Jamba (Nasdaq: JMBA) is ready for an energy boost.
The 769-unit smoothie chain is wrapping up an agreement with global food giant Nestle (OTC: NSRGY) for control of the energy beverage that bears its name. Nestle markets Jamba All-Natural Energy Drink in three flavors through the Northeast under a licensing deal for the rights to Jamba's name.
By the time the deal is finalized in two months, Jamba will have acquired the product formulation and intellectual property for the line and its three flavors. It plans to expand the product's reach once it has full control of the brand.
The energy drinks market is booming. Just ask market leaders Red Bull and Monster (Nasdaq: MNST). The outlook is encouraging. Analysts see Monster's sales growing better than 20% to top $2 billion this year. However, it's also very competitive. Coca-Cola (NYSE: KO) and PepsiCo (NYSE: PEP) figured that their brand, bottling network, and distribution would be enough to topple Red Bull and Monster. They were wrong. There's nothing inherently wrong with Pepsi's AMP Energy and Coca-Cola's Full Throttle. The brands have been able to cultivate fan bases. However, Red Bull and Monster continue to be the market leaders.
Jamba's product isn't simply a carbon copy of the fizzy energy boosts already on the market. The small 8.4-ounce cans contain 70% real fruit juice. The energy boost comes from 80 milligrams of caffeine derived from natural sources. True to its name, it's an all-natural beverage that even shies away from the all-too-popular high-fructose corn syrup.
Jamba's in a good place these days. Same-store sales at its Jamba Juice units have climbed for five consecutive quarters. The emphasis of transferring company-owned stores to franchisees has improved Jamba's finances, freeing it up to acquire a premium tea company earlier this year and now take control of one of the many consumer product lines that it has resorted to licensing out in the past.
Could this have been simply a way to save face if Nestle was planning on backing out of the energy drinks business? Perhaps. Nestle wouldn't be handing the reins to Jamba if it saw monster growth potential here. However, it's ultimately Jamba taking firmer control of its own destiny, realizing that the past year and change of store-level strength makes this the perfect time to take Jamba as a lifestyle and wellness brand to the next level.
Blended just right
Two of the companies in a new report detailing three American companies set to dominate the world are eateries. Jamba isn't one of them, but you can find out the two that are for free. Check out the report now
