All signs point to growth for frozen and dispensed beverage sales in 2023.
Cold and frozen dispensed beverages have remained strong growth categories for convenience stores over the past two years, reported John Benson, partner in the restaurants, hospitality and leisure practice at AlixPartners consulting firm.
He explained that top-line revenues recovered to pre-pandemic levels in 2021 and expanded further in 2022 with double-digit growth: approximately 10% in the cold category and approximately 15% in the frozen category.
Margins, too, have remained strong (50%-plus) for these categories compared to margins for packaged beverages (40%) and overall foodservice (45%-plus), he added.
“Clearly, these categories present important top-line and margin growth opportunities for c-stores to capture,” Benson said.
At Duchess convenience stores, they “take frozen and cold dispensed beverages very seriously, resulting in double-digit sales increases in both categories,” according to Nathan Arnold, director of marketing for Englefield Oil, which operates 120 Duchess convenience stores in Ohio and West Virginia.
Depending on the layout of a specific store, equipment can range from a traditional fountain dispenser to a Coke Freestyle machine with endless options. Arnold stated that he believes sales in both these categories will continue to rise through 2023 and beyond.
Guests can customize their beverages with vanilla, cherry and other flavor shots at the cold dispensed bar. In addition to sodas, the stores dispense brewed iced tea and iced coffee in two flavors — black and vanilla. The iced coffee can also be customized with flavored creamers from the hot coffee bar.
Frozen options consist of at least two frozen smoothie and two frozen carbonated beverage varieties and, in high-volume stores, can go up to eight selections. They are available in cherry and blueberry with a variety of soda flavors.
Members of the Crown Card loyalty program can get a free cold or frozen dispensed beverage with the purchase of five. Cold dispensed beverages are bundled with sandwiches and subs at a combination price.
Testing Bundle Deals
Plaid Pantry stores, with 108 locations in Washington and Oregon, are equipped with 10-head cold dispensed fountain machines. Although they do not offer frozen drinks yet, according to David Cole, dispensed beverage buyer for the stores, Plaid Pantry is always exploring opportunities to add them.
To bolster the cold dispensed category, which is flat and declining at its stores, while sales of bottled beverages from the cold vault are “extremely healthy,” Plaid Pantry offers customers an assortment of special deals in hopes of coming upon “the winning ticket bundle,” Cole explained. So far, he has tried a $1 fountain drink with the purchase of any Tucson tamale and a deli item, chips and 22-ounce fountain soda combo.