McTreading on Other Channels

In yet another move that steps on the toes of the convenience store industry, fast-food giant McDonald’s is testing the sale of bottled and canned drinks at about 150 locations.

While it may be years before the plan is fully realized, McDonald’s is testing the sale of bottled and canned colas, teas, energy drinks and waters at dozens of stores, including brand-name products such as Red Bull and Coca-Cola’s Vitaminwater, the Web site reported.

Larry Light, former global chief marketer of McDonald’s, told the Web site the idea is to offer more options to consumers who are going elsewhere for beverage fixes. The company realized several years ago that it wasn’t meeting consumers’ needs in that regard.

"We were seeing [customers] buy food at McDonald’s and then go buy their beverages at 7-Eleven, or they’d go through a drive-through with the beverage already in their car," Light said.

Advertising Age also reported that the expanded beverage selection could provide a much-needed boost to McDonald’s margins. Longtime franchisee Irwin Kruger is part of a test of Vitaminwater in 20 New York-area stores, and has been promoting the drink as an upgrade to extra-value meals in his Times Square location for four to six weeks and says he is happy with the results. "Any extra margin in this economy goes a long way."

The test also includes products from PepsiCo, archrival to McDonald’s fountain partner Coca-Cola. The PepsiCo products being tested are Mountain Dew, Diet Mountain Dew, Lipton Green Tea and Diet Lipton Green Tea, said David DeCecco, a Pepsi spokesman. "We’re pleased to be working with McDonald’s, and we’re delighted consumers have responded so favorably to the test," he said.

A spokeswoman for Red Bull confirmed that its signature energy drink is part of the program, although she declined to comment on how consumers have responded.

Coca-Cola has been testing "virtually the entire Coke product line in bottle and can," said spokesman Ray Crockett. "The tests are designed to evaluate a number of different concepts, especially variety and convenience."

McDonald’s declined to provide a full list of brands involved in the test and said a final lineup has not been determined. "We’re working out the execution details of how to best bring this to market for our customers with the complexity of bringing all of these beverages to the restaurant," said Neil Golden, chief marketing officer of McDonald’s USA.

Spokeswoman Danya Proud declined to offer a time frame for the completion of the test or a larger-scale rollout of bottled beverages. "This year into next year and even into 2010, you’ll start to see the full realization of the beverage plans, Proud offered. "We’re encouraged by what we’re hearing from our customers. They’re telling us they appreciate the added value, convenience and selection."

The report came amid a glowing report by Bloomberg, which said McDonald’s value rose the most in New York trading since January when its May sales jumped on demand for hamburgers and breakfast items in the UK, France and Australia.

Same-store sales at McDonald’s increased 7.7%, Bloomberg reported, led by gains of almost 10% in Europe and Asia. A 4.3% increase in the U.S. exceeded the estimates of various analysts.


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