The packaged beverage category at convenience stores is seeing strong sales growth in 2021, driven partly by ongoing beverage innovation, including new flavor options. Retailers are seeing increased customer demand for ready-to-drink (RTD) coffee, energy drinks and sparkling waters, as customers seek out beverages they perceive as healthier or energy-boosting.
Total RTD beverage sales increased in convenience stores by 9.1% within the latest 52 weeks ending Aug. 28, 2021, according to NielsenIQ. The heftiest growth was in the coffee category, with an 18.6% upsurge, followed by sports drinks with a 15.4% rise and fruit juice up 13.2%.
RTD tea sales grew by 1.8%, while its fermented sister seg-ment, kombucha, increased
Soft drink sales rose 4.5%, sparkling water 10.4% and coconut water 10.7%. Still water sales grew 4.5% and fruit drinks 6.6% for the same period.
Customers Drink Up Innovation
At Englefield Oil’s Duchess convenience stores, with 119 locations in Ohio and one in West Virginia, carbonated soft drink sales have demonstrated consistent growth over the past few years, mostly due to the big legacy brands continually coming out with interesting new flavors, said Nathan Arnold, director of marketing, Englefield Oil. These innovations, he said, give Duchess something to build promotions around.
“We prominently display signage to alert customers and generate interest about the new flavors,” he noted.
Coffee “is huge for us and continues to grow,” Arnold said. Sales are so strong that the company is looking for additional brands to carry.
Like soft drinks, manufacturer innovation is the key to this growth. He cited Starbucks’ introduction of coffee drinks made with almond milk.
Additions of limited-time offer options, such as pumpkin spice for fall and peppermint stick for winter, also appeal to customers.
“People go to coffee shops to get a variety of barista-made specialty drinks,” Arnold said. “With the LTOs, they can get these same beverages in our convenience stores.”
Many customers are switching to lower- or no-calorie beverages as they seek out better-for-you drinks. Over the past year, the premium still and sparkling water categories have soared at Duchess stores.
Arnold anticipates that the water categories will continue to gain momentum. He is so confident that he plans to expand the categories in the stores when he does his next reset and to bundle waters with food items for special promotions.
Sports drinks, always a strong category at Duchess, are also a go-to for customers who want something flavorful that’s not soda. Even though flavored waters are making inroads in this category, Arnold expects it to remain a robust one.
Out-of-stocks have taken a bite out of the stores’ usually dynamic energy drinks category over the past year. However, customers are purchasing more four-packs to take home instead of single units to consume right away.
The RTD tea category was flat all summer at Duchess, which Arnold attributes to out-of-stocks and customers substituting flavored waters and other beverages.
Energy drinks and sparkling waters, up 10% and 6% respectively, are the heartiest RTD beverage categories at Cubby’s convenience stores, which has 36 locations in Nebraska, Iowa and South Dakota, said De Lone Wilson, the company’s president. He predicted that these two categories will continue their growth pattern through the end of this year.
“Especially in the energy drink category, there are new entrants that are capturing customer attention,” Wilson said.
Like Arnold, Wilson said trends in the packaged beverage realm may be skewed by the current prevalence of out-of-stocks.
With an ever-increasing variety of flavors available across the packaged beverage categories, retailers must keep a close eye on which ones consumers gravitate toward in their local markets.
Straightforward flavors across the RTD beverage universe generally sell best, Arnold reported. “We’re constantly trying new flavors, but lemon-, lime- and berry-based flavors are always the most popular.”