminational player, you might as well provide the opportunity for customers who can’t go to a store to at least have the experience of consuming your product by going to a supermarket or club store."

And in tough financial times, when people may be scaling back on the number of cups of coffee they purchase at Caribou stores, offering the product in supermarkets gives them another option.

"People don’t stop drinking coffee, but they may look for another way to provide it to themselves in the morning," Stein said. "We can be a larger player in that segment."

The decision to place Jamba Juice in grocery stores had everything to do with expanding brand recognition, Coletta said.

"There is an associated revenue stream, but that is secondary," he said. "This is about building presence and making it easier for customers to use the brand, giving them 24/7 access. This is not intended to displace the Jamba Juice in-store experience. It’s meant to complement it when a Jamba Juice store isn’t close to them or open."

That is the same reason why White Castle first introduced its burgers in the freezer aisle, said Brian Darr, managing director of Datassential Research in Chicago.

The world’s leading provider of foodservice management software solutions, campus and cashless card systems, housing and judicial process management solutions, and access control/electronic security systems.

"Years ago, White Castle didn’t have as many units and people were asking them for the product so they could take it back to their home," Darr said. "They hadn’t penetrated into the West Coast and people who moved from the East Coast to the West wanted that product and inundated White Castle with requests."

Just because a chain is flooded with requests doesn’t mean it can successfully package its product for sale in retail outlets and maintain the same taste. The key to moving a familiar and well-known brand from a restaurant into a supermarket is quality, Coletta said. And the only way to ensure quality is by retaining the final say on all aspects of the product.

"Any company looking to extend its brand into packaged goods, the most important thing is maintaining full approval rights," Coletta said. "Jamba Juice has total and complete final say in everything, from recipe to packaging, pricing and marketing. You mitigate risks by having full control over the creative and research and development process."

Concern over quality is what has kept many of the big name chains out of the supermarket, Darr said.

"McDonald’s is a good example of a company that is very concerned about the product translating. They have a very specific process in preparing their food and they feel that it just can’t be replicated at home. Most of the big chains have backed away from it," Darr said. "If it’s a signature item, you want the experience for that product to be the same no matter where you have it, and if you can’t deliver you can undermine your brand equity. Word is out that Burger King is doing flavored potato chips, but that’s not one of their signature items."



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