Increasing beverage sales means customization, beefing up foodservice offer
LAS VEGAS -- Personalization and a strong foodservice program are the keys to increasing beverages sales, according to panelists at "A 24-Hour Buzz: Effective Beverage Marketing" workshop on the opening day of the 2009 NACS Show in Las Vegas. Both fountain and coffee categories offer operators big opportunities for sales growthif you deliver on your customers' wants and needs.
Steve Johnson, vice president of convenience retail for The Coca-Cola Co., Atlanta, urged attendees to be conscious of channel blurring in their markets, particularly from drug chains, which, according to Coca-Cola [image-nocss] data, are creeping in on fill-in and immediate-consumption shopping trips.
Johnson also pointed to the 1.3% increase in convenience store meal and snack traffic in 2008, compared to the 14.2% drop in overall c-store traffic for the same time period; 30% of c-store shoppers are buying food, and 77% of those valuable customers are also purchasing drinks.
The hurdle operators must face is how to lure in those food buyers, and it is not all about the price tag. "Value is not defined as the cheapest price," Johnson said. It is also service, offer and atmosphere. "So what is your value proposition, and how are you different?"
For retailer Quinn Ricker, director of operations for Ricker Oil Co., Anderson, Ind., the value proposition is a fountain program that delivers new and updated equipment, various ice selections, multiple drink stations, brand optimization and aggressive pricing strategies.
Ricker's most-sold product is the fountain beverage, called Ricker Pop (the chain offers both Coca-Cola and Pepsi products). "The item most commonly sold with a Ricker Pop is another Ricker Pop," he told attendees. The top Ricker's stores can see as much as $40,000 per month in fountain sales.
Ricker's stores house eight-head fountain units with between 16 and 24 heads: "It tells your customer you're dedicated."
Multiple stations help drive adjacency and go-together sales and keep traffic flowing quickly. Further, the addition of chewable ice helped sales grow between 9.4% to as much as 23.4%.
Ricker advised attendees to study area competition and customer demographics to determine price point. "It can't be a one-size-fits-all," he said. Ffountain beverages sell for 79 cents at Ricker's stores.
Meanwhile, Nancy Waldron, category management analyst, S&D Coffee Inc., Concord, N.C., stressed the importance of product quality and broad condiment offerings for a successful coffee program. "You never want to lose a customer because you don't have what they want," she said.
Despite consumers drinking more coffee at home, as well as competition from quick-serve restaurants (QSRs), Waldron nonetheless sees opportunities for operators to expand coffee sales. If they are drinking more coffee at home, then start selling bagged beans at retail.
And if you are losing customers to Starbucks, McDonald's or Dunkin' Donuts, then offer the one thing they don't: customization. Coffee is a very personal experience, said Jerry Weiner, vice president of foodservice at Rutter's Farm Stores, York, Pa. "Choice is what appeals to the masses."
Rutter's delivers this with a plethora of fresh-brewed coffee varieties, including fair-trade and 100% Columbian options. Single-origin, organic and fair-trade coffees are experiencing increases in purchase incidences every year, said Waldron.
A condiment bar stationed away from the coffee allows customers to personalize their brews with a bevy of sweeteners and creamers. "We could never do that if it were behind the counter," said Weiner. "I can't stress how important that is."
Waldron agreed, pointing out that customers love the "science kit, the mixology of it."
She recommended retailers drive coffee sales by ramping up breakfast foods and offering meal combos and the foodservice promotions.
According to Weiner, the most important part of a coffee program is also often the retailer's biggest Achilles heel: freshness. "Coffee is a 24-hour item. Treat it at 6 p.m. the same as you treat it at 6 a.m."
[The NACS Show kicked off this week with more than 1,000 exhibits filling 350,000 net square feet of floor space, showcasing the newest products and services for the $624 billion convenience store industry. NACS said it expects approximately 22,000 attendees to participate in the annual event. Check the CSP Twitter Feed for frequent updates and insights from the sessions, the show floor and more, including the fun and Vegas nightlife.]