In a Bloomberg article published yesterday :
Doug Evans, the company’s founder, would compare himself with Steve Jobs in his pursuit of juicing perfection. He declared that his juice press wields four tons of force—“enough to lift two Teslas,” he said. Google’s venture capital arm and other backers poured about $120 million into the startup. Juicero sells the machine for $400, plus the cost of individual juice packs delivered weekly. Tech blogs have dubbed it a “Keurig for juice.”
But after the product hit the market, some investors were surprised to discover a much cheaper alternative: You can squeeze the Juicero bags with your bare hands. Two backers said the final device was bulkier than what was originally pitched and that they were puzzled to find that customers could achieve similar results without it. Bloomberg performed its own press test, pitting a Juicero machine against a reporter’s grip. The experiment found that squeezing the bag yields nearly the same amount of juice just as quickly—and in some cases, faster—than using the device.
Force enough to lift two Teslas when two feeble hands would do the trick is a bit excessive, no? Marketing push aside, I know using the hands for the purposes of extracting juice would be often messy and supremely inconvenient. And consumers value convenience over anything else – they would no-doubt buy a juicer machine (the burden of turning that convenience into a sustainable business rests on the companies though). Also, the juicer promises a lot more – it’s an IoT device, wifi connected which can remotely disable recalled/expired packs among other things, and (promises to be) an improvement over the current ones available.
But Keurig for juices? Keurig started off with providing a differentiated product in the form of proprietary coffee brewing machines and the patented k-cups (they licensed with the leading brands that the consumers preferred) – they made their money from these k-cups. The machine was the moat – consumers needed to have those to be able to use the k-cups. Keurig was a great business – there’s a huge difference between a great coffee and an ok coffee: quality of beans, roasting technique and what not; and consumers are willing to pay for the quality. But cut fruits and vegetables in the packs – where’s the differentiation here? The real magic here is Juicero’s “farm to glass” system; as claimed in the blog, “farm fresh, organic produce that meets USDA Organic standards—all washed, chopped and ready to press”.
It remains to be seen if this is a sustainable business model. Let’s see; the product that Juicero is selling is high quality (farm fresh, organic) fruits and vegetable packs – perishable at the end of the day, and so requires a great distribution channel which Juicero is establishing, and has a clear lead. Any potential competitor would need to enter at scale to compete. I think the company might have a shot – the machine is a nice, non-messy way to get the end-product; more importantly (atleast initially) the target consumers are the ones focused on quality – they’re not really playing on price-differentiation – so those should be willing to pay for the convenience. Ultimately though, the company has to be able to expand demand and reach a minimum efficient scale before it can get to a sustainable unit economics. It needs to be seen though if there is a market large enough for this. (I do think though that if you’re going to be subsidizing the juicer machines and earning the profit on the packs it makes business sense to not limit the sales to the juicer-holders – you’re just constraining your revenues.)