Romance Fizzles for Starbucks and Jones

Two Seattle companies are about to part ways.

According to the Seattle Post-Intelligencer, Starbucks (Nasdaq: SBUX) will stop distributing Jones Soda (Nasdaq: JSDA) in its coffee shops. It may not have a huge financial impact on Jones, but for both companies, maybe it points out some of the difficulties of big-time expansion versus original grassroots charm.

Apparently, Starbucks wants to free up space in its coolers to offer more food items. Yet the company will continue to distribute Izze beverages, which are owned by PepsiCo (NYSE: PEP). Very interesting. I'll only add that a former Pepsi executive sits on Starbucks' board, and Starbucks has a distribution agreement with Pepsi for the bottled Frappuccino drinks that are sold in retail stores.

Jones has been distributing in more and more venues, including retail powerhouses such as Target (NYSE: TGT). And when Jones recently scored a deal with Seattle's Qwest Stadium, where the Seahawks play, there was some excitement about the little upstart possibly giving giants Coke (NYSE: KO) and Pepsi a run for their money. But I still stand by the questions I voiced concerning the Seahawks deal -- is Jones losing sight of its roots as it seeks more growth, and if so, should it?

Growth isn't always smart growth, after all. For a company like Jones, which started out distributing its alternative-brand pop in edgy, independent venues like tattoo parlors and skate shops, Starbucks was a dream come true: Here was a large and expanding company that likes to give the impression that it's small and personal and tries to establish relationships with its customers that resonate beyond the ring of a cash register.

Apparently, Starbucks distributed Jones only in company-owned U.S. stores, and not even all of them. However, as nice as it is to be featured at retailers such as Target, Starbucks entertains many daily customers, and its frequency relies on thirst, social gathering, and caffeine cravings.

Although Jones' CEO is quoted in the P-I as saying that losing Starbucks won't represent a big hit to revenues, the company does express in its 10-K risk factors related to losing any of its direct-to-retail partners, which also include Panera Bread (Nasdaq: PNRA) and Barnes & Noble (NYSE: BKS). "The loss of any of these high-profile national accounts could negatively impact our revenues and our reputation," the filing says. I guess I'm wondering about the latter. 

Meanwhile, Starbucks' Howard Schultz recently expressed concern that his company runs the risk of losing the soul of coffeehouse mystique, and the leaked sentiment resulted in another blow to investor confidence. Perhaps this is an example of just that -- continuing to distribute a powerful partner's product and clearing out shelf space for food may push higher revenues, but it seems to me that Jones Soda's artsy, indie mystique, with customer photos on the bottles, walked hand-in-hand with the type of brand Starbucks has sought to foster.   

I'm a Starbucks shareholder -- and no, I'm not short Jones Soda. This type of musing won't impel me to buy, sell, or short anything. However, while brand may be an intangible asset, it's an important one nonetheless. I can't help wondering whether a little romance may turn out to be a difficult thing for either of these companies to lose.

For related Foolishness, see the following articles:

• Does Jones Soda have game?
• Has Starbucks lost its soul?
• Jones has been getting a little flat recently.

Starbucks is a Motley Fool Stock Advisor recommendation. Coke is a Motley Fool Inside Value pick. Take a sip of either service free for 30 days.

Alyce Lomax owns shares of Starbucks. The Fool's disclosure policy is full of heart and soul.