Retailers say that sales of cold and frozen dispensed beverages are mirroring the growth in convenience foodservice, which in turn is being shaped by consumer preferences.
By Marilyn Odesser-Torpey, Associate Editor
Just as consumers are looking for more from the food they eat, they’re also looking for more from the beverages they drink. For convenience stores, this includes cold and frozen beverages made from natural ingredients and filtered water with no artificial sweeteners or preservatives.
“When you think of convenience stores historically, consumer visits have been beverage driven, but in dispensed cold and frozen beverages retailers have to change from traditional carbonated soft drinks to other beverage types,” said Warren Solochek, senior vice president, industry relations for NPD Group research. “Food-forward convenience store retailers have already recognized the need to change what’s coming out of their spigots to keep up with what’s new and on trend.”
Chuck Moyer, food service category supervisor for Rutter’s convenience stores, sees the cold and frozen dispensed categories growing but noted that he sees that growth coming from outside the category segments to which convenience store retailers have become accustomed.
“Carbonated soft drinks have seen a flattening or slightly downward trend while enhanced waters, energy drinks and cold coffee options continue to emerge,” he said. “So future growth may not come from the same dispensers we have relied on for decades, rather the inclusion of made-to-order programs, bubblers, fresh-brewed urn dispensers, etc.”
MORE VARIETY
The average Rutter’s store offers 16 fountain options and four flavor shots. Newest locations are utilizing the Cornelius Pro touchscreen dispensers that feature 20 different options.
Over the past couple of years, the company has strived to expand its program into newer product segments that appeal to a broader base. The line-up now includes a Rutter’s-branded iced tea, Kickstart energy drink from Pepsi and vitamin water options from Coke.
Each store also has four to six frozen carbonated offerings available. Those with six offerings have four core flavors and two limited time offers (LTOs) that change seasonally. In addition to its made-to-order milkshakes, the stores also have f’real machines.
Moyer said that cold brew products are continuing to gain traction. Last year, Rutter’s introduced a fresh-brewed iced coffee option in some locations. Customers can utilize the same creamer, sweetener and syrup options available for the stores’ hot beverage program.
Rutter’s also provides pump-top bottles of fruit syrups at its cold beverage fountains to allow patrons to customize their iced tea and lemonade.
“Looking forward, I believe flavored/specialty lemonades and teas will lead the way in new offerings and growth over the next year or more with the re-emergence and growing popularity of bubblers,” said Moyer.
At the frozen dispensers, he believes that one of the biggest draws for the younger generation is the ability to mix different flavors.
Rutter’s offers a variety of refillable mugs that allow customers to purchase both hot and cold refills at a discounted price. During the company’s “Summer of Freedom Sweepstakes,” customers who purchase limited edition 50th anniversary mugs will have the chance to win free refills for a year.
Dispensed beverages are also an integral part of the VIP Rutter’s Reward loyalty program. Every time card-carrying customers purchase a beverage, they earn cents off on fuel.
At the touchscreen-ordering kiosks, the stores offer drink/food bundles. Rutter’s covers south-central Pennsylvania and recently opened its 70th and first out-of-state location near Martinsburg, W.Va.
CRAFT SALES
Scott Stuart, senior beverage innovation and development manager for Pilot Flying J, which has more than 750 retail locations in 44 states, noted that some consumers have been steering away from the more familiar carbonated soft drinks. As a result, much of the company’s efforts and innovation are being poured into creating craft and “better-for-you” beverages.
Craft beverages are hand-mixed on-site at the Pilot and Flying J travel centers, versus being made with flavor concentrates or premade mixes, Stuart explained. These beverages contain no preservatives, have cleaner ingredient labels and are naturally sweetened. In July, the company plans to launch a new line-up of craft beverages that it is calling “Artisan Beverages.”
Additive- and preservative-free hand-mixed cold brew coffee is being rolled out to Pilot/Flying J stores nationwide to replace the traditional premixed flavored iced coffee. Some locations also offer f’real frozen blended coffee drinks.
Fresh iced tea is steeped with full loose-leaf tea instead of fannings (small pieces that are left over after higher grades of tea are gathered). The green tea is all natural and organic and the homestyle lemonade sweetened with pure cane sugar.
To further increase its variety, Pilot Flying J is also looking at sparkling waters and other naturally-sweetened drinks. Over the summer Stuart expects both its cold and frozen dispensed beverage sales to increase, particularly the non-carbonated beverages, lemonades and teas.
A typical store in the chain offers between 28 and 35 varieties of cold dispensed fountain drinks and teas. Syrups are also available, so customers can create their own flavors.
About 320 of the locations dispense ICEE-branded frozen beverages. LTOs in this category are featured on a quarterly basis.
In development is a selection of seasonal flavors such as tropical aguas frescas with watermelon, strawberry and mango for summer and, for
winter, a spiced pear beverage and some variations on ciders.
The company relies heavily on bundling to promote the category. This summer, for example, customers who purchase any deli item can get a fountain drink for $1.
At Des Moines, Iowa-based Yesway convenience stores, the cold and frozen dispensed beverage category is a key traffic driver, particularly as the company expands with new stores and acquisitions, according to Jeff Keune, senior vice president of food service and innovation.
“Our focus is delivering the highest quality by using filtered water and always checking the brix—the correct amount of syrup to water—to make sure the beverage tastes like it should,” he noted. “It’s important to get the basics right.”
Keune also pointed out that the company is investing in 16-head beverage dispensers with flavor shots in its stores that have the space to accommodate them, to offer customers the greatest variety and customization options every time they visit.
