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Lively Soft Drinks Emerge

March 27, 2017

Although the news is not all positive for carbonated soft drinks, innovation in the category has the potential to create a reboot.

Demand for both regular and diet carbonated soft drinks has declined as more consumers turn to healthier beverages to quench their thirst, according to IBISWorld, a Los Angeles-based market research firm. It reported total channel soft drink revenue totaled $42.8 billion in 2016, a 0.9% decline since 2011.

Yet, convenience stores will remain a key market for carbonated soft drinks, with this channel’s share of market revenue increasing steadily over the past five years due to consumers’ growing need for convenience, according to IBISWorld.

More than 31% of c-store packaged-beverage sales came from CSDs in 2015, according to the Nielsen’s annual category report.

However, new products in the marketplace are expected to bring life to the segment. For example, both Coca-Cola Co. and PepsiCo have introduced new low-calorie lines to bolster lagging diet soda sales.

Even more intriguing are the new craft brands hitting the marketplace. Pepsi introduced its Stubborn craft line in August of last year, the third such line in three years. Already, 2017 is shaping up to be more eventful in terms of CSD product introductions.

The Canadian soft drink brand, Guru, is pushing the organic and energy trends with sparkling energy water that’s said to be free of sugar, calories and GMOs. These products make up for what is lacking by including heavy doses of natural caffeine.

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2017 Looks Rich for Dairy

March 17, 2017

Dairy products like milk, frozen novelties, ice cream and more continue to be essential items for Americans—and just the kind that convenience stores specialize in.

Health is an obvious driver. Darryl David, CEO of Darryl’s Ice Cream Solutions LLC, a private-label ice cream consulting firm in St. Petersburg, Fla., said more often than not, U.S. consumers are bending toward better-for-you dairy items.

“Many of my clients are eliminating high-fructose corn syrup in their products and making products sweetened with cane sugar.”
While there might be a higher demand for soy milk in some markets, the best sellers in convenience stores, he added, are still the super-premium ice cream pint at $4.79 and the $1 novelty item.

“Over the past year, we’ve seen a proliferation of new product introductions and sustained growth of key products, including chocolate milk and whole milk,” said Kikke Riedel, vice president of strategy and insights for the Washington, D.C.-based National Milk Processor Education Program (MilkPEP).

The group found that c-stores can and should step up their game with milk. A retail study recently commissioned by MilkPEP found that convenience stores, in particular, have lost ground to other channels for milk sales, resulting in a loss of more than $1 billion in potential sales and $321 million in potential profits since 2008. “That’s a loss that we believe can be regained with smart merchandizing and milk product mix optimization,” Riedel said.

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Quenching Thirsts and Sales

March 10, 2017

Spring is almost here, which means summer isn’t too far behind. It’s time to get your beverage business in order.

By Jim Callahan

The warning, “Beware the Ides of March” probably resonates more with readers of Shakespeare’s play “Julius Caesar” than it does with c-store operators.

Still, March is an important month to mark on your calendars. That’s because March signals spring and spring of course is the precursor to summer sales.

However, some c-stores stab themselves in the back (a Caesar reference) by not being prepared to serve their customers all summer long. This month is a good window to plan, prepare dispensing equipment and oil the cash register—homing in on what I consider the No. 1 “must push” foodservice-related segment for convenience retailers.

That, of course, would be beverage offerings. Whether you are in the deep south, like I am here in Atlanta, in upstate New York—where I grew up—or Anchorage, Alaska, where I’ve never been, dispensed beverages are a top business driver throughout the year. That’s because beverage-buying trends cover a broad spectrum of customer behavior.

In my opinion, beverages are by far that No. 1 summer merchandise item. Customers alter their day with an enormous number of unplanned stops to purchase desired beverages—even rivaling restroom stops. After all, quenching one’s thirst and hydrating one’s body is serious business.

In that regard, beverage offerings too are serious business. Both cold and hot dispensed beverages are perennial top 10 performers when it comes to in-store sales. Throw in the unique and expanding frozen beverage tradition that c-store have cultivated and grown since 7-Eleven rolled out the first Slurpee machine.

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Refrigerated Coffee Creamer Sales Climb

March 3, 2017

Clean labels and more plant-based creamers may be giving the segment a boost.

Sales of coffee creamers are on the rise, according to a recent report “Refrigerated Coffee Creamers: U.S. Market Trends,” by market research firm Packaged Facts that estimates overall domestic retail sales for refrigerated coffee creamer products approached $2.5 billion in 2015, an increase of more than 4%. The increase came about as the rate of heavier usage continued creeping upwards, with the share of households consuming three or more containers per month at a five-year high of 12% even as the share of U.S. households consuming non-dairy cream substitutes remained at around 44% between 2011 and 2015.

So why are the consumers who use these products using more? Credit the appearance of clean labels as the primary reason, with additional support coming from the expanded availability of plant-based creamers. Nestlé, the leader in the coffee creamer category, has maintained its dominant position via an intense commitment to product innovation and development that leverages consumer demand for clean labels. Its vast Coffee-mate product assortment is augmented and updated continually.

At the same time, WhiteWave has become a leading contender through development and marketing initiatives in the creamer market built around plant-based creamers. The company is also guided by a commitment to meeting the growing consumer demand for personalization in their coffee experience. The company expects a considerable return on its investment across its “better-for-you” lineup.

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What Will Drive Beverage Sales in 2017?

February 27, 2017

Convenience-store retailers expect bottled water will be the fastest-growing packaged-beverage category in their stores in 2017, according to a survey conducted by Wells Fargo Securities, New York.

Analyst Bonnie Herzog’s fourth-quarter Beverage Buzz survey of retailers representing more than 15,000 c-stores shows those surveyed expect total beverage sales to increase “a modest” 4.1% during 2017.

Here’s a breakdown of how major beverage categories are expected to perform, according to the survey …

The total carbonated-soft-drink (CSD) category is expected to grow 2.8% in 2017, led by flavored CSDs, which retailers expect to grow 6.3%.

Retailers said new Mountain Dew and Kickstart flavors from PepsiCo are leading the growth in the category.

“Pepsi appears to be focused on several new CSD flavors, along with some new water and coffee flavors,” one retailer said. “The big surprise is the focus on growing CSDs.”

Colas are expected to grow 1.3%, according to the survey.

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Functional Foods, Beverages Set To Grow

January 9, 2017

Adults become more health conscious and parents are increasingly concerned about the health of children, fueling the growth of functional products.

Technavio research analysts are forecasting that the global functional foods and beverages market will grow at a CAGR of close to 8% from 2017-2021.

The Technavio report segments the market into two broad categories consisting of functional foods and functional beverages. These foods and beverages are formulated with special ingredients to provide improved health.

“The growing demand for functional foods coupled with the introduction of innovative products and ingredients is driving the market,” said Manjunath Reddy, a lead analyst at Technavio for non-alcoholic beverages research. “Other factors that will fuel market growth include an increase in the demand for functional foods from older people, increase in the number of health-conscious adults and increased concern about the health of children.”

Technavio food and beverage analysts highlight the following three drivers that are contributing to the growth of the global functional foods and beverages market:

Product innovations

Health benefits associated with functional foods and beverages

Emergence of non-traditional fitness activities

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What Are Consumers’ Beverage Preferences?

December 14, 2016

NPD Group finds that despite decline, soft drinks remain the top beverage consumed at foodservice outlets.

U.S. consumers have been drinking fewer purchased beverages for the last decade, but they turn to the beverage standards of coffee, soft drinks, milk, iced tea or bottled water when they do, according to The NPD Group, a global information company.

There are 72 fewer in- and away from home occasions per person annually when a purchased beverage is consumed today than there was a decade ago. It’s not that consumers are only drinking tap water; there are still about 1,100 beverage occasions per person a year, which equates to about three non-tap water drinks a day, according to NPD Group’s continual tracking of U.S. consumer’s eating and drinking behaviors.

Brewed coffee and specialty coffee are the No. 1 beverages consumed at home. A wide variety of coffee appliances have enabled gourmet coffee results in-home. Craft coffee brewing, like using pour over cones, French presses and vacuum brewers, is how many U.S. young adults, ages 18 and over, brew their coffee at home. Although brewed coffee and specialty coffee don’t hold the No. 1 spot away from home, the category ranks a respectable second in the top beverages consumed at restaurants and other foodservice outlets.

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Food & Drink Trends Ahead for 2017

November 30, 2016

From new but recognizable to sustainable, Mintel outlines key influences expected to impact the food and beverage market in the new year.

Mintel has predicted six key trends will impact the food and beverage market in 2017.

According to the Chicago-based research firm, 2017 will be a year of extremes, from “ancient” products including grains, recipes, practices and traditions to the use of technology to create more and better tasting plant-enhanced foods.

Expect to see a rise in both “slow” and “fast” claims as well as more products designed to help people calm down before bedtime, sleep better and restore the body while they rest. Opportunities will exist for more products to leverage the reputation of the tea category and use chamomile, lavender and other herbs in formulations as a way to achieve a sense calm before bedtime.

There will also be a valid excuse for nighttime chocolate indulgence. In 2017 and beyond, expect to see more of the unexpected, including fruit snacks made with ugly fruit and mayonnaise made with the liquid from draining chickpeas, which has been dubbed aquafaba.

Looking ahead to 2017, Mintel’s Global Food and Drink Analyst Jenny Zegler discussed the top food and drink trends set to impact global markets:

Consumers seek comfort from modernized updates of age-old formulations, flavors and formats.

People are seeking the safety of products that are recognizable rather than revolutionary. The trust in the familiar emphasizes the opportunity for manufacturers to look to the past as a dependable source of inspiration such as “ancient” product claims including ancient grains and also ancient recipes, practices and traditions. Potential also exists for innovations that use the familiar as a base for something that’s new, but recognizable, such as cold-brew coffee.

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Beverage Lines Blur

November 16, 2016

Innovation abounds in packaged beverages as crossover between segments can cause confusion in the cold vault.

By Erin Rigik Del Conte, Senior Editor

Consumers continue to demand healthier beverages as they move away from sugary drinks, but innovation continues across the beverage spectrum including among more indulgent flavors and appeals. As innovation grows, the lines between beverage segments are beginning to overlap.

“It seems as more time goes by we are seeing decreased sales of the traditional ‘pop,’” said De Lone Wilson, president of Cubby’s Inc., who said sales dollars that once went to carbonated soft drinks are being spread across different beverage segments.

“Water is up some, different teas are up some, energy is up some,” Wilson said.

Indeed, carbonated beverage dollar sales fell 0.11% for the 52 weeks ending Sept. 4, according to total U.S. c-store data from market research firm IRI. Ready-to-drink (RTD) teas rose 7%, while energy drinks grew 5.02%, sports drinks climbed 6.62% and bottled water soared 8.42%.

Manufacturers continue to roll out new offerings in an attempt to gain ground in the still-profitable carbonated soft drink arena. For instance, Monster Beverage this summer introduced the “super soda” Mutant, a high-caffeine challenger to Mountain Dew. However, just as quickly as manufacturers are introducing new product lines consumers are seeking out the next new thing, causing market figures to fluctuate.

“Some of the growth that we did see in carbonated soft drinks (CSDs) over the last year really have eroded,” said Jordan Roast, vice president of consumer insights for the U.S. market, Nielsen. “A lot of the growth has shifted into some of these different varieties of beverages that deliver a similar experience.”

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Pouring on the Profits

August 8, 2016

Ramping up cold and frozen dispensed beverage promotions during the summer months can create a profit center for convenience stores.

By Lisa White, Contributing Editor

In the past, summer fountain drink wars only took place in the convenience channel.

But with today’s quick-service restaurants (QSRs)trying to capture c-stores’ beverage business, this is no longer the case.

“As the convenience industry’s overall foodservice quality has improved, it has made QSRs more aware of c-stores as competition,” said Steven Montgomery, president of b2b Solutions, LLC, a convenience store consultancy based in Lake Forest, Ill. “The foodservice industry’s analysis has shown the importance of drinks that were formerly seen as an ancillary sale to meals.”

The potential in this segment is evident. This past Memorial Day, retailers representing approximately 15,000 U.S. convenience stores reported beverage sales were up 5.5%, compared with 4.9% over the same period in 2015, according to a report by New York City-based Wells Fargo Securities.

Although the frozen dispensed beverage category encompasses a small percentage of overall sales in a typical convenience store, these items are available in 71% of c-stores, reported the National Association of Convenience Stores (NACS). It’s fountain drinks, not the cold vault, that offer the highest profit potential.

“Retailers who distinguish fountain offerings can leverage this highly profitable category,” Montgomery said.

Atlanta-based RaceTrac Petroleum’s 661 stores offer up to 30 fountain options that include Coca-Cola, Dr Pepper and Pepsi products, and up to 18 frozen options that include Coca-Cola, Dr Pepper and Fanta flavors. The chain also has a private label frozen beverage brand, Numb Skull.

“RaceTrac’s fountain and frozen beverage program has benefited from our recent remodel program, which has allowed us to expand offerings at our legacy stores,” said Lisbeth Horehled, associate category manager for dispensed beverages. “The remodel program, which is tracking to be completed across all six RaceTrac regions by the end of 2018, brings a more modern look and feel to all our stores with updated building architecture, Swirl World frozen treat stations, an expanded coffee area and additional indoor and outdoor seating and lighting.”

At MAPCO Express Inc.’s 349 stores, there’s been double-digit growth of cold and frozen dispensed sales over the previous year. The Brentwood, Tenn.-based retailer’s locations have 8-16 head fountain machines, brewed iced tea and both frozen uncarbonated and carbonated beverages.

“Our growth has come from the carbonated category and can be attributed to our MY Reward$ [loyalty card program], simplified store execution and the addition of Coke Freestyle machines in strategic locations,” said Linda Schultz, director of dispensed beverage.

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