It’s no surprise to convenience-store retailers that beverages are a crucial draw to their stores, but with increased competition from businesses outside the industry, c-stores must be aware of generational differences and craft an appropriate strategy.
Donna Hood Crecca, principal at Technomic, spoke March 1 on Consumer-Centric Cold Beverage Strategies at the Convenience Retailing University in Nashville, Tennessee.
“Fifty-four percent of fuel/charge consumers enter the convenience store nearly or every time they visit, and it’s highest in the South and lowest in the Northeast,” Crecca said, citing recent Technomic data. The top item purchased is beverages, both packaged and dispensed and made to order.
It’s important to be tapped into consumer wants and needs so programs are “really sharp,” she said. “If you’re not getting marketing dollars, remind people how important this is.”
After noting that beverage purchase frequency is stable, Crecca showed images of outside competitors such as American Fork, Utah-based Swig (60 locations in seven states), London-based Gong cha (2,000 locations worldwide) and CosMc’s (from Chicago-based McDonald’s with one location in Bolingbrook, Illinois, and nine planned for Texas)—then noted, “Beverages are so powerful that everyone is looking to grab share.”
“Beverages are so powerful that everyone is looking to grab share.”
“We found that 90% of c-store operators are finding increased competition from operators outside c-stores such as QSRs—Wendy’s, Taco Bell, Sonic, Chick-fil-A,” Crecca said. “Why are they so interested in beverages? Beverages continue to draw in customers—and the margin.”
In a closer look at today’s c-store beverage consumer, Crecca said:
- 80% of consumers buy once a month or more.
- 55% buy once a week or more.
- 81% of consumers typically buy cold dispensed.
- 42% typically buy hot dispensed.
Among cold-dispensed buyers, the demographic skews young (18 to 34), female and Hispanic/Latino, Crecca said.
Regionally, the share of c-store patrons who typically buy cold-dispensed beverages:
- 84% in the Midwest.
- 82% in the South.
- 82% west.
- 71% in the Northeast.
Among those who frequent once a week or more, cold-dispensed beverage use is:
- 66% buy fountain drinks.
- 40% buy from a bubbler.
- 41% buy frozen.
Aging Country
Americans are aging, Crecca said, a shift retailers must be aware of.
“The median age for an American is 38 years old,” she said. “That’s up from 30 in 1980; 38 years old is the sweet spot for food-away-from home usage. That’s when consumers have the highest frequency of visiting restaurants and sourcing food away from home.”
After the same time, however, population growth is slowing, she said.
“In the next seven years, we are going to add 15 million people to this country, which is great, except it’s 1 million less than we did in the prior seven years,” Crecca said. “From a macro perspective, we really can’t factor population growth into our growth forecasting because we can’t rely on it. We don’t have more consumers. We actually have less. What that mean is there’s more competition for fewer consumers.”
Crecca then segued into highlighting key distinctions among generations. “It’s important to factor in generational behaviors into your LTOs and overall plan for the program,” she said.
Gen Z (19-31):
Top reasons for choosing cold dispensed in c-stores, per Technomic data:
- Like large fountain beverage sizes.
- Want a drink over ice.
- Crave these drinks.
- Fountain tastes fresh.
- Like to combine, create their own concoction.
Crecca added that 55% of purchases in this group are planned while 45% are impulse.
In addition, the following prompt purchases and a willingness to pay more for cold-dispensed beverages:
- All-natural
- No artificial ingredients
- Naturally sweetened
- Supports immune system
- Vitamin-enhanced
- Stress relief/relaxing
- Reduced sugar
- Supports digestion
- Sustainable ingredients
- Boosts energy
There’s a willingness to pay more for cold dispensed beverages, she said. “Gen Z’s definition of health is more what can I nourish my body with,” Crecca said. “A more positive look at health.
“Momentum for Gen Z is with fountain,” she added. “They can customize.”
Millennials (32-47):
“Millennials are more pragmatic than Gen Z in reasons for buying cold dispensed,” Crecca said.
Top reasons for choosing cold dispensed in c-stores:
- Want a drink over ice/like large fountain beverage sizes.
- Fountain beverages offer good value.
- There are often good promotions/discounts and bundles.
- Fountain tastes better than other formats.
- Like specific fountain brands.
She added that 64% of purchases are planned while 36% are impulse.
In addition, the following prompt purchases and a willingness to pay more for cold-dispensed beverages:
- Stress relief/relaxing
- No artificial ingredients
- Supports immune system
- Vitamin-enhanced
- Naturally sweetened
- All natural
- Sustainable ingredients
- Boosts energy
- Supports digestion
- Organic
Gen X (48-58):
Top reasons for choosing cold dispensed in c-stores:
- Want a drink over ice - “Gen X overindexes by 11% over general population,” she said.
- Easy to drink while driving.
- Fountain beverages offer good value.
- Want to drink out of a straw.
- Like large fountain beverage sizes.
- Fountain tastes fresh.
Purchases are split 50-50 between planned and impulse, Crecca said.
“Gen X overindexes on lemonade and sugar-free beverages,” she said, “and also are increasing consumption of energy drinks and boba/bubble tea. Perhaps they’re inspired by their Gen Z kids?”
In addition, the following prompt purchases and a willingness to pay more for cold-dispensed beverages:
- All-natural
- Naturally sweetened
- No artificial ingredients
- Sugar-free
- Vitamin-enhanced
- Supports immune system
- Stress-relieving
- Reduced sugar
- Supports digestion/reduced fat
- Contains probiotics
Baby boomers (59-78)
“By 2030, a fifth of the U.S. population will be 65 or older, and these seniors are unlike any group of seniors we’ve seen before,” Crecca said. “They’re going to control half of the wealth in the United States, so they’re more affluent than seniors have been in the past. This is also the generation that drove the growth of chain restaurants, fast food and full service. They love dining out.”
Through COVID, this generation’s mindset shifted, and now they’re driving the experiential economy, “kind of a YOLO (you only live once) thing going on: I’m going to live life to the fullest, take advantage of experiences, explore, dine out, travel. All of that is kind of happening at an unprecedented rate with this generation,” she said. “So how can you cater to them? Don’t miss an opportunity. Many have a lot of money.”
Top reasons for choosing cold dispensed in c-stores:
- Want a drink over ice.
- Fountain beverages offer good value/like large fountain beverage sizes.
- Want to drink out of a straw.
- Easy to drink while driving.
- Want to treat myself.
Crecca said 55% of purchases are planned while 45% are impulse.
In addition, the following prompt purchases and a willingness to pay more for cold-dispensed beverages:
- All-natural
- No artificial ingredients
- Reduced sugar
- Naturally sweetened
- Diet/reduced calorie
- Supports digestion
- Supports immune system
- Reduced fat
- Organic
- Sustainable
“I know it’s hard to mix up the cold-dispensed beverage assortment due to contracts, but lean on your suppliers. Say, ‘Show me what you have that speaks to these types of attributes so I can grow my relevance to different consumer groups.’ A lot of suppliers have access to data, and they also have some great product portfolios.”
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