March 27, 2018
Noncarbonated beverages and sparkling waters are getting more space in coolers as customers look for alternatives to traditional soft drinks.
In the fourth quarter of 2017, Coca Cola eked out a 1% gain in sales of its carbonated soft drinks (CSDs) such as Coke, Sprite and Fanta in North America, while global volume sales dipped 1%.
Still, those kinds of numbers won’t grow the CSD segment and beverage companies such as Coke are committing to noncarbonated beverage products to bolster profits.
“We’ve noticed flavored sparkling water is taking over in cooler doors and alkaline Ph-balanced water is being noticed at the c-store level,” said Nicolette Jaeger, loyalty and foodservice manager of Warrenville, Ill.-based PRIDE Stores, which has 12 locations in the Chicago area. “We do see a move away from carbonated soft drinks, but people still crave the classics like Coke and Pepsi.”
Last year, the convenience channel accounted for about 19% of industry revenue, which totaled $44.6 billion in 2017. Still, annual growth of CSDs declined 0.4% in 2012 and 2017 and is projected to decrease 0.9% between 2017 and 2022.
CSDs in 2016 still topped the packaged beverage category with an average-monthly-sales-per-store total of $7,639, according to preliminary figures released in the NACS State of the Industry Summit Report from April 2017.
With top carbonated soft drink manufacturers further diversifying their lines and moving into other beverage arenas, the segment will continue evolving to suit consumer tastes.
“Whether the category stops hemorrhaging and whether Coke and Pepsi take from other beverages remains to be seen,” said Tom Pirko, managing director, BevMark Consulting, Santa Barbara, Calif. “We haven’t had these competitive dynamics before, with the two biggest players in the world looking to find a way to bring consumers back in.”
Both Coca-Cola and PepsiCo have launched new mid-calorie soda products, reported IBISWorld. In addition, craft sodas like Pepsi’s Stubborn line are more popular. In 2017, Coca-Cola debuted Blue Sky Zero Sugar, a craft soda, and Coca-Cola Zero Sugar, for consumers who prefer the taste of traditional sodas, but are weary of the added sugars and calories.
With the focus on obesity and rise in diabetes, the focus has turned to healthier versions of carbonated beverages that have less calories and healthier ingredient profiles.
January 24, 2018
While the dairy section has struggled, dairy items are key purchases for most households.
The International Dairy Deli Bakery Association (IDDBA)’s What’s in Store 2018 report noted that while dairy has seen declines in both sales and volume, dairy still has a household penetration rate of 97.7%.
This is one of hundreds of findings in What’s in Store 2018, the latest edition of the annual trends publication from the (IDDBA), and What’s in Store Online, a collection of over 150 downloadable graphs and tables, as well as links to white papers and trends articles.
Other findings in the book’s “Dairy Sales and Retail Trends” chapter include:
“You can’t ignore dairy,” said Kathryn Pereira, education coordinator, IDDBA. “Dairy fulfills many shoppers needs, be it for additional protein, fueling athletic endeavors, snacking, or incorporating it into any meal. It’s versatile.”
With over 30 years of credible reporting, What’s in Store is an essential resource for dairy, deli, bakery, foodservice, and cheese departments and industries, providing vital data on retail and market trends, growth, and category changes shaping the food industry. What’s in Store is a secondary resource that is developed through both interviews with industry experts and sourcing third-party data and trends.
This year’s edition again features a continuous storyline to improve user efficiency and provide greater clarity for professionals needing to understand today’s retail world. Through five themes, readers gain new insights and learn about marketplace influences.
December 1, 2017
With a healthy profile, updated blends and more marketing, tea’s image and popularity is on the rise.
This is not your grandmother’s cup of tea. While tea is the world’s most popular hot drink, it has long lagged behind coffee in terms of infiltrating everyday culture, the Wall Street Journal reports.
Today, new tea drinks and marketing campaigns are part of a plan by tea makers to increase tea’s profile—and the price people are willing to pay for a cup. “Our mission is to create a modern-day tea culture,” said Charlotta Oldham, tea category manager for Europe, the Middle East, and Africa for Starbucks Corp. “I totally believe tea can be as cool as coffee.”
By volume, tea outranks coffee, with the world consuming 1.7 trillion cups of tea in 2016, way above the 984 billion cups of coffee, according to Euromonitor. More Americans are drinking tea, with the number of cups of tea rising 6.5% between 2012 and 2016, and sales of tea jumped 9.9% as well. However, coffee still commands more dollars, raking in $79.3 billion in retail value in 2016, compared with a mere $42.7 billion for tea. Coffee has been pushed along by specialty coffeeshops, although now it appears growth might be settling down.
Now, companies like Might Leaf Tea Co. are betting that by pushing tea’s healthy claims, updated flavors and more sophisticated tea bags will make people willing to shell out more for a cup of tea. TeaPigs sells chocolate flake, and licorice and peppermint tea bags, while Unilever PLC debuted green and herbal teas under its Lipton brand. Even Walmart stocks higher priced teas that “Soothe Your Tummy.”
November 27, 2017
Where carbonated soft drinks are slipping, RTD coffees and sparkling water are picking up the slack.
According to National Association of Convenience Stores (NACS) data released this summer, carbonated soft drinks (CSDs), energy and sports drinks, water, juices and teas, accounted for about 15% of total in-store sales for convenience stores in 2016.
“Beverage sales are often impulse purchases so store traffic is one of the keys to improving packaged beverage performance,” said Gary Hemphill, managing director of research for the Beverage Marketing Corp.
SLIDING SODA SALES
The demise of carbonated soft drinks cannot be solely attributed to sugary drink taxes—only a handful of cities currently have enacted them. Rather, sales have been on a downward trajectory for the last few years as consumers are turning to healthier beverage options to satisfy their thirst.
CSDs lost 3.3% in unit sales in all retail channels for the four-week period ending Oct. 7, according to Nielson research, reported by Wells Fargo Securities.
Even new CSD product offerings have struggled to make an impact, such as the super soda Monster Mutant, a collaborative venture between Monster and Coke.
“It has been slow to gain momentum,” said Mike Nelson, category manager for Plaid Pantry. The Beaverton, Ore.-based company operates 110 stores in Oregon and Washington State. “We plan to address the CSD decline issue with expanding other categories such as ready-to-drink (RTD) coffee, tea [and] enhanced/sparkling waters.”
WATER LEVELS UP
Earlier this year, bottled water sales set a new record when it surpassed soda for the first time as Americans’ top beverage of choice. Indeed, the subcategory has been consistently producing healthy volume gains for the past several years. Ironically, year-over-year comparison indicates a blip this summer when growth slowed substantially between June and August, only to rebound in September.
For the four-week period leading up to Oct. 7. Nestlé Pure Life and Dasani each registered 9.9% gains in unit sales and Aquafina jumped 8.1%. Of the three brands, which represent the majority of the market share, only Nestlé posted growth (0.5%) for the 12-week period while sales for Aquafina and Dasani dropped 1.1% and 2.7%, respectively.
Looking at c-store rings, sparkling water appears to be faring much better.
La Croix and Sparkling Ice each claim slightly more than one-fifth of the dollar share, but La Croix outsold its competitor in unit sales for the four-weeks ending Oct. 7 with a 51% gain compared with 1.4% for Sparkling Ice, according to Wells Fargo Securities. Dasani’s sparkling flavored water also posted impressive gains of nearly 45%.
November 8, 2017
By: Melissa Molnar, Digital Marketing Specialist
Recently the NACS conference in Chicago took place, and Harbor Category Managers attended to learn about the most exciting things happening in the convenience store industry. We sat down with Chelsea, Harbor’s Category Manager for Beverage, Grocery and Grab & Go, to learn about what was trending at the show for her categories. Chelsea shared that there were two major trends shaping these products, better-for-you and portability.
Better-for-you food was popular in 2017, and it will be continue to be popular in 2018. Customers are seeking items that are clean label, full of protein, and cater to their busy lifestyles. Consumers are less likely to stop and eat a meal, and instead are eating on the go. Products are changing to fit these lifestyle needs. P3 Portable Protein Packs, Hillshire Snacking Small Plates, and Lunachables are examples of on-the-go, pre-portioned and protein filled products. More brands are creating products that are healthy and portable, so be on the lookout for innovations in this category in the New Year.
When it comes to Beverages, consumers are drinking healthier products, while at the same time, palettes are changing. Functional beverages that are better-for-you and offer other benefits are what customers are looking for. KeVita Kombucha with probiotics, Naked Juice and La Croix are popular products for 2018. These drinks cater to all age groups, and offer refreshing healthy choices in the beverage case. People are more aware of sugar and calorie count than ever.
Grab and Go is more than just the cooler, and traditional meal items are transitioning to be more portable too. Innovations to make pastries more portable will be a big part of that category come the New Year. A new product that will be launching is the Prairie City Walkin’ Waffles. These waffles are targeted toward busy customers who are looking to snack on something sweet while on-the-go. Walkin’ waffles will be available in the December Retail Solutions Book for pre-order.
Set your store apart from the competition by stocking better-for-you, seasonal flavors and in-between pre-portioned snacks. These are the products that customers will be buying out in 2018, and Harbor can help you figure out the best options for your store.
September 1, 2017
As traditional carbonated soft drink sales continue to lag, the convenience store channel is proving a hot bed for new beverage options sought by younger consumers, including healthier craft sodas and cold brew coffee.
By David Bennett, Senior Editor
Industry experts say Millennials are leading the escape from mass produced, over-processed and over-packaged foods with a demand for real, healthier ingredients. The same can be said for U.S. packaged beverages, according to Gary Hemphill, managing director of research for Beverage Marketing Corp. (BMC), who explains the marketplace is being reshaped by consumer demand for variety and healthier refreshment. Due to this, retailers are likely to continue to see more category and product innovation.
“It is fair to say that Millennials are leading the charge toward healthier refreshment beverages with products that are more natural and simple with a straight-forward list of ingredients,” said Hemphill.
If that push from younger U.S. beverage consumers is growing, it’s reflective in the mixed sets and product lines displayed in c-store cold vault spaces throughout the country.
The packaged beverage category is a perennial performer in terms of positive gross profit dollar growth. In 2016, packaged beverages (non-alcohol) accounted for 18.5% of gross profit dollars. Within the category, enhanced water (12.3% increase in sales), sports drinks (4.5%) and bottled water (3.9%) led sales growth from the cooler, according to data from the National Association of Convenience Stores (NACS).
For the first time in 2016, bottled waters surpassed carbonated soft drinks to become the No. 1 beverage by volume. The BMC projects sparkling water sales will increase more than 20% in 2017.
As U.S. consumers shun traditional carbonated soft drinks (CSD) in an effort to live healthier lives, Coca-Cola, PepsiCo and other drink manufacturers are pushing to pad their product portfolios with beverages with less sugar and what are considered “better-for-you” ingredients.
For instance, Monster Mutant ‘super soda’ is an extension of a strategic partnership between Monster and Coke. Coke in 2015 acquired a minority stake in Monster and became “preferred global distribution partner” for Monster energy drinks. However, Mutant isn’t marketed as an energy offering, but is being peddled as a CSD alternative.
August 18, 2017
New energy product launches are helping energy drinks and shots gain some of their lost momentum.
By Howard Riell, Associate Editor
Fueled by flavor extensions, cross-bundling, limited-time offers and Americans’ nonstop lifestyle, energy drinks are finding new consumers who are reviving lagging sales.
At the same time, energy shots continue to provide a convenient alternative.
For the 52-week period ending May 14, 2017, energy drinks sales in the convenience store channel rose 1.83% to $9.05 billion, according to data from Chicago research firm Information Resources Inc. (IRI). For the same period, sales of energy shots were $731.1 million, down 7.57% from a year ago.
“Energy drinks continue to grow, but somewhat more modestly,” said Gary Hemphill, managing director of research for Beverage Marketing Corp. (BMC). “The last half of 2016 experienced a slowdown. The need state of energy is a large one, so we believe the category is likely to maintain solid growth in the years ahead.”
Monster, Red Bull and Rockstar remain the leading brands.
New-product activity in the category has been strong, as marketers attempt to draw in new consumers, but also increase consumption among loyal consumers. Studies show while the demographics of customers have broadened in the last couple of years, the core consumer of energy products continues to be younger males.
“There is a broad set of leading, established energy drink brands like Monster and Red Bull,” said Chris Randall, managing director in global consulting firm L.E.K. Consulting’s Consumer Products division. “However, the functional beverage category is evolving, and other drinks like Kombucha are slowly becoming more mainstream. Many of the new, hot introductions focus on ‘natural’ in both drinks and shots, plus the combination of protein and energy.”
July 7, 2017
Wells Fargo shares insights on the beverage industry.
Wells Fargo recently attended Beverage Digest’s “Market Smarts” Conference in New York City and shared the future outlook for beverages.
“We continue to believe that the beverage industry has many opportunities (and challenges), but believe the overall outlook for the industry’s leaders remains favorable,” said Wells Fargo Senior Analyst Bonnie Herzog.
Key themes from this year’s conference, as outlined by Wells Fargo included:
(1) authenticity, relevancy, taste, and functional attributes remain key traits of successful brands, both old and new;
(2) manufacturers continue to raise the bar to leverage consumer and retail insights and are increasingly making efforts to stay ahead of evolving consumer tastes;
April 28, 2017
Whether it’s a modest combination deal or full promotional blowout, c-stores are finding the best methods to churn cold and frozen dispensed beverage sales.
A March 2016 survey by Mintel Group Ltd. showed that convenience store visitors want a wider variety of fresh food and beverages as part of their shopping experience.
As part of the report, 912 internet users aged 18 or older were asked: “Which of the following made-to-order or fresh foods/beverages have you purchased at convenience stores in the last three months,” 48% of respondents said fountain beverages, which was the top choice among food and beverage offerings.
Some years ago, the fountain category and the concept of fresh appeared contradictory. C-stores were known for a limited dispensed drink selection, with few promotions to push product. Frozen beverages often came out of a 7-Eleven Slurpee machine. However, convenience retailers today provide U.S. consumers a vast selection of cold and frozen dispensed beverages including fruit-infused slushes, milkshakes, iced coffees, novelty soft drinks and frozen beverage concoctions. The result is a category that continues to provide momentum when it comes to in-store sales.
EXTENDING FOODSERVICE SALES
C-store foodservice programs generated more than one-third of in-store gross-profit dollars in 2015, with cold and frozen dispensed beverage sales being key contributors, according to the National Association of Convenience Stores (NACS) 2015 State of the Industry report. By gross margin sales, cold beverages per store, per month grew to 50.86% in 2015. Frozen beverages weren’t that far behind with a gross margin percentage of 46.05%.
NACS’ preliminary State of the Industry report for 2016 will be out soon. When it is published, cold and frozen beverages will likely be strong performers again.
Arguably, the c-store channel has already earned the title as the cold dispensed beverage destination champ. Now, convenience retailers are adding some polish to the title in the form of new product offerings and flavorful deals to keep customers coming back—and not just to the cold vault.
April 24, 2017
Both bottled water and sports drinks are thirst quenchers that continue to be staples in the convenience channel.
According to research firm Mintel, 83% of U.S. consumers drink unflavored still bottled water, compared with 82% drinking tap water. Flavored still bottled water was consumed by 48% of those surveyed, and 46% sought out both unflavored and flavor-enhanced still bottled water.
The report, “Bottled Water U.S. January 2017,” also indicated that 17% of U.S. consumers drink flavored sparkling bottled/canned water frequently, compared with 16% preferring both unflavored and flavored enhanced still bottled water.
Promotions tend to have a big impact on sales for both bottled water and sports drinks.
“In the grocery channel, a deal may promote 10 beverage bottles for $10 or $1 per bottle, whereas in c-stores, a buy-one-get-one offer is only good for those who buy multiple products, with the first beverage at full price and the second either reduced or free. It’s about moving more units through and increasing the rings,” said Marylou Mendez, chief financial officer at Mendez Automotive Services Plaza Chevron Service Center, based in Costa Mesa, Calif. “We do a lot with Smartwater, our No. 1 seller that has a year-round promotion of buy a liter at full price and get a second for 50 cents.”
The retailer also carries Core water, which is experiencing increasing sales, as well as another top seller, Gatorade. The latter is offered in a two-for-one deal, with lemonade, lemon-lime and fruit punch flavors selling best, along with the newer cucumber-lime line.
In addition to promotions, Mintel’s report confirmed that the environmental impact has had an effect on consumption of bottled water. Consumers prefer reusable packaging for these beverages as well as biodegradable materials.