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Have We Reached Peak Juice?

What happens when there are more juice bars than juice consumers.

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You're going to start seeing juice in places you've never seen it before," Andrew Walker enthuses. The 36-year-old Montreal native and Clover Juice co-founder is nothing if not a juice evangelist.

"You're going to go to a club with a DJ spinning music and see juice in the bottle service area where people used to buy cocktails and Red Bull. People aren't even going to ask, ‘What happened to Red Bull?' because they'll already know that with juice, they can stay up longer, won't wake up with a bad hangover, and are actually getting minerals into their bodies."

Walker is sitting in an office in Northeast Los Angeles with his wife and co-founder, Cassandra. In front of them on a long wooden farm table is a colorful array of Clover Juice's offerings: two different types of green juice (both made with plenty of kale), some ginger drinks (one with carrot, another with lemon), a pink chia seed concoction, and an opaque coconut elixir complete with floating fruit chunks. Like most boutique juices, they are cold-pressed, meaning their contents have been pulverized and then hydraulically pressed, instead of blended using a blade that generates heat and can affect nutrient content.

Clover Juice has instituted a national shipping program to help it expand.

Clover Juice has been an LA hit since 2013, when the Walkers started the business out of a local yoga studio; it currently produces around 2,000 bottles a day. The juices skew sweet because, as Cassandra explains, they want customers to "actually taste green juice without having to plug their nose to get rid of that very thick taste." The company now has three store locations in LA and recently rolled out a national shipping program.

The move to ship fresh, raw juice overnight is a way for Clover Juice to attract customers outside of Los Angeles and stay afloat in the ever-crowded juice industry. "You couldn't survive with just a storefront or two," says Andrew. "You need to expand to catch up."

"I don't think every juice company can survive, that's for sure."

While juice was considered a specialty purchase just a few years ago, cities like LA, New York, San Francisco, Boston, and Chicago are now flooded with juice shops. Grocery store aisles are similarly inundated. It's become an almost-Darwinian competition for the innumerable companies in the space.

"We see juice bars closing up daily here and it breaks my heart," Cassandra says in a low voice. "It's happening right now. We're watching it happen. I don't think every juice company can survive, that's for sure."

In describing the early days of the juice revolution circa 2008, the New York Times referred to juice devotees as "zealots from the raw-food fringe." At the time, cold-pressed juice could only be found at health food stores and was associated with crunchy granola types, as well as athletes and celebrities who turned to juice for detox. Oh, how things have changed. By 2012, Barron's was calling juice a "national movement," with mainstream shoppers shelling out up to $14 for bottles of organic juice, thanks in part to a general shift towards wellness.

Lulitonix just opened its first brick-and-mortar store.

In some cities, juice really is everywhere. Take Los Angeles: If it's the land of a thousand juice bars, then West Hollywood may just be the city's juice capital. Walk down the neighborhood's main drag and you'll find two Juice Served Here locations just a few doors down from Kreation Juice and around the corner from spots like Qwench Juice Bar, Nekter Juice Bar, Earthbar, Pressed Juicery, Beaming, and Shred Juice. It's nearly impossible to walk a block without stumbling upon a new juice spot.

Market research firm IBISWorld estimates the juice industry as a whole now brings in $2.3 billion in annual revenue; the LA Times reports the cold-pressed juice segment is valued at an estimated $100 million. While IBISWorld credits giants like Jamba Juice and Smoothie King for moving the needle, analyst Andrew Alvarez notes that more than two-thirds of the juice market's money is actually coming from independent brands.

"In just about every city that's got a rich concentration of educated, trend-sensitive health-and-wellness subscribers, we're seeing independent juice bars."

Among the first of these companies to make waves was BluePrint, which attracted attention thanks to its regimented cleanse that was hailed by celebrities like Gwyneth Paltrow, Sarah Jessica Parker, and Beyoncé. The popularity of these cleanses, which hit the market in 2009, are credited with kickstarting the juice craze, even as the trend has shifted from extreme cleanses to one-off juice purchases. In 2012, organic food behemoth Hain Celestial acquired the company for a reported $26 million and began to treat the juices with HPP, making the products shelf-stable and available for purchase in stores like Whole Foods and Target.

Liquiteria, New York City's first juice bar, opened in 1996, but embarked on an aggressive expansion plan in 2013, debuting four more locations in the city; it also arrived in Boston earlier this year. Juice Generation, a once-small company that had a single shop in Hell's Kitchen in 1999, has since grown to 15 locations in Manhattan, Brooklyn, and Long Island City. Juice Press, which opened in 2010, is now New York's largest juice chain, with 25 locations. In LA, Pressed Juicery is considered one of the city's juice pioneers. Founded in 2010, it now has 29 locations and is sold at Equinox gyms. These major players must not only contend with one another, but with the myriad smaller brands that have popped up.

"There's just tons of variety and, more importantly, formats with juice growth," says Jeff Klineman, editor-in-chief of BevNet, a site that covers the beverage industry. "We're seeing everything from growth of national HPP brands like Suja and BluePrint to a number of regional restaurant chains [offering juice]. In just about every city that's got a rich concentration of educated, trend-sensitive health-and-wellness subscribers, we're seeing independent juice bars."

Juice Served Here has 10 locations in LA. Photo: Juice Served Here

Huge corporations have a stake in juice, too. Starbucks owns Evolution Fresh, Coca-Cola has Odwalla, and Pepsi has Naked Juice. Alvarez believes this juice explosion is actually delaying the industry's progress. He predicts that as the market gets more and more saturated, it will grow at a rate of just 2 percent.

"It's reached a point where there is more juice out there than people actually consuming it," says Hayden Slater, CEO of Pressed Juicery. "For a long period of time, I welcomed competition because I was a firm believer in the more the merrier—there's a pizza and coffee shop at every corner, and they all seem okay, right? Well, that was two years ago. Now it's just pure madness. There are 22 juice stores in a 1.4-mile radius in LA. That's asinine."

Lianna Sugarman, founder and CEO of New York-based juice company LuliTonix, agrees and posits that a lack of business savvy is a problem in the space.

Photo: Juice Served Here

"Probably in the last few minutes, five people have woken up and said they want to start a juice company," says Sugarman. "But this isn't something that you can just do as a dilettante. A lot of us went into this because of the love of the product, but you can't just be like, ‘Oh, I love juice, and my yoga business isn't going that well, but I'm like, really into spirituality.' That's not going to work! There are a limited number of people buying $11 juices."

The industry's growing pains are beginning to show in a serious way. Several Jamba Juice locations in New York City have shut down, even though the brand added cold-pressed options to its lineup last year to keep up with juice trends; new investors are hoping to help the struggling business. Last month, Starbucks quietly closed its brick-and-mortar San Francisco location of Evolution Fresh, as it was presumably unable to compete with the city's countless other juice shops.

On the boutique end, OMGBlends recently announced on its site that it was ceasing online orders. Seattle-based Vital Juice is halting operations while the brand "seeks a partner for help," founder Edward Balassanian tells Racked. The Awl recently reported that New York City restaurants offering cold-pressed juices of their own are causing friction with neighboring juice bars.

And then there are the problems at Organic Avenue. The 15-year-old chain, which has 10 locations, laid off a third of its staff in January, citing "economic" troubles. It also closed two stores last year and has delayed the opening of additional locations slated for 2015. Sources tell Racked that the company was shopping around for a buyer in the spring and was even in talks with competitor Juice Press before CEO Marcus Antebi walked away from negotiations. It seemed like a fairly natural fit: Like Juice Press, Organic Avenue also sells vegan food alongside its juice.

"That's not going to work! There are a limited number of people buying $11 juices."

Organic Avenue declined to provide comment for this story, but sent out a mass email days after Racked inquired, informing shoppers they were "under new management." The company has not disclosed who its new owner is, but a source tells Racked it is an LA company looking to scale back Organic Avenue's losses that come from food waste.

Max Goldberg, a health and wellness advocate and founder of the Pressed Organic Juice Directory, says the brand began to run into trouble when founders Denise Mari and Doug Evans sold a controlling stake of the company to investment firm Weld North in 2013, taking the brand in a more corporate direction. Goldberg believes Organic Avenue's new owners "have serious challenges ahead of them."

"Organic Avenue was a beloved brand, but they went through four CEOs in almost five years," he says. "When any company goes through that transition, it can't be a good thing. The brand has really lost its way. You used to see people walking around with those orange Organic Avenue bags, but not so much anymore. People have lost connection to the brand."

Organic Avenue is experiencing trouble in the saturated juice market.

"A lot of mistakes are being made in the juice industry right now, and Organic Avenue is a prime example," adds another juice industry insider, who spoke under the condition of anonymity. "It first started with them expanding too quickly, then it turned into a healthy fast-food thing, and then they became just another Pret a Manger. It's what money people don't understand: You can't dilute the brand to appeal to everyone. Hain Celestial had the same thing when it bought BluePrint—it might be selling well at Whole Foods, but it's not being bought anywhere else."

While other segments of the food industry may be similarly crowded (as Slater mused, think about how many pizza joints and coffee shops are in your neighborhood), very few are as tricky as juice.

While other segments of the food industry may be similarly crowded, very few are as tricky as juice.

"This is the most difficult kitchen I've ever had to run," Mark Roth, Juice Press's director of food and beverage, states matter-of-factly.

Roth is at his company's 18,000-square-foot headquarters in Long Island City. In one of its kitchens, a team of 80 work to produce 8,700 bottles of cold-pressed juice each day. Spanish music blares while colorful elixirs are poured from giant plastic containers and mixed like potions before being bottled and sealed on a neat assembly line.

On a second floor high above the counters, a team presses piles of kale into a massive juicer. One worker stuffs lettuce into the juicer with a giant rod, while another holds a cloth sack to catch the pulp. Around the corner, an enormous conveyer belt moves fruits and vegetable under faucets spraying down the 15,000 pounds of produce that can come through the facility each day. There are cupboards packed with agave cartons; inside the storage room, it looks like someone robbed a Costco.

Juice Press's Long Island City facility.

"It's a lot easier in other food and beverage markets because you're not as limited," says Roth. "Some juices can last five days—our aloe vera water can last 20—but really, after four, everything is done." Adds Sugarman, "You're dealing with temperature-sensitive products that are excited to go bad. They want to die!"

Danielle Charboneau, the director of operations at Juice Served Here, says dealing with spoilage is a daily challenge for her company and its 10 Los Angeles locations.

"There are so many things that can go wrong if you don't operate perfectly at all times," she says. "If the product doesn't get to 35 to 40 degrees within the two hours of it being made, the shelf life goes from three to five days down to one or two. So if your fan breaks down, if your driver leaves the door open for five minutes, it's too late pretty fast."

"Investors who pressure brands to expand, especially when the development headwinds are so strong, are being terribly irresponsible."

But as food and beverage consultant Adrienne Steele explains, the issues juice businesses face go way beyond standard production woes: regulation costs are even harder to keep up with.

"You basically need your own quality control and quality assurance team to make sure you are in compliance with state regulation for manufacturing," she says. "It costs a ton of money just to abide, so it's really limiting for small companies. Then you factor in $20,000 for machinery, and the costs of goods, bottling, labeling, staff, overtime, driving, rent. It's a lot to keep up with and a lot of these people are coming into the juice industry with no food and beverage experience."

Pleasing investors is another bitter pill to swallow. While major Silicon Valley and Wall Street firms are pouring money into juice companies, "investors who pressure brands to expand, especially when the development headwinds are so strong, are being terribly irresponsible," real estate executive Andrew Moger told Crain's New York last year.

Vital Juice's Balassanian says expansion is difficult to deliver on since many retailers are unwilling to sign contracts that benefit both the producer and seller. Juice is considered a high-risk product to stock thanks to its perishability, not to mention it has incredibly small margins and involves often prohibitive upfront costs.

"These companies don't stand a chance," he says. "If you want to be a mom-and-pop shop and do it for the love story, great! But once investors want to start scaling on a national level, it's so hard to be in retail and juicing at the same time. The profits are just not there anymore because it's a margin-sensitive environment. The days of making $5 profit off a juice are gone. Now you make a $16 juice and it actually costs you $16 to create. "

"We're a specialized product. I'm not looking to follow the Taco Bell model. Ever."

When asked about the current atmosphere in the juice industry, Sugarman likens the mood to Game of Thrones. Moon Juice's Amanda Chantal Bacon agrees that it feels like war: her LA company has seen everything from gracious buyout offers to "G-rated Mafioso tactics promising to put us out of business."

"There was a point in my career when that did upset me," she says. "I did have some fear surrounding that. What's helped me is realizing that I'm not in a manic growth headspace. We're a specialized product. I'm not looking to follow the Taco Bell model. Ever."

Still, Moon Juice is ready to unleash some unconventional weapons. The brand launched a beauty line last month and Bacon says it will eventually roll out additional products that make sense for her brand like deodorant, toothpaste, and sunscreen.

Juice Press is staking its future on food.

She says the speculation around town is that big corporations will eventually be mobilizing buyouts of mid-sized brands, while the small companies will either continue to operate on a very minor scale or go under completely. IBISWorld's Alvarez also believes the industry will eventually consolidate and that "growth in the number of locations will outpace the number of new companies, indicating that chains will play a bigger role."

Balassanian, who is currently looking for new business partners for Vital, says he is pitching his brand "as a better-for-you-company, not a juice brand, because it's time to transition out of being a juice company."

"A construction worker is not going to come in here, take his hat off, and ask for a juice recommendation. We are trying to reach the middle class, and the gateway drug for us is food."

Juice Press's Antebi echoed this sentiment at a press event in May: "The standard business model of the American juice bar just doesn't work. The idea of just having a machine press isn't enough to sustain the business anymore. It's just not scalable for 2015."

Antebi believes the future of his company is in food. The brand has offered an assortment of 40 different salads, sandwiches, soups, and puddings since 2010, but has recently revamped its menu to add another dozen items it's deeming more customer-friendly. Juice Press intends to capture new customers by "reinventing vegan food."

"A construction worker is not going to come in here, take his hat off, and ask for a juice recommendation," says Antebi. "We are trying to reach the middle class, and the gateway drug for us is food."

Pressed Juicery believes compromises can be made so companies are able to price their products more competitively and attract this middle-income customer. It doesn't use glass bottles and is not ashamed to admit its products are not organic; as a result, the brand sells juice for $6.50 a bottle—nearly half what its competitors do. The brand is opening locations in New York in the coming months, with the belief that lower prices can wipe brands like Organic Avenue totally off the map.

Pressed Juicery sells its bottles for half of what other companies do. Photo: Pressed Juicery

"I'm the juice customer who used to live in Manhattan and couldn't afford a $12 juice every single day," Slater says. "I'm not interested in making the vegan, Brentwood mom have one more option for her diet. We don't believe health should come in a glass bottle, at $12, for only some people. We're working to get to a point where this will be accessible to everyone. We'll come ahead that way."

For other juice companies, the assumed path towards survival is shipping nationally. Like Clover Juice, Juice Served Here will be rolling out national shipping of its raw juices in October; LuliTonix, which just opened its first store in Soho, plans to follow suit with a new line of HPP juices some time in the next year.

"LA might be super saturated, but there's still opportunity in the rest of the country," Charboneau says. "Vegas doesn't have a ton of juice shops, Arizona doesn't have a ton of juice shops. There are people in Miami and Texas that would order our juice and are interested in getting into the lifestyle."

Because, despite the overabundance of companies, true juice proselytizers believe there are still customers to convert.

"People are investing in their health more than ever," says Clover Juice's Cassandra Walker. "Yes, there will probably be aspects of the cold-pressed world that are going to fade out, but being healthy is not a fad. There's something different about this movement. It has the ability to completely change the way you live."

Editor: Julia Rubin


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