Branching Off Beverages, Part III (CSDs & Juices)
Immediate consumption is c-store sweet spot; variety also critical
OAKBROOK TERRACE, Ill. -- A consumer decision tree can serve as a helpful map of the likely behavior of beverage consumers. It also can highlight opportunities for guiding the purchase to completion and making the shopping experience as convenient and smooth as possible. A decision tree reveals how consumers shop a category, ranking the order and importance of elements ranging from occasion and need state to flavor and brand preferences. Each tree--typically presented as a flowchart--is as different as the subcategory and its core consumer.
According to Technomic, 66% of all consumers say they have consumed a regular carbonated soft drink (CSD) in the past month, with the figure skewing toward 18-to-24-year-old males, 80% of whom have consumed a regular CSD. Meanwhile, 44% of consumers have had a diet CSD in the past month. This segment skews toward Caucasian, middle-age consumers, likely because of health concerns, with no strong skew by gender.
For juice, 16% of consumers claim to have made this purchase in the past month, skewing toward 18-to-34-year olds. Meanwhile, 13% of consumers say they purchased bottled or canned iced tea, with a strong skew toward 18-to-24-year olds.
Ivan Alvarado, director of category management for Dr Pepper Snapple Group (DPSG), Plano, Texas, shared research from the company's 2011 convenience store study, the findings of which he said continue to be relevant. According to DPSG's research, there are two groups of c-store shoppers: regulars who stop at a store because it is on the way to work or to home, and those who treat the store as a destination stop for buying a beverage for the work day (for example, construction workers or landscapers).
When asked why they go to a c-store, 20% of consumers mentioned the need to buy gasoline, followed by the desire to buy an alcohol beverage (12%) and a meal or snack (11%), according to DPSG.
"The decision of what type of beverage they will purchase is determined by the need they are trying to fill," said Alvarado. For c-stores, immediate consumption is the sweet spot.
The first item on the CSD decision tree is regular or diet, followed by single- or multi-serve, can or bottle, cola or flavored. For juices, the decision process is simpler and largely dictated by the end user, according to Alvarado. If the purchase is for an adult, the choice will likely be orange or cranberry juice. If it is for a child, apple or grape juice is more popular. For energy drinks, functionality and brand are paramount.
Variety is critical for beverages, DPSG research found. "A shopper is willing to drive past a c-store because they know it won't have the variety of beverages they're looking for," said Alvarado. "Once I do get to the store, the very first factor that will determine what I want to drink is whether I want packaged or fountain. Fountain is preferred because of the value for the money, or size. On the cooler side, it's mainly variety that plays a very, very important role."
With CSDs, a large variety of flavors can help drive impulse sales. Of course, this is limited by the number of cooler doors and the need to stock core brands, but leveraging the impulse nature of other brands and flavors can drive incremental sales. For example, DPSG research shows flavored CSDs are more impulsive purchases than colas, but they are not necessarily displayed in a way that maximizes that impulse buy.
"If I go to a typical c-store, the most prominent position is typically allocated to colas, just because historically it's always been done that way," said Alvarado. "The biggest brands are also ones that invest the most. We found that by moving flavor brands into premium position--the 'strike zone'--you can drive impulsive, incremental sales for the retailer."
Package variety, however, is not as important as flavor variety, said Alvarado: "Having a multitude of different packages won't necessarily result in incremental sales. [For] energy, you have 8, 12, 16, 20 and 24 ounces. Do you really need all of those package sizes to address the needs of that consumer? If I don't find an 8-ounce, will I have a 12-ounce instead? Or do I really need 24 ounces when a 20-ounce is enough?"
From the perspective of Atlanta-based Coca-Cola Refreshments, a consumer's need state--rather than a traditional decision-tree process--guides his or her beverage choice, said Clint McKinney, group director of category advisory and space strategy. Needs states range across several factors, including occasion, brand, package size and price point, he said, and consumer needs are continuing to change.
"Before considering preferred product attributes, it is essential to understand shoppers and their missions," said McKinney. Coca-Cola's iShop Study considered stockup, fill-in nonfood, fill-in food/beverage, grab-and-go home, grab-and-go and need-it-now missions.
"Among its many findings, it revealed that one of every two trips to a convenience retailer is made to satisfy a grab-and-go occasion," he said. "This highlights that today's consumers are time-strapped and desire convenient solutions to help simplify their lives. Retailers can drive all of this by better understanding their own customers. Point-of-sale displays, food bundles, cold-vault signage, points of inspiration and more drive targeted merchandising and execution based on specific consumer needs. They need to make sure they have the right product in the right package, at the right price point, and for the right occasion."