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A Smoothie You Can Chew On


The future of the smoothie is chunky. At least, that's what Brian Ng thinks. For months now, he's been in hot pursuit of the perfect combination of chunkiness and cold, pur?ed fruit. In this quest, Ng, a product-development manager at smoothie chain Jamba Juice, has traveled a bumpy road. He's tested all kinds of ingredients in search of the ones that, when put through a blender with fruit, yield no glops, no mush, no graininess. Just honest-to-goodness chunks.

Long known for staples including Banana Berry and Strawberries Wild, Jamba is busy bulking up its menu as part of its bid to become the Starbucks (SBUX) of the smoothie. The 600-store chain, which in the most recent fiscal year posted net income of $2.9 million on sales of $253 million, is on the cusp of its most aggressive expansion ever, both in its products and its physical presence. Jamba plans to boost store count to as many as 1,095 over the coming three years. "Just as Starbucks defined the category of coffee, Jamba has the opportunity to define the category of the healthy snack," says Brian Moore, analyst at Wedbush Morgan Securities. He thinks Jamba could eventually expand to as many as 5,000 locations.

Privately held since its 1990 founding, the chain went public last November when it was acquired by Services Acquisition Corp. International, a so-called blank check company formed solely to raise funds to acquire an existing business. Major shareholders of newly christened Jamba Inc. (JMBA) include Soros Fund Management and venture firm Benchmark Capital Management Co. The chain does not lack for experience at the top: Its chairman is former AutoNation (AN) and Blockbuster (BBI) CEO Steven R. Berrard. CEO Paul E. Clayton was president of Burger King Holdings Inc.'s (BKC) U.S. operations before joining Jamba in 2000. Now, with $85 million in cash and little debt, Jamba is filling out its ranks, laying out $3 million this year, in part to hire and train such crucial employees as store and district managers, real estate analysts, and product- development experts.

Expanding the definition of the smoothie, and adding a warm product--perhaps, executives say, a "hot, savory pocket"--is key to the chain's ambitious plans. Its current smoothies are, well, smooth, since they're marketed as beverages. Typically, they're a blend of fruit, fruit juice, and ice. Some contain yogurt or peanut butter. But Jamba has a pressing business reason to add new textures and ingredients to the mix: As part of its sales strategy, the chain wants to boost the frequency of customer visits. Visits total fewer than two a month for almost 80% of Jamba customers. If Jamba can make some products more filling, it could attract not just thirsty customers but also hungry ones. Since any ingredient that requires some chewing likely adds calories and feels more filling, "texture is part of how we'll get there," says Paul Coletta, Jamba's senior vice-president for marketing. That's what makes Ng's experimentation in Jamba's food lab such a vital strategic effort for the company.

CHIC EATS

Just as fashion houses must stay on top of the latest trends in clothing styles, Jamba must scope out the coming trends in taste. Once it spots the next hot flavor, nutritional trend, or texture, it must figure out how, and when, to incorporate it into products. It must excel at jumping on nascent trends--if not launching them--before rivals.

In food circles, adding more texture and nutritional value to products is in. That became obvious on a trend-spotting trip to Manhattan that Coletta and six members of his staff took in mid-April. The group sampled the menu at two dozen eateries and noted grains such as flaxseed added to beverages and baked goods.

But what texture would work in a Jamba smoothie? Chunky is in synch with the current consumer desire for "natural" products that seem "organic and wholesome and real," says Coletta. Over the last several years Jamba has toyed with the concept unsuccessfully. Ng, a lanky 27-year-old with spiky black hair, spent months experimenting with peanut and cheesecake smoothies. But the ground peanuts felt too gritty and didn't even taste like peanuts when mixed with the other ingredients. The cheesecake smoothie, which contained bits of graham cracker, failed, too. "It added some chunkiness, but after 15 minutes it just turned mushy," says Ng.

Stymied, Jamba put chunkiness on hold. Ng turned to other projects, working on low-calorie fruit-and-juice smoothies and low-carbohydrate smoothies. But late last year, the need to tinker with the original smoothie formula became more urgent, largely because Jamba wanted to introduce a product substantial enough to serve as a light meal. In a brainstorming session, vice-president for product innovation Brian Lee, Ng, and a few others kicked around ideas for ingredients, suggesting nuts, corn meal, carrots, even beans. Granola seemed the most promising avenue, so Ng scooped up a few pounds of every kind of granola he could find. Some made the mixture too thick; adding more liquid made them too runny. A hard-to-pour smoothie is heresy at Jamba, since Lee says that watching a smoothie being poured from the pitcher into the cup with a grand flourish is part of the thrill.

Ultimately, Ng narrowed down his recipes to a handful to test in a few stores. Jamba won't disclose the actual ingredients, although Lee says that the product contains "a variant of granola and cereal." If consumers like it, Jamba will have made a big step forward. If not, Ng can look forward to a lot of long days in the food lab.

By Louise Lee


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