The Coolers in Convenience stores today are a great deal different than they were 20 yearsago. While carbonated soft drinks (CSDs) used to hold the top spot, they’veslowly given way to energy drinks, bottled water, enhanced waters and teas. Asthe popularity of CSDs falls, so does theirspace in convenience coolers.
Single-store operator Carlos Rodriguezremembers what his coolers used to looklike—stocked with CSDs and little else.
“Coolers are experiencing a dramaticshift. Today it’s all about energy watersand energy drinks,” said Rodriguez, general manager of Summit Mobil (Worcester,Mass.). “Red Bull is selling very well in ourstore, but Coke’s Rock Star is holding itsown. And Coke’s new Enviga, a fat-burning iced tea, has been warmly accepted byevery demographic we serve.”
Jim Callahan is alsokeenly aware of thechanging dynamics ofpackaged beverage sales.The company owns 50c-stores, delivers petroleum to 114 c-storesanddirectly operates six conveniencestores, including twotruck stops. As directorof marketing for Geo.H. Green Oil Co. Inc.(Faiburn, Ga.), Callahanconsults with the storesin the Green Oil familythrough weekly memos.One message he sendsloud and clear is to beaware of what’s selling.
“Where CSDs used torequire 75% of the nonalcoholic cooler space,with the strides the noncarb drinks have made, it’s really now a50-50 split. Take a look at your cooler setup and make sure it’s consistent with thetimes. Water, energy and isotonic drinksare all showing year-after-year double-digit growth, with no let up in sight.”
Another message Callahan sends out tohis dealers is the power of promotion—heknows an assertive approach will produceprofitable packaged beverage sales. ButGreen Oil is rewriting the book on convenience purchases. Through aggressivepromotional activity, the company hasbecome a destination for take-home packaged beverages—the Coca-Cola 12-pack,in particular.
“Cigarettes still hold the No. 1 salesspot in our stores at 30.9%. Packaged beverages come in second with 16.2% of sales,followed by beer at 11.9%,” said Callahan.”We sell a lot of packaged beverages by the case off the floor. The top-selling packageby far is 12-pack Coke products—our sixstores sell more than 60,000 cases of Cokeper year. We run an everyday special andhave found it very effective in buildingour overall inside business.”
Chill Stop Creates Commotion
While Green Oil owns its stores andmanages a self-distribution infrastructure,in essence, it is a small chain. In an effortto enhance its promotional capabilities,the company signed up a few years agofor Coca-Cola’s Chill Stop program.
Chill Stop was originally designedwith single-store or small chain operators in mind. Coca-Cola wanted torecognize retailers with the highest levelof performance on a per outlet basis, sothe single-store operator could get thesame lucrative deals as 100-store chains.The company also wanted to designatethe program with a name that would berecognizable to customers.
“When customers see the Chill Stop signage, they know that store is where theycan get a great value on Coke products,”said Jim Gulley, group director of immediate consumption channels for Coca-ColaEnterprises. “To reinforce this idea, we’veaired radio spots tagging Chill Stop locations as the place to find the latest Cokeproducts, with the intention of drivingtraffic to our Chill Stop customers. Puttogether a group of independents in amarket, with our added advertising, andthose small operators are marketed to theextent of a large chain.”
While the program comes at no monetary cost to retailers, there are a number ofrequirements Coke puts on the table whenpresenting the program to retailers:
- Availability. Is the retailer willing toprovide equal availability for all the categories Coke participates in?
- Promotional Frequency. Does theretailer feature Coke’s brands and packages on a regular basis?
- Support New Item Introductions. Isinnovation something a retailer will helpCoke feature?
- In-Store Presence. Is having a highdegree of consumer communication instore something a retailer wants to do viaCoke, such as making point-of-purchasematerials available to identify the store asa Chill Stop Outlet?
A key factor of the program is whatGulley calls “proximity marketing.” Cokewants to communicate to consumers atevery available opportunity—on the streetwith curb signage; at the gas pumps, wherea radio messages support pump-topper signage; and in stores with displays. Coke alsoprovides ice barrels, countertop and standalone coolers so retailers can offer productsat multiple locations for impulse sales.
The Chill Stop program has made areal difference in Green Oil’s packagedbeverage sales. Aside from shifting fromsingle-serve to take-home packages as thelion’s share of its sales, the company is alsodoing a stronger volume than ever before.
Callahan credits a great deal of this success to his company’s commitment to theprogram. “Many operators don’t want toconform to requirements that companiesask of them in return for their best programs,” he said. “The smaller you are themore you have to realize your place in thescheme of things. Try to measure if thereturn is worth what they’re asking.”
Cooperating with Coke’s programmeans the beverage company gets first pickof placement in Green Oil’s coolers, butwith stores located just outside of Atlanta,Coke’s hub, it’s a no-brainer for Callahan.Coke requests four eye-level shelves for itswater, four top-level shelves for isotonics,three eye-level shelves for energy drinksand, ideally, another secondary cooler, furnished by Coke, of course. It’s a lot of primereal estate, but the company feels the proofis in the profits.
“The investment required to be successful in the Chill Stop program does notrequire dollars, rather it requires buyinginto the concept,” Callahan said. “The oldadage says ‘you have to give to get.’ In theAtlanta area, giving Coke first position, atwo-to-one cooler advantage over Pepsiand placement for Coke in a front end merchandising cooler, is not too much to give.”
The supplier provides all equipmentand signage with the intention of helping increase volumes. It also stresses thatthe Chill Stop program does not mean theretailer has to be exclusive to its products.
“There is no exclusivity requirement, butthey have to predominantly merchandiseCoke products,” said Gulley. “A retailersigning up for Chill Stop has as muchflexibility with Coke as they can possiblyhave.”
The Chill Stop program can, to an extent,be tailored to a retailer’s particular strategy.While one retailer may use it to push take-home packages, others can use it to pushsingle-serve.
“Take-home business is something wefocus on. I’ve found Coke 12-packs havealways been our third biggest draw, behindgas prices and cigarettes,” said Callahan.”One of our truck stops averages 75,000 customers a month, and part of that comes from always having agreat price on the Coke fridge pack.”
Summit Mobil’s Rodriguez has also had explosive results withthe Chill Stop program he’s had in place for just under two years.
“When we signed on with Chill Stop, our sales noticeablyincreased,” he said. “Over the last four years, we’ve seen our beverage sales grow 10 to 20% consistently. It’s particularly beneficialfor small, independent retailers.”
The single-store and single garage gas station has considerablecompetition with corporate entity Honey Farms, so the MobilMart promotes as much as possible. It will carry promotions intothe winter if they’re doing well, like a Powerade promotion or apromotion on cases of Dasani water.
“We needed to keep up with our competition and the Chill Stopprogra
m has allowed us to do that,” said Rodriguez. “We havethree supermarkets within five miles and we still do great.”
Coke comes to Mobil Mart’s table with many promotionalideas. Currently, the company pushes cases and single-serve itemsas combo promotions. “Profit might not be great in one area, butcombos help slower profits with more volume. The customer isgetting a great price and that brings them back,” said Rodriguez.
The store discounts 30 cents across the board on all iced teasand waters. On top of that, it offers a combo—24-packs of waterfor $5, and the company sells from 24-packs for 50 cents each.
“We offer real attractive prices year around, and Chill Stop helpsus do that. It makes others compete with us. We have a neon signin the window, corrugated signs in the parking lot and displays inwindows. Coke is a good company for us and it continues to grow.We can increase volumes, get repeat customers and we get a lot ofcompliments on our pricing,” said Rodriguez.
A Break Fromthe Norm
While other companies consistently sell lots of non-alcoholicpackaged beverages, Richmond, Ky.-based Red Hed Oil has alwaysbeen a go-to place for beer. The company devotes four to five doors tobeer, with just one door for water and one door for everything else.
“Our stores have always done great beer volume,” said JohnYellman, category manager for the 17-store chain. “The bulk of oursales come from six-packs out of the cooler, as opposed to floor displays. There’s just something about beer that demands the product iscold. It’s not like buying a warm, take-home pack of soda.”
In an effort to increase its CSD sales, Red Hed recently took ona warehouse soda that offers a better price point than the categoryleaders. It’s been carrying all the different flavors of Faygo soda sinceJanuary and it’s been impressed with the movement, even though thecompany has done little to promote the new beverage.
“We carry 24-oz. bottles in the cooler and two-liters in our beverage aisles, and it’s done very well,” said Yellman. “All we have is basicsignage on the cooler doors and the front door.Once we know whichflavors are favorites, we’ll devote more attention to advertising, but fornow the lower retail is enough to get our customers to try it.”
Yellman says that the 24-oz. package is continuing to show growth.The company will take Faygo up on its offer to do taste testing in RedHed stores a bit later to spread the word.