Last year, Americans drank an estimated 6.5 billion gallons of coffee, a modest increase in volume over the year before. An estimated 9.5% of that coffee was purchased from convenience stores, said Gary Hemphill, managing director of research for the New York-based Beverage Marketing Corp.
“Modest growth” is the description Hemphill used again to project what is likely to happen within the category in 2015.
“Growth in the category is being driven, in part, by population gains and the growth in the away- from-home-segment,” he said.
But c-stores are in competition for the coffee business, and not just from other stores and restaurants. One of the biggest competitors is the home single-cup brewer.
“Up a tick” is how Brett Atherton, director of marketing at Brooklyn, N.Y.-based Bolla Markets, summed up the growth of coffee sales in the company’s stores.
“Younger customers are drinking less coffee and looking more to energy drinks to get them going in the morning,” Atherton said. “On the other hand, our energy category is up double digits.”
GROWING COMPETITION
Two years ago, Bolla introduced a proprietary all-organic coffee program in its stores. The upscale offering was meant to be a differentiator in the very crowded New York marketplace and to engage the customer with the product.
“Everybody’s trying to get into the coffee game, even Taco Bell,” he said. “Consumers tend to think of organic products as ‘better’ than non-organic ones, so it gives us an edge to have it.”
The organic coffee program was also developed to be a driver for the stores’ gourmet deli, which is becoming an increasingly important contributor to the chain’s revenues. Atherton noted that the stores do a lot of bundling with deli items and coffee, a strategy that draws attention to, and trial of, the deli.
“We don’t look at coffee as a double-digit growth category; it’s a piece of the puzzle to drive the profitability of the store as a whole,” he said.
He noted that having an organic product gives the stores a unique selling focus to feature on their windows, pumps and perimeter signage, as well as at the registers and coffee stations.
Bolla Markets runs what Atherton called a “lean” coffee program, offering six different varieties at any given time. The dark roast is meant to appeal to Starbucks fans, the light to those who prefer Dunkin’ Donuts coffee. Also always on tap are hazelnut, French vanilla, decaf and a limited time offer (LTO).
The store’s LTOs cycle in and out every 60 days, and many offer something special for the customer. They may represent a specific country of origin or a seasonal flavor, such as pumpkin spice in the fall.
In addition, flavored shots and creamers also give Bolla Markets’ shoppers a number of other options for customizing their coffee.
