Juices and Teas Bounce Back

Innovation, health and pricing are some of the factors that will help or hinder c-store operators looking to make money with juices and teas in 2010.

While juices and teas have struggled over the past few years, 2009 was sort of a renaissance year for the category as both segments experienced sales gains. Overall, for 2009, juices enjoyed a strong year with a 4.08% increase in sales dollars in U.S. convenience stores to $379.43 million, according to Information Resources Inc. (IRI). Unit sales increased about 1% to 187.4 million.

Like juices, refrigerated teas and coffees experienced a strong year with a 4.46% increase in sales dollars to $166.37 million. Unit sales surged 3.08% to 102.7 million.

Retailer’s success with the juice category “all depends where you’re located,” suggested Jack Trebilcock, beverage category manager for 37-store operator Miller Oil Co. in Norfolk, Va. “The south is more of a tea area, with sweet tea being the biggest seller down here. The north has adapted to tea, but they’re more into flavored products. Teas are popular year round here, where they are more for the summertime up north.”

Trebilcock said the new products helped drive sales in 2009. “AriZona came out with its 20-ounce PET bottle, which was good because it exposed them to a new demographic—women and older customers that weren’t into that 23- or 24-ounce can. Once you crack that thing open you’ve got to drink it or just let it sit there, so I think the resealable plastic package was fantastic.”

Trebilcock likes to set aside a full door for teas and a half door for juices, but only manages to do that in half his stores. In the others, due to space constraints, he cuts both allotments in half. Gallon containers of iced teas are displayed on the sales floor.

Price Concerns
Pricing could remain perhaps the most crucial factor in determining retail success. “You have Coke jumping in with Peace Tea [as part of a distribution deal with Hansen Natural Corp.] at 99 cents for a 24-ounce can, and then Pepsi responds with their Lipton one-liters at 99 cents,” Trebilcock said. “Everybody is jumping in, which is not necessarily a good thing for us. I was getting $1.59 for those things, so I’m losing 60 cents for every transaction walking out the door.”

Dropping prices, and hence profit margins, is a phenomenon Trebilcock said he is “seeing all over. Not just in beverages, but in the cigarette category as well, where they’re just low-balling everything. When Coke comes out with a 99-cent 16-ounce cans what does Pepsi do? They come out with a 99-cent 16-ounce can. So $1.59 has now become a 99-cent ring, which means I’ve got to sell twice as much to make the same amount of money.”

Gary Hemphill, vice president with Beverage Marketing Corp. in New York City, said that he expects product innovation in the juice category to fuel growth in 2010. “The marketplace has moved to an era of specialization and to fine-tuned products that target specific consumers and need states. That’s where the growth will be in the category overall.”

Hemphill pointed specifically to niche products with unique fruits that are high in antioxidants. Others also have noted recent product entries in this area including juice sodas and shakes and sugar-free, diabetic-friendly juices.

 

Top Refrigerated Apple Juice Brands

 

BRANDSALES DOLLARSUNIT SALESAVERAGE PRICEONE YEAR PRICE CHANGE
Total Apple Juice Sales $5,416,9303,332,053$1.63($0.03)
Tropicana Pure Premium $5,030,4233,094,012$1.63$0.04
Land O Lakes 178,019$137,999.00$1.29
Florida’s Natural$127,54270,196$1.82$0.03
Simply Apple$65,38717,233$3.79$0.45
Oakhurst $10,6068,481$1.25$0.05
Washington National$3,5863,289$1.09($0.60)
Tropicama$1,308819$1.60($0.13)

 

Source: Information Resources Inc. (IRI) for the 52 weeks ended Dec. 27, 2009

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