The Juicero

Juicero, the high-profile juice startup that became a symbol of Silicon Valley excess after a scathing Bloomberg article showed their $400 juicer wasn’t required to squeeze the company’s juice packs, announced today it is shutting down immediately.

It’s a surprisingly fast downfall for a startup that launched just a year and a half ago. Let’s take a look at how we got here:

A Look At The Timeline

The company, which raised approximately $120 million, showed the first signs of trouble last fall when founder and CEO Doug Evans abruptly stepped aside and handed the reins to Jeff Dunn, a former Coca Cola exec who had previously been CEO of Campbell’s Fresh.  The move, likely pushed by a Juicero board that included Campbell’s Soup (which had invested $13.5 million in Juicero), was a sign they were getting impatient and felt the company needed an exec with experience scaling a beverage business.

Dunn’s first major move as CEO was to drop the price from $699 to $399.  A significant price cut early on in a product’s life cycle is usually never a good sign and, in retrospect, this was the first signal the company was missing its sales goals by a large margin.

In March, the company struck a deal with Whole Foods to serve glasses of juice at Whole Foods. It was a good move for a company who had had some success in professional markets (restaurants and cafeterias), but the trial was small, with only 11 Whole Foods in southern California offering up Juicero juice for $5 a pop.

And then came the Bloomberg article. The piece, which focused on the fact the Juicero juice packs could be hand-squeezed, soon became a viral sensation.

And last month, things looked dire as the company announced layoffs of 25% of staff and planned to accelerate a move to a lower-cost, second generation juicer.

What Happened?

My feeling is Juicero’s problems weren’t so much in a high-priced juicer but had more to do with a hugely challenging supply chain issue of its making. The problem, as I saw it, was this: the company was the sole source of juice packs for their juicer which they needed to produce in each region given the lifespan of each packet, but to make those juice packs they needed to build more factories, which would require massive amounts of capital.

That’s it. While most focused on a high-priced juicer, the part of the story most missed is the company had spent a large chunk of their capital building their factory to make juice packs. When I interviewed Doug Evans last year, he told me they had initially tried to find a company to make juice packs, but since no one could readily meet their exacting standards, they had decided to build their own.

It was then their fate was sealed.

The company ended up building a factory in Los Angeles, which meant they could easily supply juice packs to the California market (where they launched), but I always wondered how they could move beyond that. Think about it: The juice packs had a total life span of seven days.  The juicer, which wouldn’t press juice beyond the expiration date, essentially imposed a ticking clock the company had to beat once a juice pack shipped.

This, I think, was what did Juicero in.

The company as much as said this in an open letter on their website:

In order to fulfill our mission, we announced last month that we would shift our resources to focus on lowering the price of the Press and Produce Packs. We began identifying ways that we could source, manufacture and distribute at a lower cost to consumers.

During this process, it became clear that creating an effective manufacturing and distribution system for a nationwide customer base requires infrastructure that we cannot achieve on our own as a standalone business. We are confident that to truly have the long-term impact we want to make, we need to focus on finding an acquirer with an existing national fresh food supply chain who can carry forward the Juicero mission.

Where To From Here?

In the letter, the company indicated they are up for sale and are looking at acquirer with a national fresh food distribution chain. I think its telling that this company is not Campbell’s Fresh, a company that invested in Juicero (through its parent company’s investment fund) and is headed by its former CEO.

Bottom line, the company’s self-imposed supply chain restrictions are going to be difficult to overcome. The Juicero brand, somewhat tainted by the viral Bloomberg story, isn’t enough to attract an investor at this point. The company’s IP around building a cold-pressed juice machine and supply chain might be of interest to some company with designs are tapping into a fresh-squeezed juice product, but chances are it will be at firesale prices.

Goodbye Juicero, we hardly knew ye.

1 COMMENT

  1. Sometimes its about the core idea, other times it’s about execution and capital management.

    This is more about the latter. The juice machine was over-engineered, the supply and distribution chain was built in the most expensive and tricky way possible. It was as if this thing was almost designed to fail.

    Cold-pressed juice is interesting to people, but not at the price points wanted by Juicero. They needed to reset at a lower price point, but they built so much cost into their system it made it all but impossible.

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