Category Management Handbook

Cold Is the New Hot

Iced and cold coffee show potential in dispensed beverages

Dispensed beverages are trending down—down the temperature gauge, that is. Hot beverages are getting cold and cold beverages are getting bold.

According to Chuck Moyer, foodservice category supervisor for Rutter’s Farm Stores, York, Pa., demand for iced coffee at his 60-store chain is strong. He sees consumers continuing to select it over hot brew year-round, even in winter months. Cold-brew coffee, made through a slower method than iced coffee, is also worth the attention of operators.

“Many coffeehouses have been offering the product already,” Moyer said, “but I think you are going to see a big push for c-stores to figure out how to execute it in our environment.”

What’s the difference between the two? To make iced coffee, you set up pour-over coffee made with hot water to drip onto ice cubes, which instantly cools the fresh brew. It tastes like normal full-bodied coffee, although sometimes it is a bit diluted because of the melted ice.

To make cold-brew coffee, you most use a gradual steeping process, which can take up to 24 hours. Immerse the coffee grounds in cold water to soak them, and then filter the mixture. The resulting concentrated coffee, typically mixed with milk, tastes smoother and less bitter than regular drip coffee.

Getting Personal

For hot dispensed beverages, Moyer sees growth potential in handcrafted or signature beverages such as espresso-based drinks, lattes and frappes. Jerry Weiner, who served as vice president of foodservice at Rutter’s before retiring in 2015, calls it the “have it your way” phenomenon.

“Customers want personalization and customization,” Weiner said. Rutter’s offers six sweeteners, nine liquid flavors, four different dairy products, two nondairy products, syrups, whipped creams and more. “I’d watch people put six or seven ingredients in and wonder what in the world was in that cup,” he said.

Moyer recommends using limited-time offers (LTOs) as part of a dispensed-beverage strategy. “While everyone needs to offer a strong base of core everyday flavors, consumers are constantly looking for variety and options,” he said. “We must install seasonal programs that leave our customers excited to see what is coming next.”

For traditional hot-brewed coffee, Weiner always favored fair-trade products. A segment of his customers appreciated fair-trade coffee because it supported a social cause. And all of his customers could appreciate the quality of the coffee, even those who had never even heard of the term “fair trade.”

“Coffee is different,” he said. “It’s a very personal beverage.”

Nontraditional Options

Consumers are looking for variety in cold dispensed beverages as well, specifically more noncarbonated options that might not traditionally be found on a fountain—“things like energy drinks, teas and enhanced waters,” Moyer said.

C-stores’ biggest challenges in staying on top of these new trends? Space and time. New stores can be built with extensive self-serve beverage areas in mind, but incorporating them into existing stores with small layouts can be difficult. It’s also hard to compete with coffee shops and drink chains “whose entire focus is the hot beverage category,” Moyer said. It’s tough to stay out in front of the newest flavors.

Hot Beverages

Cold Beverages

View the full 2016 Category Management Handbook

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