Why Starbucks Wins: Greenberg
Normally, when a company like Starbucks makes an acquisition that takes into new territory I’m the first to say: “This is a sign the core business has matured—and going forward this will be a different business from the one investors bought.”
But with Starbucks , I won’t.
Its announced acquisition of miniscule Evolution Fresh as the launching pad for a health and wellness brand is not just a natural progression for Starbucks—but downright genius (and, in retrospect, so obvious.)
The success of the new venture, and its growth possibilities, is Starbucks’ to screw up.
But based on history, it won’t.
With any business or investment there is a leap of faith based, in large part, on the ability of management to execute. A hallmark of Starbucks, as a business, is execution. And one thing CEO Howard Schultz has proven is that he can execute.
He executed with an original model of opening up stores across the street from one another that looked like a model destined to destroying itself. (I was an early critic.)
He executed on a turnaround orchestrated by Schultz after the company appeared to lose its way. (Having learned from my past mistakes, I was not a critic.)
And he is likely to execute on this new venture, as well. As he told Maria Bartiromo on air Thursday—Starbucks reinvented a generic business like coffee, so why not do the same with juice?
It just makes sense, and an early investor in Jamba Juice , he certainly knows the juice bar side of the ledger.
Best part: Evolution is being rolled out before the growth of Starbucks legacy business loses energy entirely.
I spend a lot of time knocking companies for what they do wrong—or what their stocks get wrong. In the process I learn to respect those that do it right. On that score, Starbucks is at the top of the list.
P.S.: Don’t ask me what I think the stock is worth. I don’t know. I can’t buy individual stocks but in this case, with a very long-term view, I wish I could.
Questions? Comments? Write to HerbOnTheStreet@cnbc.com