When it’s hot outside, sales of frozen dispensed beverages sizzle at convenience stores. “Depending on a particular store's location, sales of this category routinely spike in the summer and dip in the winter,” said Jayme Gough, NACS research analyst. “While the impact of COVID-19 on category sales is not known yet, retailers have had to pivot their strategies for the category as warmer weather and summer travel approach.”

But with some planning, convenience retailers can keep their frozen dispensed beverage sales strong and create loyal customers.

A Popular Category

Frozen dispensed beverages have long been a staple at convenience stores since slushies were created in the 1950s. Their popularity continues more than 60 years later with slush drinks, both carbonated and non-carbonated, driving growth. Frozen dispensed beverages accounted for 1.36% of in-store sales in 2019, averaging $29,960 sales per store, according to recently released NACS State of the Industry data. “While the frozen dispensed category accounts for the second smallest percentage of sales within foodservice (5.7%), it has the second-highest gross margin of foodservice categories (56.7%), underscoring its attractiveness to retailers,” Gough said.

Slushie sales at Doodles Convenience Store in Oak Island, North Carolina, have picked up as the weather warms. “It’s been a little bit different this year because of the pandemic,” said manager Michelle Pruitt. “Our sales are off from the previous year, but we think they will increase now that summer is here.”

Our Place Quick Stop in Pingree, Idaho, hasn’t seen sales of frozen dispensed beverages dip. “In fact, because of our rural location, we’ve actually had more business since the pandemic because we’re one of the few places still open,” said manager Kathy Hone. “Our frozen dispensed beverage sales have stayed pretty good.”

Slush Trends

Innovation in frozen dispensed beverages keeps the category fresh and interesting for consumers. For example, according to The ICEE Company, candy company brands are partnering with convenience stores on branded slushie drinks, such as ICEE Warheads Sour Strawberry Grape Smashup. In addition, add-ins and infusions to create textural experiences in frozen dispensed beverages have become popular.

“Viral trends on social media, whimsical flavors and unique renames of popular flavors, such as Mermaid and Unicorn, have driven impulse and desire to try new flavors,” said Natalie Peterson, senior director of marketing for The ICEE Company. “It’s important that retailers pay attention to these trends to stay relevant to consumers.”

For example, ICEE’s newest machines allow customers to choose a base flavor and mix in flavor shots. “Customization is key to success,” Peterson said. “The ability to customize  flavors spans across frozen carbonated and frozen non-carbonated.”

Healthy Slushies

As consumers become more aware of what they put in their bodies, there has been a shift within this category from frozen carbonated to frozen non-carbonated. “This category gives retailers a chance to offer innovative, healthful frozen dispensed beverages that can turn customers into loyal shoppers,” Gough said.

Today’s consumer is more aware and conscious of ingredients and what is put into their bodies.

For example, Green Zebra Grocery has its own line of kombucha slushies. The store partnered with Brew Dr. Kombucha to create a Superberry Lemonade kombucha slushie packed with organic berries, including elderberry, currant, blueberry, goji berry, strawberry and raspberry. Other kombucha slushie flavors are pineapple ginger and marionberry mint.

At 7-Eleven’s lab store in Dallas, the chain has been experimenting with organic Slurpee “farm-to-fountain” flavors such as blood orange, cucumber and coconut. These non-carbonated flavors include superfoods like turmeric, celery, licorice root and black carrot. This year, 7-Eleven launched its first energy version with the limited-edition Quake Energy Berry Blast Slurpee, based on the chain’s private-label Quake performance energy drink.

“Today’s consumer is absolutely more aware and conscious of ingredients and what is put into their bodies,” Peterson said. “ICEE is working on innovation that will highlight some value-added ingredients and healthier options in our fresh line. Reduced sugar, and more natural flavors and colors are important options in frozen dispensed beverages.”

Coronavirus Changes

Because of the coronavirus pandemic, retailers have been scrutinizing their operations, including frozen dispensed beverages. “We are seeing retailers adapt quickly to offer frozen beverages in a safe way,” Peterson said.

“We’ve always kept our slush machine very clean, but we have been wiping it down even more because of the coronavirus,” Hone said. “We’ve also stopped allowing customers to refill slushie cups to help keep things sanitized during the pandemic.”

Customization is key; the ability to customize flavors spans across frozen carbonated and frozen non-carbonated.

Our Place Quick Stop still sells refillable cups and plans to restart its refillable service as soon as it’s safe to do so. “Ninety-nine percent of our customers always get a new cup, so there’s not many who are clamoring for refillable slush cups,” Hone added.

Pruitt said the cleaning schedule for the frozen dispensed beverage equipment continued as usual at Doodles Convenience Store. “We’ve always completely cleaned the machines every 14 days, so we didn’t need to make any adjustments during the pandemic,” she said.

Roslindale Food Mart in Roslindale, Massachusetts, had to shutter its self-service frozen dispensed beverage machines during the state’s shutdown to follow health department guidelines but was able to put the machines back in service in May. “We have to sanitize the machines more frequently than before, but we’re glad to have them back in time for summer, said employee George Elias.

Summer Sales

With summer in full swing, retailers should use the hotter weather to capitalize on sales of frozen dispensed beverages. “The summer months provide a great opportunity for convenience retailers to promote and highlight their slushies,” Gough said. She suggested tying frozen beverage promotions into summer holidays like Independence Day to create buzz for the category. “Some retailers have created summer discounts or expanded loyalty programs, while others have experimented with a variety of different flavors,” Gough said. “Still others pair a frozen beverage with another discounted item to spur even more sales.”

Retailers should establish an annual frozen dispensed beverage promotional calendar with limited-time offers built in.

Because 90% of consumers say they snack multiple times a day, Peterson recommended an aggressively priced frozen drink program paired with late afternoon snacks to help boost frozen dispensed beverage sales. “Any-size beverage promotions with a low price point drive traffic traditionally, and we see that activity continuing,” Peterson said. “We also think convenience retailers can maximize on increased snacking occasions in the United States, post-pandemic.”

Overall, retailers should establish an annual frozen dispensed beverage promotional calendar with limited-time offers built in. “This will differentiate the offerings for consumers,” Peterson said. “Brands matter, as does variety and rotation to keep consumers engaged in the category.”

Doodles Convenience Store changes the flavors on its two-spout dispenser every 14 days to keep the category fresh. “We have four to six flavors in our rotation, which includes two berry flavors and our No. 1 seller, Lemon Ice,” Pruitt said.

Roslindale Food Mart doesn’t adhere to a specific flavor rotation on its six-flavor dispenser. Elias said the store’s most popular flavors are watermelon and strawberry. “We put in a new flavor whenever one runs out,” Elias said. “We don’t advertise or promote the category because it basically sells itself, especially in the warmer weather.”

Frozen Future

These retailers have a rosy view of the category’s future. “Frozen dispensed beverages are very popular with our customers, and we anticipate that will continue,” Hone said.

“It’s still a good category to have,” Pruitt added. “We have no plans to change our frozen dispensed beverage program.”

However, to run a successful program, retailers should consider staying on top of category trends. “Studies show consumers crave variety in their beverage selection and choose retailers based on this,” Peterson said. “The convenience stores offering the best selection and variety in frozen dispensed beverages will continue to win over customers.”

The Power of CSX Data

CSX, the engine behind category metrics and NACS State of the Industry data, provides current and customizable tools for financial and operational reporting and analysis in the convenience industry. Retailers can measure their company by any of the myriad metrics generated via our live database. Contact Chris Rapanick at (703) 518–4253 or [email protected] for a complimentary executive walkthough.