What do customers expect to see behind cold-vault doors? Soda, juice and water? Yes, of course, those products still command prime real estate in convenience stores. But over the years, ready-to-drink (RTD) coffees or teas and energy drinks squeezed their way onto shelves. Now, customers also seek out innovative concoctions such as rapid hydration drinks.
Finding the right inventory harmony between old favorites and new products within the packaged beverage category can be challenging as trends continue to evolve. So what’s the hottest craze right now for c-stores? Market research and store-level insights point to “better-for-you” quenchers.
At Rutter’s, virtually all packaged-beverage subcategories have outperformed last year’s numbers throughout the first three quarters of this year, noted Joe Bortner, senior category manager for the York, Pa.-based chain, which owns and operates more than 80 stores in Pennsylvania, Maryland and West Virginia.
“None more than the ‘rapid hydration’ space,” he said. “Consumers are becoming more educated and aware of what they’re putting in their bodies, which is leading into this functional beverage growth trend.”
Hydration beverages earned over $35 billion last year, and the subcategory could grow to nearly $59 billion by 2032, according to Precedence Research, a market research and consulting organization. These drinks are distinguished by ingredients to promote hydration benefits such as electrolytes — i.e., sodium, potassium and magnesium — and coconut water or fruit flavorings.
NielsenIQ data also showed a substantial uptick in two carbonated beverages that boast a wide range of natural components. Sales of Poppi by VNGR Beverages, which contains agave inulin, apple cider vinegar and fruit juice, posted year-over-year dollar sales gains of 167% for the 52 weeks ending Sept. 21 and a nearly 179% increase in volume, noted a Goldman Sachs Oct. 1 report.
It also registered triple-digit growth in the low-calorie carbonated beverage segment.
Low-calorie Olipop, featuring cassava root fiber and kudzu root extract among other ingredients, logged gains of 129% in dollar sales and 133% in volume for the same 52-week period.
Many other product groupings, including big-brand carbonated beverages and bottled water, showed nominal growth or posted losses.
Overall, the energy drink category grew 5% in dollar sales for the 52 weeks ending Sept. 21, 2024. Of note, Alani Nutrition finished with a 53% gain in dollar sales and 62% jump in volume.
RTD Coffee Trends
Sales of RTD coffees have dipped. Circana research revealed that RTD cappuccino/iced coffee, cold brew and refrigerated RTD coffee fell in both dollar and unit sales for the 52 weeks ending Sept. 8.
“Brands within RTD coffee are all trying to figure out what resonates the most with consumers. The coffee subcategory is a relatively indulgent one, which combats where we’re seeing growth in the rest of the cold-vault category,” noted Bortner.
That said, he’s observed younger shoppers continue to show strong interest in the caffeinated drinks along with energy options.
“Gen Z will likely be the group that grows this category the most. Millennials and Gen Z are more affluent with tech, and so we leverage targeted offers through our app and loyalty platform to create value and build the overall basket of the RTD coffee consumer,” said Bortner. “I think there’s something to be said that the consumer that was once seeking an RTD coffee beverage in the morning has shifted to drinking energy drinks. They’re able to source the caffeinated boost in morning without all the calories and sugar that are present in RTD coffees.”
Don’t count out the impact of seasonal promotions brewing business for coffees, however.
“Seasonal trends offer opportunities for packaged beverages and RTD coffee in the U.S. to engage consumers with unique and timely offerings,” said Kelsey Olsen, food and drink analyst for Mintel. “Within coffee and RTD coffee innovation, consumers are most aligned on interest in new seasonal coffee flavors and seasonal coffee creamers, showcasing the appeal of seasonal innovation.”
Research also indicates packaging influences purchases, whether it’s varying sizes priced right or the use of sustainable materials. Actually, the packaging innovation trend is a carryover from last year.
“In 2023, new packaging led beverage launch types, surpassing new product varieties and range extensions,” said Olsen. “This shift indicates a strategic focus on packaging innovation as a means to capture consumer attention amid rising ingredient costs and inflation.”