How to avoid UnsupportedClassVersionError when installing JBoss Developer Studio ?

Issue

When installing JBDS, like this:

C:\Temp>java -jar jbdevstudio-product-universal-7.0.0.GA-v20130720-0044-B364.jar

This is the output:

Exception in thread "main" java.lang.UnsupportedClassVersionError: com/izforge/izpack/installer/Installer
 (Unsupported major.minor version 49.0)
        at java.lang.ClassLoader.defineClass0(Native Method)
        at java.lang.ClassLoader.defineClass(Unknown Source)
        at java.security.SecureClassLoader.defineClass(Unknown Source)
        at java.net.URLClassLoader.defineClass(Unknown Source)
        at java.net.URLClassLoader.access$100(Unknown Source)
        at java.net.URLClassLoader$1.run(Unknown Source)
        at java.security.AccessController.doPrivileged(Native Method)
        at java.net.URLClassLoader.findClass(Unknown Source)
        at java.lang.ClassLoader.loadClass(Unknown Source)
        at sun.misc.Launcher$AppClassLoader.loadClass(Unknown Source)
        at java.lang.ClassLoader.loadClass(Unknown Source)
        at java.lang.ClassLoader.loadClassInternal(Unknown Source)

What does it mean and how to avoid it ?