Wednesday, June 6, 2007

Jamba Juice, Shareholder Meeting

One of the benefits of living in California is that many popular companies are based in the Bay Area. I enjoy attending annual shareholder meetings, and the Peet's meeting this year was wonderful. While Peet's is based in Emeryville, CA, the meeting took place at the new roasting facility across the beautiful Oakland Bay. I spoke with the Chairman who told me about Peet's history (Peet's first store was in Berkeley, but Peet's was originally Starbucks and then sold the first few stores in Washington state to "some guy named Howard Schultz," as the Chairman explained, with a smile).

Jamba Juice's annual meeting--its very first one--also took place in Oakland, at the Marriott City Center near Chinatown. The Chairman was impressive to listen to, but the other speakers seemed more focused on marketing than the nuts and bolts of running a business. In an industry where location is everything, Peet's and Starbucks are snapping up almost all the great locations. For example, Peet's just opened new stores in Morgan Hill and downtown San Jose. Those could have been Jamba store locations. Unless Jamba intends on selling its product over the Internet or solely in stores, it needs to focus on locations and favorable lease terms to increase revenue. I was disappointed that the company does not purchase any futures contracts, but a corporate officer explained that the primary product they use was strawberries, and no futures market exists for that ingredient. He also explained to me that Jamba Juice tends to favor suburban locations rather than business-centric, downtown locations because suburbia offers seven-day-a-week foot traffic, whereas business districts are typically ghost towns on weekends.

Some other interesting notes: Jamba is focusing on opening kiosks in airports and perhaps also having drive-thrus. They seem to be shying away from a heavy physical presence, perhaps because of high rents--especially closer to the more residential areas in Washington and California, where strip mall rents are much higher than average. But why go public if the money raised will not be used to increase a physical presence? A private company can just as easily enter into partnerships and devise marketing plans.

The Chairman stated that he has received many offers to open stores internationally but he was being cautious about opening abroad because he wanted to carefully control the brand's image. Another speaker dropped an interesting tidbit about Jamba partnering with another major player to sell beverages in stores. If Jamba partners with Coca-Cola, which has been increasing its non-soda portfolio of assets, most recently with Caribou Coffee, then perhaps the stock will experience a short term boost.

Most disappointing was that Jamba did not offer any of their products at the meeting. For a first time meeting, however, perhaps Jamba did better than most would have.

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