Frozen dispensed beverages are more than a cup of flavored ice. Slushes can make c-stores a hot destination for customer traffic, pushing up margin and incremental sales.
By D. Gail Fleenor, Contributing Editor
Convenience store operators are adding to their frozen beverage offerings in anticipation of summer 2016 and beyond. Unit sales of slushes have soared due to retailer specials but dollar sales have been flat. However, the segment, which generates 50% profit, according to the National Association of Convenience Stores (NACS), and often results in additional in-store purchases, is a popular one with customers.
Looking toward a ‘hot’ frozen beverage summer, some convenience retailers have ensured they are the first choice among customers when it comes to frozen beverage destinations.
“We are looking forward to a hot summer and growth in frozen beverage sales,” said Gary Randell, vice president of marketing for Marion, Ind.-based McClure Oil. The 35-store chain has changed its frozen beverage to Congo Ice, which is provided by McClure’s coffee supplier, john conti Coffee Co.
At the same time, McClure Oil expanded its slush beverage offering from two to four flavors. When prices were reduced one year ago at the chain to draw customers to the new frozen dispensed beverage, unit volume more than doubled.
“We expect our frozen beverage profit to grow as we move forward into a good, hot Indiana summer,” Randell said.
Frozen dispensed beverages were invented over 50 years ago, but the category stays current with constantly changing flavors and innovations to keep customers craving the freeze.
About 71% of all convenience stores offer frozen dispensed beverages, according to NACS. Although the product is a small part of store sales, those cups of colored ice are profitable and useful to retailers.
“I don’t think there is a product more positively tied to our industry than frozen dispensed beverages—regardless of brand name,” said Jeff Lenard, vice president of strategic industry initiatives for NACS. “Other channels may sell the product but none is more identified with slushes than c-stores.”
Dispensers have changed with the times, making it easier for retailers to provide more options. From the original floor model dispenser to the countertop model that runs its own diagnostics with automatic signage updates via the Internet, frozen beverage dispensers are more user-friendly than ever before.
Even boxes of syrup flavors are easier to use and retailers say dispensers are easier to clean.
Number one on any list of frozen tips is keeping slushes interesting to customers. New flavors, limited time only flavors, the ability to combine flavors and fun things to add, like sprinkles, will draw customers to the frozen beverage dispenser. Promotions that include collectible cups boasting sports teams or entertainment figures can be a big draw, especially when there’s a series theme.
However, without promotion and visibility in the store, sales can melt without the means to draw in consumers, especially during colder months.
Thomas Williamson, buyer for Mundelein, Ill.-based Graham C-Stores, is trying out a pilot program in six of its 30 c-stores. Graham C-Stores has Siberian Chill, a Pepsi program; a Granita-style slush and Caribbean Crème.
Test stores will feature flavor infusions with four different flavors from a single barrel ICEE machine. Flavor infusions are especially attractive to the product’s prime purchasers, kids and teens from ages 3-17, estimated at almost 50% of buyers, according to ICEE Co. statistics. Williamson is also considering adding Jolly Rancher candy flavors, via a frozen product from Sunny Sky.
Depending on location, some c-stores have a more concentrated need in the slush area. Carbonated frozen dispensed beverages, such as Coke Freeze, are popular at Georgia-based McDonald Oil, according to Tim Huff, company president. For frozen dispensed beverages, the convenience chain chose Missouri-based Alligator Ice with two dispensers for two flavors.
Cherry is the No. 1 flavor at McClure Oil stores, Randell said. Other flavors offered include Blueberry, Green Apple and Lemonade.
New flavors are important for continued purchases whether it is to attract children or adults. For example, ICEE’s new 2016 flavors are Strawberry Citrus, Strawberry Shortcake, Tropical Fusion and Sour Grape. Health conscious adults are usually attracted to fruit slushes and those infused with fruit juice.
For convenience stores serving Hispanic customers, citrus, fruit and tropical combinations are popular, said Liz Heard-Castells, president of Castells & Associados and chief strategy officer of Davis Elen Advertising.
Changing a flavor or two each season can keep the frozen offering fresh and pull customers to the fountain, according to Williamson. Both the dispenser and new flavors offered need to be visible. He said he hesitated to test new systems because he was very happy with the visibility of the signage on his present systems.
Frozen dispensed beverages also should be publicized outside the store to draw customers in, as well as inside the store. Draw customers in for a frozen cup and they are likely to pick up other items, part of the product’s value.
“We use Sunny Sky Jolly Rancher,” said Johnny Phelps, category manager for High’s of Baltimore. “They give our stores a wrap to put around the machine that adds color and lets customers know what the latest flavors are.” Phelps said current flavors such as Blue Raspberry, Watermelon and Green Apple are popular with customers. Carbonated frozen drinks are also available at the Maryland chain.
How many times have you seen a frozen dispensed cup with a sports logo, event or entertainment picture sitting on a desk, full of pens? Frozen dispensed beverages offer virtually free publicity for chains. The cups are a symbol of loyalty as well.
When customers like a store’s frozen beverages, they make a conscious choice to patronize that store. Collectible cups encourage customers to visit more often to buy the complete set. High’s of Baltimore includes frozen beverages in its rewards program. When customers purchase a frozen drink, they receive one cent off the fuel price.
7-Eleven’s success with its Slurpee program is due in large part to the excitement the chain creates with its year-round promotions. The chain has a special Slurpee Webpage with a variety of animations geared toward children and teens.
Lenard noted there are strong regional preferences in frozen dispensed beverages. The item is especially popular in Canada, where it has essentially replaced fountain soda. There are also some areas in New England, he said, where stores do not carry fountain soda but frozen beverages are offered.
“While you would think that frozen beverages would be more popular the farther south you go, Detroit is tops in frozen dispensed beverage sales in the U.S.”