Anyone who’s ever tried to satisfy an urge to snack with a bag of salty chips knows that you have to have a drink to do it right. That, of course, is the basis of cross-marketing: linking the desire for one product to a perceived need for another—and offering customers cost-saving deals that combine their favorite snack foods and beverages is a natural.
Beverage offerings are a perfect way to drive c-store traffic throughout the day and boost your bottom line by cross-marketing to other categories, said Robert Perkins, director of marketing for Rutter’s Farm Stores.
Perkins, who handles cooler CSDs, dairy and juices, always tries to link whatever quenches his customers’ thirsts to all of the snack foods, be they meat, alternative or salty.
“Pepsi and Frito-Lay are a ‘natural’ but we have to get them aligned,” Perkins said. “We also do a lot of bundling deals like a one-liter drink and a 2.5-ounce bag of chips is probably our biggest cross-marketing bundling opportunity.”
Rutter’s most successful beverage cross-marketing comes with its foodservice meal deal, which allows customers to choose any chip brand at the single-serve size.
Combo Deals Consistent Drivers
Because most of Rutter’s stores have an on-premise food program, food and drink combo offers are Jerry Weiner’s favorite way to drive traffic to the higher margin beverages the company sells.
“Even in the stores that do not have our most extensive food program we still bundle a beverage and a chip with a roller grill product,” Weiner said. “In a single cross-promotion we tie into a breakfast sandwich, which is offered at all of our stores.”
Some promotions—like the hot dog combo—are everyday values, Weiner explained, and customers using the touchscreens to order fresh food are automatically offered a variety of combo options as they place their food orders.
Because most of Rutter’s stores have an on-premise food program, food and drink combo offers are one of the chain’s most popular methods for driving traffic to the higher margin beverages the company sells, such as bottled water, energy drinks, coffee and the soda fountain.
Weiner actually sees food driving beverage sales more than the other way around. “Coffee is a very personal product,” he said. “Once a customer has found a coffee he or she really likes, cross-promoting to a breakfast sandwich or pastry with signage is pretty easy. We do the same thing with fountain drinks and candy bars.”
Encroaching Retail Channels
The ability cross-merchandise items within the foodservice category is becoming even more important as other retail channels, most notably supermarkets, mass merchandisers and even drug stores, jump into the foodservice business. Convenience must grow incremental sales and maximize sales from every customer that enters the store. Operators can ill afford to allow other retail segments to gain momentum in the crucial category.
In a new study issued by Report Buyer is a UK-based think tank, connoisseurs craving gourmet, specialty and premium foods and drinks, consumed mass quantities in 2007 valued at $59 billion, a growth of 10.9% over 2006.
The “Gourmet, Specialty and Premium Foods and Beverages in the U.S” report showed that as a growing population of gourmands seeks high quality and natural ingredients, a proliferating number of new gourmet/premium products are reaching the marketplace. This surge in products coupled with increased availability within supermarkets and convenience stores have contributed to the hearty growth in the gourmet/premium foods and drinks markets. By October of 2007, 15% of all new food and drinks introduced to the market fell into the gourmet category.
A synergy occurring between the gourmet and natural foods industries is helping to nourish consumers’ desires for healthier food choices. Gourmet foods and beverages tagged as natural rose from 174 in 2006 to 259 in 2007. Simultaneously, national and independent supermarkets are quickly reinventing themselves with “fresh formats,” carrying greater numbers of gourmet and specialty products to attract more customers.
Authors of the report note that mainstream supermarkets and grocery stores lead the market for gourmet/specialty foods and drinks, accounting for 52% of the total retail dollar sales in 2007. They anticipate this broadening of the gourmet/premium market well into the next decade as growing numbers of marketers and retail channels offer an ever-increasing number of products to attract more customers.
Convenience retailers can capture their “fare” share of the foodservice business by remaining innovative and expanding their foodservice programs to include more freshly prepared foods and natural ingredients, the report said.
Emerging Email Marketing
Gary Gonczy, marketing director for Kwik Trip Inc., is doing his share to promote and grow the company’s foodservice business by getting the word out to a mass audience of new and existing customers. The company’s most successful cross-marketing efforts during the last year were its “Rock Your Pop” fountain drink and milkshake promotions, both of which produced substantial sales traffic and significant sales gains in these categories.
Gonczy said his company has also started an email coupon program that bodes well for future beverage-and-food-driven cross marketing. Kwik Trip, which initially populated its database with names of its thousands of credit card customers it then solicited via email, gets email addresses from its focus groups as well.
At the store level, Kwik Trip associates do not ask customers to sign up, but give out slips with information about the coupon program and directions to the store’s Web address. The email coupon program then delivers exclusive promotional coupons for discounted or free items directly to customers’ computers, and coupon choices can be customized to reflect customer product preferences.
“We have what we think are some pretty valuable customer demographics,” Goncy said. “We’re doing some coupon promotion via email every month based on customer preferences an are just beginning to do cross tabs based on customer preferences.” He reports that about 70% of those solicited initially signed up for the coupon service, and about 50% are willing to do online surveys for the company as well.
David Frankenfield, director of facility revenue for Loves Travel Stops & Country Stores, points out that even truck stops with transient customers can benefit from using beverage sales as drivers. Frankenfield says the majority of Love’s c-stores have subs and salad programs that use fountain drinks to add value pricing to meals and increase revenues.
“Of course, our travel stops are busy 24/7 with the slowest time in the middle of the night, which doesn’t offer much in the way of traffic-driving opportunities,” Frankenfield said. “And combo deals are also limited in our travel stops since we offer coffee or fountain drinks free to truck drivers with fuel purchase anyway.”