January 30, 2019
With the abundance of ready-to-drink, cold brew and nitro varieties of coffee and tea trending today, and consumers looking for more varieties and customization, convenience store operators must continually adjust their hot dispensed beverage programs to maintain maximum profitability.
While the motivators for beverage consumption remain the same as always—a boost of energy in the morning and a pick-me-up in the afternoon—consumers, especially younger ones, are always looking for new products to satisfy their needs, according to Mark DiDomenico, director, client services for Datassential research firm.
For some, that could be switching from hot dispensed beverages to ready-to-drink (RTD) from the cooler. For others it might be a new exotic brew or limited time offer (LTO) creamer to add a different flavor to their coffee.
As Millennials and Gen Z consumers take over the primary age demographics, their preferences in food and drink are increasingly driving sales, DiDomenico pointed out.
“These younger consumers are looking for beverage options that combine flavor, authenticity, functionality and a sense of adventure,” DiDomenico said. “That could be anything from kombucha to herbal teas.”
When it comes to coffee, 100% Colombian has been around for a long time, but now a growing number of retailers are becoming more specific, highlighting different geo-specific regions of counties or even specific farms, he explained.
“There’s a mystique about taste and quality that goes along with these coffees similar to wines,” DiDomenico added.
At the same time, some things have stayed the same. For example, French vanilla has been the No. 1 favorite coffee flavor, and hazelnut No. 2, for at least 20 to 30 years. And, people like to experiment with flavors through LTOs. DiDomenico said that as a nod to the preferences of younger consumers, operators may want to add some plant-based milks and natural sugars such as turbinado sugar and Stevia to their coffee bars.
SERVING UP PROMOTIONS
Special deals on coffee can also increase customer awareness and sales of hot dispensed beverages.
At Big 10 Mart, which has 15 locations in Iowa and Illinois, hot dispensed beverage sales were down 14% during the first three quarters of 2018 versus 2017, reported Jacque Hager, director of retail operations for the chain.
“We attributed this to more competition and a hotter summer,” she explained.
To try and combat those declining sales, the company implemented a 99-cent price point on any size coffee on Mondays. As a result, Big 10 Mart saw a 15% increase in hot dispensed beverage sales during the fourth quarter versus the previous year.