By Pat Pape, Contributing Editor
Before frozen dispensed beverages made a mark in venues such as amusement parks, movie theaters and shopping food courts, the unique product was born and raised in the convenience store industry.
No matter what brand name—ICEE, Slurpee, Koala Ice, Koolee or Slushee—the frozen dispensed beverage category keeps customers coming back. With close to a 50% gross margin, these treats are among the most proﬁtable items that c-stores sell today.
Just like many American innovations, the frozen beverage began as an unintended by-product of something else.
The idea for the beverage concoction was a result of an accident in the late 1950s at the Coffeyville, Kan., Dairy Queen.
Owner Omar Knedlik bought sodas in glass bottles and put them into the store’s finicky freezer. Contents of some bottles turned into slush, but Knedlik served them anyway one hot, summer day. Customers loved it.
Trying to recreate the beverage, Knedlik fiddled with an old ice cream machine and a stainless-steel barrel wrapped with coils adorned with Freon coolant. He found that placing a flavored drink inside the barrel while introducing mechanical pressure produced an even better slush-like drink.
According to an article in the Kansas City Star, root beer was the first flavor, which Knedlik advertised as “The Coldest Drink in Town.” He worked with the John E. Mitchell Co. of Dallas to enhance the machine. Mitchell employees added an automobile air conditioner, creating a frozen carbonated soft drink that could be sipped through a straw, and they began selling the machines to outlets with soda fountains. A contest was held to name the beverage, and “ICEE” was the winner.
In 1965, 7-Eleven installed the machines in 300 stores.
Howard Greene was an assistant advertising manager at 7-Eleven at the time. Now retired, Greene still recalls that the company envisioned its own proprietary version of the machine and found a manufacturer to help.
The name Slurpee sprouted sometime in 1966 during a brainstorming session at the Stanford Agency, 7-Eleven’s advertising partner. While enjoying the drink, Bob Stanford, agency director, noted the beverage made a “slurp” coming through the straw. The ad team added the two “e”s and an icon was born. More brainstorming followed.
“When we started out, we wanted to make it different,” Greene said. “We had crazy flavors like the ‘Pink Blob,’ ‘Fulla Bulla,’ ‘Firewater’ and ‘Kiss Me You Fool.’”
Then, the chain created radio advertising, featuring banter between Bob Stanford and Frank Harding, the company’s public relations manager who possessed a unique, high-pitched voice. “That was his real voice,” Greene said. “Everywhere he went, people knew him by his voice.”
Once the product name, flavors and ads were set, “we spent a lot of money promoting it,” said Greene. “We went on the road with a musical show and dancers. It was very elaborate. We presented it to every 7-Eleven store manager in the company. We did two meetings a day and were on the road for a whole month.”
7-Eleven also executed an intensive radio blitz involving popular local DJs in every market.
“We received bonus air time, and the marketing department could tell immediately that sales were going up,” Green said. “It was fun. We had a lot of freedom. We could put the ads on air without running them through channels. We didn’t have to run it through the legal department. That was great.”
By the ‘70s, frozen carbonated drink fans would go out of their way for a cold cup of their favorite beverage, according to Jerry Weiner, vice president of foodservice at York, Pa.-based Rutter’s Farm Stores.
“The only items that 7-Eleven had that were not in retailer containers back then were Slurpee and coffee,” said Weiner, who began in the convenience industry at 7-Eleven in 1972. “They didn’t even have fountain drinks. Slurpee was definitely a destination item because it was unique. For a long time, it was targeted to children. It was very sweet, with wild colors.”
Then, the beverage began to change as manufacturers added new flavor choices and novel drinking accessories.
“What’s happened to it over the years is options, choices, more valves, more flavors and a bigger spread in terms of its consumers,” Weiner said. “It used to be that if you had something red or blue, you had a home run. But that’s not the case anymore.”
To capitalize on Slurpee’s popularity, 7-Eleven introduced special collectors’ cups in 1972. Over time, the cups have featured artwork ranging from monsters and movie titles to super heroes, rock stars and animal species. 7-Eleven also launched surprise Slurpee cups with false bottoms holding free prizes, such as collectable coins. All have contributed to the category’s success.
LIDS, FANCY CUPS AND SELF-SERVICE
In the early 1980s, ICEE was available at the candy counter inside most Sears stores, which was a huge account for the beverage company. But there was a problem. Young shoppers liked to buy an ICEE and then wander the store. Sometimes they accidently splashed on products or spilled on carpets. Sears management was not amused.
To retain the account, ICEE created and patented a clear, domed lid for the ICEE cup, which helped keep the drink inside. Messy mishaps were curtailed, Sears was happy and kids thought it was the next best thing.
With the popular domed lid came a clear cup so customers could enjoy their own colorful creation of layered beverage flavors—a trend that has been a rush for the industry.
“There’s a degree of excitement generated as consumers expect new options from time to time,” said David Bishop, managing partner of Balvor LLC, a Chicago-based sales and marketing firm. “They seem to enjoy combining flavors to make new visual and tasty creations.”
Later, the clear cup was divided to hold two separate flavors, and in 2000, 7-Eleven rolled out a clear cup with space for three separate flavors and dubbed the innovation the Triple Splitz-O.
Another boost to the frozen carbonated beverage business was the evolution of equipment, thanks to upgrades to the faucet, electronic system and syrup connectors. These improvements allowed customers to serve themselves for the first time, gave them control over their own beverages and freed up store associates to tend to other tasks.
Since its beginning, the frozen carbonated beverage was considered a kid’s product. But in the 1980s, 7-Eleven did research indicating that people ages 12-24 had become the primary users.
“We talked to adults who said they would walk into the store and grab a Big Gulp cup [in order] to get a Slurpee,” said Charlie Thomas, former advertising and promotion development manager at 7-Eleven.
“They were embarrassed to be seen with a Slurpee cup since all the advertising and promotions were geared toward kids. We wanted to make Slurpee more appealing to that age group.”
In 1995, 7-Eleven did a three-month promotion with MTV, which Thomas described as “the catalyst for shifting the demographics to the 12-to-24-year-old age group.”
During the summer, MTV televised all live programming from a “beach house” where stars drank from a Slurpee machine that was part of the set. Personalities could glide down a Slurpee slide (similar to a “slip-and-slide”) and land in a pool of cold Slurpee drink. “Slurpee was well integrated into the programming,” said Thomas. “But the shift really began to change when we did the Brainfreeze television commercial.”
The Brainfreeze commercial (still available for viewing on YouTube) shows a teenage boy in a lawn chair sitting in a hot, bleak Southwestern backyard. He sips a Slurpee and suffers a Brainfreeze. At the same time, 7-Eleven changed the cup design to make it more contemporary and paired it with florescent-colored straws. The effort paid off.
“We had a 10% lift in Slurpee sales that summer,” said Thomas.
One year later, after introducing a Brainfreeze straw featuring a plastic brain inside a clear plastic ice cube, the stores saw sales spike 17% over the previous year.
“That really repositioned the brand and gave people permission to walk around with a Slurpee cup with pride instead of being a closet Slurpee drinker,” Thomas said.
BEAT GOES ON
Omar Knedlik died in 1989, but not before seeing the beverage he inspired evolve into a well-established treat for people of all ages. Today, about 70% of all U.S. convenience stores carry some version of a frozen carbonated beverage, which delivers an estimated 50% margin on every sale.
Coca-Cola, cherry and something blue (raspberry or blueberry) remain the long-time favorite flavors.
Each year, ICEE sells more than half-a-billion cups of product around the globe. Canadians purchase about 30 million Slurpee drinks, no matter what the weather pattern. Because of surging customer sales, the province of Manitoba has been the Slurpee capital of the world every year for more than a decade.
In many ways, all brands of frozen carbonated beverages are alike, and in many ways they are different, according to Thomas. “If you look at it, it’s a cold beverage in a printed cup that is intrinsically linked to the convenience store format,” said Thomas. “It has become the iconic drink of the c-store industry.”