Make room for a new tenant on grocery store shelves. Smoothie chain giant Jamba (Nasdaq: JMBA) is moving in.
A distribution deal with Nestle (OTC BB: NSRGY.PK) will stock supermarkets with ready-to-drink Jamba Juice-branded smoothies and juices beginning in the second quarter of next year.
Nice timing. Sales at the 672 Jamba Juice locations peak during the summer months.
This morning's press release doesn't elaborate on the tactical logistics of the rollout. The Wall Street Journal is reporting that the launch will initially take place in eight western states, with Nestle also considering an overseas launch.
This is clearly welcome news, even if it's not entirely unexpected. The company was asked about its retail push during last month's quarterly conference call. Jamba teased that news on that front would be coming soon.
It's a great move. Jamba may be struggling on an operating basis, but its brand is still the top dog in premium smoothies. The blueprint is there. Trendy coffeehouse chains like Starbucks (Nasdaq: SBUX) and Caribou (Nasdaq: CBOU) have partnered in the past with food giants to put out ice cream and cereal bars, respectively.
Switzerland's Nestle is a perfect partner, with $80 billion in annual sales and the title of world's largest food company. Since it's a juggernaut in everything from candy to ice cream, would it be a reach to see Jamba Juice sorbets?
Before you shake your head, remember that even Jones Soda (Nasdaq: JSDA) has struck frozen juice pop and carbonated candy deals.
You also might be forgetting that Jamba finds customers willing to pay extra for nutritional "boosts." If Jamba's supermarket products can stand out on the refrigerated shelves because of their functional boosts -- and they will -- we're not just talking about a company slapping a premium brand on a "me too" product.
Why do you think that Coca-Cola (NYSE: KO) paid $4.1 billion this year for the maker of Vitaminwater? Jamba won't be the next Red Bull or Hansen Natural (Nasdaq: HANS), but boost-saddled beverages will be worthy of premium pricing at the retail level. In a perfect cycle, the grocers' presence will also be a great ambassadorial move to expand the brand and get patrons out to the smoothie shops for the real deal.
It worked for Starbucks. Jamba won't be the next Starbucks, but it doesn't hurt to stay true to the blueprint.
Former odes to Jamba and other earthy drinks:
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