Retailers are investing more in hot dispensed beverage programs that reflect the consumers’ growing penchant for espresso-based coffee offerings, flavorful teas and more choices.
By David Bennett, Senior Editor
Wawa Inc. is known for its proprietary coffee, especially to its customers—one of every two are said to purchase a hot beverage every time they enter one of the company’s 600-plus stores located in Pennsylvania, New Jersey, Delaware, Maryland, Virginia and Florida.
In fact, the Wawa, Pa.-based convenience store chain estimates that during the last 15 years it has sold well more than one billion cups, earning a serious tip of the hat from hot beverage connoisseurs.
But even the strongest programs can grow complacent without constant monitoring and tweaking, and Wawa found itself with a coffee program in need of a booster, according to Mendy Meriwether, Wawa’ category manager, fresh beverages.
“Back in 2009, our coffee category was starting to suffer—competition, declines in market share and feedback from our customers and associates told us we needed to reinvent,” Meriwether said.
Like some other c-stores, Wawa acted on the growing coffee trends, evaluated its own product and developed a successful program based on the premise that a quality product could help drive traffic, resulting in increased profitability. Wawa restructured its hot beverage team to include coffee experts, giving them more cross-functional support across the entire organization. The c-store chain also analyzed every aspect of the program, including the equipment, and product offer.
And what has brought Wawa’s hot beverage initiatives in line with the company’s goals?
“Attention to detail, focus and committed associates with our desire to deliver quality product to customers 24/7,” Meriwether said.
Never has coffee been hotter as convenience stores, quick-service restaurants and grocery stores are branding and expanding into fresh prepared coffee quests to drive daypart sales.
Going toe-to-toe with the likes of Dunkin’ Donuts, Starbucks and McDonald’s, the convenience store channel is upping its hot beverage offerings, and as a result, is experiencing growth in the coffee market for the first time since 2008.
More convenience stores are going the way of Wawa and York, Pa.-based Rutter’s Farm Stores, which has expanded its hot beverage selections to include more types of coffees, teas, espresso, frappes and lattes. Also, taste enhancers, such as creamers, syrups, toppings and whipped cream, have sweetened Rutter’s plan to add more value to its coffee category across its 60 stores.
Perhaps more dynamic is the fact that some c-stores are developing hot beverage programs that mark them as destinations—and just not in the U.S.
INVENTION IN THE UK
A few years ago, strategists at BP UK found items offered in its coffee program were equally unexciting—in more ways than one. Not only was the actual product not reaching its intended mark, but several components related to its Wild Bean Café combined to make the patron experience unsatisfying, from the bakery items to the actual physical interior of the BP stores.
“Our consumers told us that they found the layout of the store confusing, that they were not clear about how to navigate the store, where to order and then pay for the coffee,” said David Pitron, BP UK’s offer development manager. Customers told BP UK that the existing Wild Bean Café ambiance did not reflect the premium quality of the Wild Bean Café coffee offering. “Especially for women—they did not recognize Wild Bean Café as a credible and desirable place to satisfy their foodservice needs,” he said.
Of the 1,200 BP stores, 320 are company owned.
BP joined forces with London-based multinational retailer Marks and Spencer (M&S), which specializes in ready-to-eat meals, fresh produce, sandwiches, wine and groceries.
Enlisting a quality food partner was the first step in the c-store reformation, which at the center was focused on a quality coffee program. New Wild Bean Café branding, use of wood and brick, staff uniforms and a new ‘best quality’ food-to-go program, including an on-site bakery, flatbreads, up-market pastries and semi-barista coffee has created a contemporary and efficient customer experience.
“Our response was to change the gondola configuration in the store to open up the sightlines to each core element of the store and to add a dedicated till point to the Wild Bean Café area so that customers could order/pay and collect their coffee at the same location, as well as paying for fuel and any c-store items,” Pitron said.
Over time, the investment has paid off, and now the BP has expanded its inventive spirit to foster more customer customization opportunities, thus even more sales.
“Our existing Wild Bean Café offer has been successfully growing over the past 10 years both in sales and margins, but we saw that the market was shifting rapidly and that consumers were becoming more discerning and requiring a greater ability to personalize their coffee, with different milk options, decaf versus caffeinated,” Pitron said.
Jack Groot is a consultant to the coffee industry and founder of JP’s Coffee & Espresso Bar of Holland, Mich. and has studied coffee programs at every level of retail. Groot told CSD that because there’s a higher and higher focus on quality coffee and espresso-based offerings nationwide, it’s natural that more c-stores are looking to cash in on the trend. However, transitioning from being a basic convenience coffee competitor to a server of quality coffee can be a challenge, just by the nature of the convenience industry, he said.
“When you look at c-stores, they’re convenience-based,” said Groot, who serves as a coffee expert across all retail channels. “It’s not that they can’t be quality, but they can be disadvantaged by the fact that the longer it takes to produce something, or the higher the education needed for the person executing that, the harder it is for them to do it in their particular business model.”
Still, some retailers like Wawa, which now employs in-store baristas at some locations to make customers’ coffee orders, are making up ground in the custom coffee arena by using more skillful employees and advanced equipment, such as bean roasters and cappuccino machines, to better satisfy consumer tastes.
“You have a lot of these places who distribute an immense amount of coffee that understand there are tremendous options for them to get into a higher-level market,” Groot said.
RIGHT TIME FOR TEA
According to Groot, more c-stores are expanding their hot beverage programs to include hot teas in various flavors, which more customers seem to be gravitating toward.
Not surprisingly, the U.S. tea industry continues to flourish, building on a trend started more than two decades ago, which has seen the total wholesale value of tea grow from less than $2 billion to more than $10 billion today, according to the Tea Association of the U.S.A.
This real growth of the tea industry in the U.S. is even more impressive with the last three years rolling average for tea imported into the U.S. growing more than 4%. Among the findings:
• Specialty tea continued its upward climb into 2014 as consumers continue to seek out exotic and unique teas. Observers expect an overall annual dollar increase in the market of 10-15%.
• While not immune from negative forces in the economy, traditional tea, because of its relatively low price point, will be most resistant to those forces. Annual dollar growth in the area of 2-3% is expected in this segment.
“Given the experience of the last several years, the intrinsic qualities of tea, and the lifestyle and consumption trends that appear to have become firmly established in the marketplace, only one logical conclusion seems possible; the future for both iced and hot tea in the U.S. looks very hot,” the Tea Association concluded.
RIDING THE WAVE
Like a growing number of c-stores, BP UK’s revamped approach to its hot beverage program has proven effective in driving customer engagement.
“A great cup of coffee and a breakfast item are a great way to start your day, especially when it is fast and served to you by a friendly and engaging team member. It is a regular daily need and pulls people to the store on a high frequency and the M&S offer, fuel offer and c-store offer ensure that customers can satisfy many missions in one visit when they come to us,” Pitron said. “Many customers will pick up their lunch at the same time as their morning coffee and take it to the office with them. Other customers will grab a coffee on the way home while picking up some dinner for tonight from the food offer.”
4 Tips To Improve Your Hot Beverage Program
• Ensure a strong brand.
• Differentiate your strategies from the competition.
• Empower your employees by soliciting their input.
• Educate your customers on the specialty of your program.