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10/12/2021

Frozen beverages are ready for a post-lockdown comeback

Self-serve beverage sales took a hit during the pandemic, but new flavours and strategic promotions in frozen are getting things flowing again.
water air and syrup add up to 70% gross profit

It was the best of times and the worst of times. The pandemic took a bite out of fountain beverage sales for some convenience stores, while others did quite fine and dandy, COVID be damned. According to the U.S.-based National Association of Convenience Stores, sales of cold dispensed beverages fell by 7.9% in 2020. It was a tough go in Canada as well.

But it all depended on the jurisdiction, says Judi Saliba, senior sales executive, national accounts, TFI Food Equipment Solutions, which sells frozen and cold beverage equipment to independents, regional and chain c-store operators across Canada. “It was very localized,” she explains. “Some health units closed everything down and others didn’t.”

It was a tough situation to navigate for retailers. One would have to shut down their self-serve beverage operations, while another could stay open three blocks away, depending on the decision of local health authorities. It’s not all bleak. Many retailers have managed to “pivot”—the buzzword of the pandemic, highlighting enticing flavours, contests, and offering special collectable cups. Some c-stores did well, as consumers sought the comfort of food and beverage items with nostalgic appeal, including a frozen slushy drink from their local corner stores.

“The smart retailers understand the popularity of frozen beverages,” notes Saliba. “Research shows that the demand is strong and steady as consumers age into the category and continue to enjoy them. Big players are building sales by promoting a flavour of the month and bundling drinks with items like salty snacks. We also know customers like to mix and match flavours. The more you offer, the more your sales increase proportionately. Some retailers out west have as many as 16 available.”

7-Eleven has tapped into the nostalgia trend for its Slurpees and brought back its blue vanilla flavour ending a 14-year hiatus. Along with the tried and true, it has introduced a new dragon fruit option. Even cola flavours reign supreme, retailers should offer variety, not only to cater to customers who like to mix it up, but for the visual appeal. As Saliba points out, the doors of the frosty drink machines are often see-through, making the swirling, bright colours of lemon lime or grape, for example, truly eye-catching. Take advantage of that by ensuring your sightlines are clear to caption customer attention, she suggests.

At Circle K and Couche-Tard locations, summer kicked off a strong promotional push. It partnered with Pepsi to offer its customers four exclusive collectable cups featuring NHL franchise history. It also quenched its customers’ thirst for new and interesting flavour with a Sour Patch Kids mystery flavour and special edition Froster cups. “We are always on the hunt for new and exciting flavours for our customers,” says Katie Power, the company’s director, dispensed beverages, Canada. “This summer has been one of our most flavour-focused seasons on record.”

Circle K and Couche-Tard stores featured exclusives like Pepsi Blue Frosters, coinciding with the launch of retail packaged bottles and cans with the aim to create a holistic in-store approach. Its Mountain Dew Code Red will be available all year long, as will Mountain Dew Major Melon (only at Circle K) for Froster customers. With back-to-school season upon us, these unique flavours will be enticing to students. This fall and winter will also see customers having the opportunity to win a free Froster and other prizes through the Drink, Snack, Score and 31 Days of Circle K promotion.

Despite some sales hiccups in the sector last year, confidence is high for success. “Having the ability to offer our beverages in a self-serve environment allows our customers to customize their drink just how they like them,” explains Power. “Our goal for the future of dispensed beverages is that customers make Couche-Tard/Circle K their destination to enjoy a variety of refreshing beverages.”

Saliba is equally bullish for the future, especially as restrictions ease: “There’s a lot of pent-up demand..... and the category remains popular and profitable. There's nothing more profitable in a convenience store than frozen carbonated beverage.”

 

Tips to create fountains of fun

1. Choice: Keep customers coming back for more with a wide assortment of flavours, including nostalgic favourites and limited-time offers.

2. Boost sightlines: Those see-through windows on the machines are there for a reason—the swirling, bright colours are eye-catching and draw customers in.

3. Picture perfect: Encourage flavour mash-ups in clear cups for social-media sharing or contests.

4. Promo time: Promote a flavour of the month and bundle with a salty snack.

5. Cool down: It’s almost pumpkin spice season. Entice new audiences with frozen versions of seasonal hot drinks.

6. Youth appeal: Bright signage, in store and out, as well as social media blasts, attract younger consumers.

7. Packaging: Collectible cups boost engagement, while reusable options (Public Health permitting) tap into social responsibility.

8. Sanitation: Routine monitoring and wiping down of the self-serve area is essential. Consider valve guards/shields to further instill confidence.

Originally published in the September/October 2021 issue of Convenience Store News Canada

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