Cold, Frozen Beverage Sales Heating Up

Frozen and cold dispensed beverages are in demand, with operators appealing to new audiences with product innovation.

“The No. 1 reason that consumers go to a convenience store for foodservice is for the dispensed beverages. This is the primary draw,” said Tim Powell, director of c-store programs at Technomic.

In 2012, cold dispensed beverages sales totaled $2.3 billion, and frozen dispensed beverages drew $410 million, according to Technomic. The slushy/icee category was up 3% from 2008-2012 and it is projected to grow 3.5% from 2012-2015, buoyed by new flavors, including seasonal options.

Frozen coffee beverages is a growing category at c-stores, up 11% from 2008-2012 and expected to see another 11% increase from 2012-2015, according to Technomic. Customers are looking to frozen coffee as a meal replacement, while retailers see it as a daypart extension. After McDonald’s popularized the concept, customers are demanding it and retailers are meeting that need.

Andrew Dun, vice president, marketing, Insight Beverages agreed that frozen coffee—as well as milkshakes—are becoming more prevalent. “I think that one of the biggest areas of growth out there is in frozen coffee. If you look at the success of QSR and what is happening there with frozen coffee, that is going to drive very strong demand and help drive the frozen dispensed beverage category from a growth perspective,” he said.

Smoothies, which offer an alternative to soft drinks and are gaining increased appeal because of their healthy connotation and are being used increasingly as a snack replacement by customers.

Smoothies were up 12% from 2008-2012 and are predicted to grow by as much as 13% from 2012-2015, according to Technomic’s research.
Future Focused

Technomic found the frozen dispensed category overall is expected to grow 5.7% from 2012-2015 in convenience stores, while cold dispensed is expected to be relatively flat with 0.7% growth from 2012-2015.

“Frozen dispensed beverages benefit from new product introductions. Granitas (a semi-frozen dessert made from sugar, water and flavorings) have the potential to create $4,000–$12,000 incremental gross profits per store, per year, and frozen coffee can bring in $3,500–$10,000 incremental gross profit per store, per year. It’s about offering consumers a unique reason to walk into your store,” Dun said.

As evidenced by the frozen coffee trend, frozen and cold dispensed beverages aren’t just for young adults and kids anymore, and operators and manufacturers alike are looking to appeal to new customers in expanded and older demographics.

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