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Convenience Stores' Beverage Edge

Restaurant chains might take a cue from convenience stores that cater to guest desires for custom self-serve drinks, value and private-label options.

By Monica Rogers, Contributing Editor -- Chain Leader, 7/1/2009

7-Eleven customer
7-Eleven plans sassy ads that skew to the younger, female audience it expects will be the main buyers of its new iced coffee beverages.
America's cusp-of-recovery status puts convenience-store beverage marketers in an interesting place, juggling value with the need for quality and new news.

“The market has shifted in the beverage category more in the last two years than in 20,” says Paul Pierce, senior director of merchandising for Dallas-based 7-Eleven, which operates 36,100 convenience stores worldwide. “The desire for customizability with drinks is still huge. But [guest desire for] value hurt energy drinks somewhat, and has sent some guests back to basic fountain drinks. Guests are also interested in new private-label bottled drinks that cost 10 to 20 percent less than branded items.”

At the same time they want value, customers are not willing to sacrifice quality. “Places like Starbucks really upped the ante on what guests expect from their beverage experience,” says Pierce.

Private-Label Blitz

Delivering on guest desires, c-store leaders are enhancing their private-label offerings. 7-Eleven launched its own Seven Select brand water and snack products in 2008. “The Seven Select products are just flying off he shelves,” says Pierce. The chain expanded the line this year to include fruit and vegetable juice drinks and sees a lot of potential for enhanced waters, sodas and isotonic beverages.

QuikTrip beverages
Beverage customizability is a huge perceived benefit at convenience stores like QuikTrip. Guests like to mix ingredients from carbonated-frozen-beverage, fountain and coffee-island machines.
Tulsa, Okla.-based QuikTrip, which operates 525 convenience stores in nine states, has done well with its private-label energy drinks, available from the fountains and in bottles. “Energy drinks are still our hottest beverage category,” says Mike Thornbrugh, manager of public and government relations. “Sales have been consistently strong, steady and solid.”

Private label has long been a focus at Wawa, Pa.-based Wawa, which operates 570 stores in five states. “Our heritage is with dairy, which we've done since 1902, but in recent years, Wawa juices and teas have become very popular with our guests,” says Lori Bruce, public relations director. Wawa's private-label beverage line includes enhanced waters, iced teas, enhanced teas, fruit drinks, juices, energy drinks, sodas and cappuccinos.

Hot on Cold

For some convenience-store operators, McDonald's specialty coffee has dampened sales of hot coffee drinks. QuikTrip has felt the pinch, as has Beaverton, Ore.-based Plaid Pantry. “McDonald's has made a hell of a charge,” says Butch Fulton, Plaid Pantry merchandising manager. But the regional chain's tea business is up 50 percent over last year. “Tea is our fastest growing segment,” Fulton says.

7-Eleven sees potential for iced coffee. The chain's new iced-coffee program launches next month, featuring two flavors: mocha and French vanilla. Because 7-Eleven thinks the iced-coffee drinks will trend younger and female, the supporting advertising campaign will be “very sassy,” says Pierce.

7-Eleven Slurpee machine
7- Eleven continues to
evolve its Slurpee beverages and is testing a line of “real fruit” smoothies.
And building on the strength of its Slurpee carbonated frozen beverages, which Pierce says really took off this year, 7-Eleven is also in test with a new machine that will dispense “real fruit” smoothies. While the test is new and limited to 100 stores, sales of the fruit smoothies are exceeding expectations. “We think many of our guests will look to the real-fruit smoothies as a way to graduate from Slurpees to frozen, noncarbonated drinks,” Pierce says.

Altoona, Pa.-based Sheetz also added new options to the frozen-specialty lineup at its 350-plus stores. Froozies, veggie-fruit smoothies, are now available in Grape Escape, Tangerine Tango and Apricot Infusion flavors. And Nutrition Shakes, positioned as meal replacements, are now offered in fruit, java and mocha flavors.

Custom and Quick

Beyond product discussions, convenience stores say customizable speed of service is a huge beverage decision driver. “We ask our guests about the drive-thru option, and they don't want it,” says Pierce. “They want to handle the product and want control. They tell us that drive-thru doesn't seem as fast to them as the ability to just walk in and make the drink they want without dealing with a server.”

“Mix and match is huge,” says Thornbrugh. “We encourage it.” QuikTrip's Web site gives recipes that pull ingredients from all over the self-service beverage station. Mix-it-Up Drink Recipes include the Chocolate Covered Cherry, combining a Black Cherry Smoothie from the freezer with four shots of chocolate and four shots of vanilla syrup from the Flavor Center machine in the coffee bar.

HOT TOPIC

Check out the Menu Development page for more restaurant chain menu promotions, rollouts and ideas.

But what about those who abuse the system? “We don't get bent out of shape about how or what they mix,” Thornbrugh says. “Everybody's got their own way of wanting to mix things up, and in our mind, it's more important to encourage that than to police it.”

MORE: Meal-replacement shakes are the mainstay of Protein Bar, a new quick-service restaurant concept from former packaged-food-industry manager Matt Matros.

MORE:
Frozen beverages are popular at restaurant chains, and many are new for summer.

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