Watch out Jamba Juice, Starbucks is coming for you. CEO Howard Schultz announced yesterday that the company would “make our first significant step forward into this category with the introduction of a Health and Wellness beverage platform.” That’s CEO for “We’re gonna make smoothies.”

Through our extensive research and development, we believe we have hit the mark with the protein and fruit-blended beverage we have developed, which is made from simple ingredients that provide the benefit of sustained energy that our customers want.

This new beverage will initially be available in two flavors and will include fresh fruit and a proprietary whey protein, with no artificial sweeteners, delivering 15 or more grams of protein with no more than 270 calories.

Schultz also hinted at some new secret “Italian” beverage:

On a recent trip to Italy, we found a unique beverage platform that we believe to be a perfect complement to our overall beverage business. This exclusive, proprietary opportunity was developed through a partnership with our Italian supplier and represents a brand new category of beverage, which is both refreshing, low calorie, and indulgent at the same time. It offers a unique frozen, smooth texture, distinctive taste profiles and options ranging from fruit-based to dairy-based to yogurt-based ingredients…

And we believe customer acceptance of this new distinctive beverage category will create a new demand, drive incremental traffic to our stores much like Frappuccino did 10 years ago.

Wall Street doesn’t seem to be too thrilled with the idea of Starbucks entering into the smoothie territory currently dominated by Jamba Juice. Portfolio says:

So even if Starbucks rolled out literally the best smoothies available in America, wiping Jamba Juice off the face of the earth and converting every last one of their customers, that would still increase revenue by just 11 percent. And the reality, of course, will be far more modest.

Not only is the impact of the new beverages likely to be minimal, but they also seem at odds with C.E.O. Howard Schultz’s stated intention to bring the focus at Starbucks back to coffee.

The labor intensity of making the drinks, the added blender noise, and the new task of sourcing fruit all add up to distractions from that core concern.

Will you buy a Starbucks smoothie?

No Smoothie Sailing For Starbucks [Portfolio]
Starbucks F2Q08 (Qtr End 3/30/08) Earnings Call Transcript [Seeking Alpha]
(Photo: artnchicken )

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