Jamba Juice Among Companies Being Imitated in China: Good for the Brand?

| About: Jamba, Inc. (JMBA)

After the fake Apple (NASDAQ:AAPL) store was highlighted last month, journalists have started reporting about several other Chinese “copycat stores” that resemble western brands.

Ikea, Disney Stores (NYSE:DIS), Subway and Dairy Queen were among the first names that were quoted as being “imitated” in China – as it might be reasonable for trademarks with a strong international appeal. It is a bit more unexpected to see Jamba Juice (NASDAQ:JMBA) among these leading companies, as WSJ reported yesterday:

At Jambo Juice in Beijing, where smoothies are made on-the-spot so consumers can add so-called energy boosters and opt for antioxidants, the green signs and tropical colors are familiar to anyone who has ever patronized U.S.-based chain Jamba Juice, which doesn't have outlets in China.

But Jambo's founder, Ye Jiabin, says he got the English name from an African language (it is a greeting in Swahili), and is now considering changing the name because it is too similar to the U.S. company. "We've just always put more emphasis on the Chinese name"—which is Jiang Bao—he said.

The place, by the way, seems to be getting decent reviews:

This little smoothie bar is a rare find in Beijing. With smoothies similar to Jamba Juice, including your choice of a free booster to boost up your health, it's just unfortunately it's hidden away under Central Park. The best part is, it has my favorite wheatgrass shots.

If “imitation is the sincerest form of flattery”, Jamba Juice should be seriously flattered.

However, both management and investors would probably rather go for royalties and licensing fees.

As the number one top-of-mind smoothie brand in the USA, Jamba Juice is trying to transition from a made-to-order smoothie company to a healthy, active lifestyle brand.

These copycat stores are probably an indirect validation of the company's belief that there is a potentially huge market, both domestically and internationally, for Jamba's product offering.

Right now the company is also building a licensing platform that is being launched in the USA, and includes multinational partners like Nestle (OTCPK:NSRGY). Any kind of foreign imitation may be seen as helping creating a market that these partners are certainly watching carefully and that Jamba may try to pursue in the future.

As far as international expansion of its (original) sales points, so far the company opened a store in Nassau, Bahamas, is developing several locations in Korea, and signed franchising agreements to establish new stores across Canada and the Philippines – and has a few copycat unknown locations in China, of course.

Disclosure: I am long JMBA.