Because of the robust profit margin and strong demand for frozen dispensed beverages, more channel retailers are rolling out their own signature programs. However, convenience stores still remain above the crowd when it comes to one of the coolest beverage segments out there.
By Michele Wojciechowski, Contributing Editor
Without a doubt, convenience stores face competition in several categories. Often, it’s competitors looking to copy the success of established c-store foodservice and beverage programs that spur even more retail rivalries.
This summer, for example, ice cream giant Baskin-Robbins and doughnut kingpin Dunkin’ Donuts added new frozen beverage options to their menus.
In Dallas-area stores, Baskin-Robbins now offers customized fruit smoothies. Not to be outdone, Dunkin’ Donuts partnered with Oreos and Chips Ahoy! as part of a new beverage program inspired by cookie-flavored iced coffees and frozen beverages.
Of course, these launches combine to chip away at the category dominance of c-stores, the long-time channel leader in frozen dispensed beverage sales.
THE POPULAR CROWD
According to a recent survey by Chicago-based research firm Technomic Inc., consumers ages 18 or older said of all the beverages purchased in the past month, 70% bought milkshakes, 40% chose smoothies prepared from scratch, 50% preferred shaved ice/snow cones or slushies and 44% indicated they preferred some type of frozen beverage.
Again, a lot of those frozen beverage transactions are being rung up in c-stores. According to research provider Mintel Group Ltd, 17% of men and 14% of women frequent c-stores to purchase made-to-order beverages.
Moreover, people aged 25-34 account for 64% of the frozen beverages bought at c-stores, once a week or more. Comparably, consumers aged 35-44 buy 42% of frozen beverages at c-stores; individuals aged 18-24 account for 40%; and 45-54 year-olds purchase 31%.
Since Jim Yates opened Texarkana, Texas-based E-Z Mart Stores Inc. in 1970, the c-store chain has expanded its frozen beverage category to encompass many brands and varying consumer tastes. E-Z Mart now has nearly 290 locations in Arkansas, Louisiana, Oklahoma and Texas. According to Kim Fowler, category manager for E-Z Mart Stores, by carrying over that same service philosophy to fit modern consumer tastes, the chain has increased category profits and its standing as a quality beverage provider.
E-Z Mart c-stores currently offer ICEE as well as generic frozen carbonated beverages, gourmet ice and f’real frozen beverages. This selection is available year-round at select E-Z Mart locations, with some stores having one frozen option and others offering all three. Its “Gourmet Ice” flavors include fruit punch, blue raspberry, pink lemonade and strawberry.
“Currently, the frozen carbonated beverages are our top sellers because we are just starting to offer the non-carbonated beverages,” said Fowler, who has earned the fanciful title ‘Queen of Quench.’ Not surprisingly, E-Z Mart’s sales of frozen beverages increase in the warm summer months, due mainly to hot southwestern temperatures and schools being closed.
As for standing out from the competition, Fowler said, “I am sure our pricing is much more competitive than some of the specialty shops.”
So where did the title Queen of Quench derive?
“Our frozen beverage offerings are part of our ‘Quench Corner’ and are a featured part of our fountain offering,” said Fowler. “This area is highly visible and can be seen when entering our stores.”
A Mintel segment performance report said smoothies have proven to be solid performers when it comes to category growth. Though the smallest of category segments, it posted sales gains of 166%, growing from $297 million in 2009 to an estimated $790 million in 2014.
Why have smoothies—such a small part of the category—been selling so well?
According to the same Mintel report, “the smoothie segment saw strong gains over the measurement period due largely to a growth in product options and a growing interest in convenience, on-the-go meal and snack offerings.” In addition, 22% of respondents prefer smoothies to satisfy their hunger.
As for the number of consumers who drink smoothies for any reason, Mintel surveyed Americans between April 2013 and June 2014: overall, 56% of consumers said they drink smoothies. Consumers aged 25-34 accounted for 63% of smoothie sales, followed closely by younger Millennials.
Once a novelty treat, smoothies have been revived as slightly better-for-you (BFY) treats and functional, nutritious specialty drinks that show up on more menus. As the market has evolved, smoothies have developed a split positioning: On one side, fruity frozen drinks are infiltrating quick-service restaurants (QSRs) and c-stores to satisfy frozen beverage preferences. On the other hand, smoothies offer options to patrons searching for functional, vitamin-boosted meal and snack replacements, riding a wave of interest in BFY options like energy drinks, yogurt and juices.
More retailers in more channels are upping the stakes by developing innovative iced coffee programs. In a September 2014 report about consumer attitudes and behaviors toward coffee in the U.S., provided by Mintel, one line reads “Iced coffee and new flavored coffee are desired by Millennials.”
Without a doubt, the statistics show that a lot of consumers are buying frozen beverages. With so many of these frozen products being sought out, c-stores are in position to capture more market share.
With 700 stores serving the East Coast, including Pennsylvania, New Jersey, Delaware, Maryland, Virginia and Florida, Wawa Inc. offers a line of frozen beverages that changes in size and scope, depending on the region, customer preferences and other factors.
“We have a strong ICEE program along with a full-frozen beverage offer consisting of smoothies, frozen cappuccinos and lemonades. We carry frozen beverages all year long, but streamline the offer seasonally,” said Mendy Meriwether, Wawa’s brand manager of fresh beverages.
According to Meriwether, Wawa’s fruit smoothies continue to be a top seller for the c-store chain, and each year, their momentum continues to build.
While summer season is the peak time for smoothie sales, they also continue to be a stable sales product in colder weather at Wawa.
“In my opinion, Fruit Smoothies appeal to both those looking for a healthy meal alternative along with a treat to compliment your hoagie or other lunch item,” Meriwether said. “Fruit smoothies attract both adults and children.”
How is Wawa dealing with competitors? They make sure that the frozen beverage category is featured all summer long.
“We continue to differentiate with our focus on high-quality products that stand out from the competition,” said Meriwether. “Our cheesecake smoothies were our feature this year, and we have seen great results. They taste amazing.”
In fact, these cheesecake smoothies satisfied the customers’ needs for a treat—besides tasting great, they are also indulgent.
Sometimes, as proven by the results, this is just what the customer is looking for.
One thing Wawa does at times to attract customers to its new products, such as the cheesecake smoothie, is to offer samples—to both customers and company staff associates. “Associates are our biggest advocates of our offer,” Meriwether said.
“It’s important they know how [the products] taste and can describe it to our customers who want to learn a bit more about the offer,” Meriwether said. “In addition, we encourage our associates to offer samples—trial drives purchase.”
As for other ways to beat the competition, both managers of E-Z Mart and Wawa suggested digital and in-store signage, the use of social media as part of your promotional plan—to include multiple messages to appeal to the “need states” of customers, whether they demand something healthy or an indulgent treat.
It’s also constructive to get feedback from both loyal and new customers, promotional campaigns, tastings and, most importantly, offering quality products at the best prices.