Sales of dispensed and packaged beverages have been trending similarly for the past couple of years, with the gap gradually growing smaller as dispensed beverages have been gaining share.
Don Burke (pictured), senior vice president of Management Science Associates Inc., Pittsburgh, spoke at CSP’s Dispensed Beverages Forum on April 10 on challenges, trends and opportunities in the category.
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The gap between the two categories grew during the pandemic, when consumers shifted more toward packaged beverages because they were sealed and perceived as a safer choice, Burke said.
The gap is now closing, which “shows some consumers are slowly going back to dispensed beverages,” Burke said. “It’s pretty encouraging. They are getting more comfortable with a dispensed beverage.”
In 2022, 60% of all beverage sales were packaged, he said, but in 2024 through March 2 that figure has dropped to 54%. “Good news again, confirming that consumers are becoming more comfortable buying dispensed beverages,” he said.
Burke presented a slide of the United States showing the total dispensed beverages dollars year over year ending March 2, 2024. Sales were best in the center of the country, primarily in Southern states.
“Southern states, where it’s warmer, is growing the strongest,” Burke said.
Top 10
When it comes to what brands to carry, Burke said it’s important to work with the biggest manufacturers. Year to date through March 2, the top 10 beverage manufacturers account for 74% of total dispensed beverage dollars versus 44% of total packaged beverage dollars, he said.
Drilling down to sales in categories and subcategories year to date through March 2, Burke presented a slide showing dispensed cold beverages account for 46% of sales, broken down as (number totals might be affected by rounding):
- Fountain carbonated: 35%
- Fountain noncarbonated: 6%
- Dispensed cold coffee: 3%
- Fountain sports drinks: 2%
Dispensed frozen beverages account for 19% of sales, broken down as:
- Frozen noncarbonated: 10%
- Frozen carbonated: 8%
Dispensed hot beverages account for 35% of sales, broken down as:
- Coffee: 27%
- Cappuccino/specialty coffee: 6%
- Hot chocolate: 2%
- Hot tea: 0%
“This shows where the opportunities are,” Burke said. “Consumers today are looking for added benefits—healthier—they want some other reason to buy the beverage other than they’re just thirsty.”
Another reason consumers buy—or don’t—is the condition of bathrooms. “It’s important for a guest to have clean bathrooms,” he said. “If they’re dirty, they’re going to think your dispensed beverages area is dirty.”
Cold Dispensed Gains
In other highlights, Burke said:
Sales of hot dispensed beverages are not as impacted by seasonality as cold and frozen.
Dispensed cold beverages have gained share in 2024 (46% through March 2 versus 43% in 2022), whereas dispensed hot beverages have lost share (35% through March 2 versus 38% in 2022). Frozen dispensed has held steady in this time, at 19%.
After a 12% increase in 2023 versus 2022, total dispensed beverage dollars year over year have slowed to 3% year to date through March 2. Dispensed cold beverages had the largest increase this year, at 8%.
The year-over-year percentage change in total dispensed beverage dollars, in the 52 weeks ending March 2, shows total dispensed beverages up 10.5%, broken down as:
- Dispensed cold: Up 13.5%
- Dispensed frozen: Up 12.0%
- Dispensed hot: Up 6.6%
However, items are down 4.5% total, broken down as:
- Dispensed cold: Down 5.5%
- Dispensed frozen: Down 7.0%
- Dispensed hot: Down 3.7%
Elsewhere, dispensed frozen beverage dollars continue to rise since 2022, but the rate of increase is slowing in 2024, Burke said. In a slide going back to 2022, in fact, March 2024 was the only month showing a negative: down 0.1%.
Cappuccino and specialty coffee has “a lot more seasonality to it,” Burke said, adding that because declines are more pronounced in the summer months, retailers shouldn’t treat the entire hot beverage category the same. “There are some differences,” he said.
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