smoothie sells

SMOOTHIE SELLS

New latte challenger is a real smoothie

Blended juice drinks could be the next big thing in the beverage industry, experts say, with outlets such as Zuka poised for Starbucks-like growth.

For a quick, pick-me-up before work, Kami Stephens drives past the coffee shops that dot the westside like chocolate sprinkles on a latte and pulls into a Zuka Juice store.

The Lake Oswego resident gets the usual: a Cold Warrior smoothie that blends freshly squeezed orange juice, orange sherbet, peaches, bananas and a cold supporter of echinacea, vitamin C and zinc.

"It's between this and coffee" says Stephens as she waits for her order at the Zuka Juice store in Tanasbourne Center in Hillsboro. "And this is just more refreshing and healthy."

Indeed, there's no question smoothies sell in coffee country. Zuka Juice Inc., based in Salt Lake City, operates more than 20 franchises in the Pacific Northwest - with its No. 1 selling site at Tasbourne Center. Given Zuka's recent acquisition by Jamba Juice Inc., a San Francisco-based smoothie-maker, some industry watchers say that the juice market is on the brink of duplicating the explosive growth that specialty coffees experienced in the early 1990s.

Together, Zuka and Jamba Juice will have 220 retail smoothie outlets based mostly in the Western United States. The privately held companies will capture about $150 million of a market estimated at $400 million. Starbucks Corp. Chairman Howard Schultz, who used to sit on the board of Jamba Juice, will continue to serve as the expanded company's adviser.

"Everyone is looking for the next big thing," said Rivers Janssen, editor of Fresh Cup Magazine, a Portland-based trade magazine that follows specialty coffee, tea and other beverages. "If you've got these companies consolidating, that's a sign that the market is growing fast."

Smoothies are made-to-order drinks of blended fruit juices, nutrients and sometimes yogurt of sorbets. They're sold at juice bars that cater to consumers who want a low-fat alternative to fast food - something like a shake without the fat grams.

The Zuka-Jamba merger brings together two companies headed by chief executive officers in their 30's. Zuka Juice was co-founded by David Duffin, 32, who first tasted smoothies while a Mormon missionary in Jamaica. He will join the Jamba board and become a franchisee in his home state of Utah.

Jamba Juice creator Kirk Perron, 34, founded the Juice Club nine years ago in San Luis Obispo, Calif. An avid cyclist, Perron wanted to create a quick, healthy, portable meal after his long rides.

The merger expands Jamba's reach to the Northwest. Most of the company's more than 125 locatins are based in California, Arizona, Colorado and at Yale University.

Zuka stores, except those in Salt Lake City, where Zuka carries huge name recognition, will eventually change their names to Jamba Juice. But that change and any other additions to the menu would be executed over a yearlong period and with input from franchise operators, Perron said. Because the stores' products and styles are so similar, Perron said the changes wouldn't be that obvious to customers.

As for how smoothies and juice will continue to fare in the caffeinated Northwest, Perron said he's not worried. Jamba Juice is geared more toward customers looking for a quick meal replacement or refreshing drink, he said.

"The Pacific Northwest culture is perfect for our product line because there are so many educated people who know they can't ear a hamburger every day," Perron said.

When Zuka store operator Amy Meacham moved to Oregon two years ago to open the store at Tanasbourne Center, she said she "didn't know how it would work with Oregon being a coffee king."

But she's received a tremendous response, so much that she has since opended two other stores - in Beaverton Mall and Murray Crossing Center at Southwest Murray and Allen boulevards. Still, the Tanasbourne Center Zuka is her busiest. On a hot summer day, she'll serve up to 1,600 customers.

The store's location certainly plays a significant role in its success. It's right off U.S. 26, amid several big retail draws, including Target, Old Navy, Mervyn's and Home Place, said Rob Massar, finance director for the city of Hillsboro. Plus, it's surrounded by multifamily housing filled with younger families who fit in well with Zuka's demographic.

"It's the adult person's Slurpee," said Jayn Parsons of Hillsboro. "It just tastes good."

Younger people love it too.

"This is my coffee," said Dan Parsons, 17, who loads up on carbo-supporter smoothies before track meets at Glencoe High School. "We come here about once a week, definitely more in the summertime."







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