Product Innovation & Marketing Fuel Dispensed Beverages

The cold frozen dispensed category is undergoing some major changes these days with many c-stores adding milkshakes and even energy slushees to their offerings. The additions continue to make the cold and frozen dispensed category one of the hottest in the convenience store industry.

Digging down into the category even more, the fourth annual CSD/Balvor 2012 Foodservice Outlook Survey found top-quartile retailers routinely outperform other operators in both the cold and frozen dispensed beverage segments.
Salt Lake City-based Maverik convenience stores has been seeing constant sales increases in both of those category subsets and the company expects this growth to continue through 2012.

“Specialty cold beverages in general are trending upward significantly over the previous year,” said Janalee Clements, customer segment manager for the 220-store chain.

Clements explained that sales of its Icee offerings continue to grow year after year. In fact, she has been adding more barrels to many of the company’s existing units to broaden the flavor selections. In some of the stores, she is expanding the number of barrels from four to six.

Dealing with Dairy
Since installing f’real mix-it-yourself milkshake blenders in a number of Maverik stores about four years ago, Clements has seen volumes of the frozen dairy-based beverages grow so rapidly that she had to double the number of machines in each store.

In the Convenience Store Decisions/Balvor poll, a majority of retailers said they believe there is definitely room for growth in the frozen beverage category. Seventy-eight percent of the respondents noted the biggest growth opportunity for this subset lies in the afternoon between 2 p.m. and 6 p.m.

Dispensing Excitement
On the fountain front, Coca-Cola Freestyle technology, which allows customers to concoct their own flavor combinations from more than 100 possibilities, has been creating excitement among retailers since it debuted in 2009 at the NACS Show.

Similarly, flavor shots at the fountain have helped create a buzz with consumers. Rich Green, Maverik’s fountain beverage category manager, has found that Maverik’s own flavor shots, a hit since they were introduced about in 2008, are continuing to grow his fountain sales. “We are seeing our fountain sales increase without cannibalizing our bottled or canned beverage sales,” Green said.

Variety over all categories, is increasingly becoming one of the most important drivers for store traffic, said David Portalatin, director of industry analysis for the NPD Group, a New York-based research firm.

But even more important factors are the still-ailing economy and soaring gas prices.“If gas prices continue to skyrocket, that could negatively affect fountain sales because people simply have less money to spend on drinks,” said Jeff Lenard, vice president of communications for NACS.

Lenard, Portalatin and Green all agreed that higher prices on fuel can be offset by creating value-added offerings.

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