Sales of cold dispensed beverages improved in 2021 from 2020’s pandemic-battered performance as consumers returned to the soda fountain to see out their favorite selfserve drinks. In all, average sales of cold dispensed beverages grew 7.4% on a perstore, per-month basis in 2021, NACS State of the Industry data indicate. Gross margin improved to 46.41% in 2021 compared with 42.71% in 2020. 

Within this category of foodservice, the performance was uneven across subcategories. The average monthly sales of carbonated beverages per store slipped to $1,907 in 2021 from $1,976 in 2020. However, category sales share of “other” fountain beverages rose to 28.7% in 2021 compared with 19.1% the previous year. This segment includes drinks such as iced tea, iced coffee and kombucha. 

83% of c-store shoppers are willing to pay more for dispensed beverages with functional benefits, but they aren’t willing to sacrifice great flavor in that pursuit.

Comparing consumer behaviors and sales figures of 2020 to those of 2021 can be hard to evaluate, said Patrick Loftus, survey research and data visualization manager, NACS. 

“Overall, the increase in cold dispensed beverage sales per store, per month, likely has more to do with this offering being available for a full year versus being available for only part of 2020,” he said. “The decline in carbonated fountain is possibly due to a shift of shopper preference to non-carbonated beverages.” 

Cold dispensed beverages represented 6.6% of foodservice sales in 2021, down from 7.2% of foodservice sales in 2020, NACS State of the Industry data indicate. Carbonated beverages accounted for 62.7% of cold dispensed beverage sales, down from 69.8% in 2020. 

According to a recent report from Mintel, carbonated soft drinks make up the nation’s largest non-alcoholic beverage category, topping $39 billion in sales and with more than half of U.S. adults consuming them several times a week. But to grow the category, retailers and manufacturers must increase consumption frequency among lighter users, the research organization said. 

Because a well-managed fountain bar can generate a 50% or higher margin, many convenience retailers are adding new offerings to tempt thirsty customers. 

NEW FLAVORS 

Neon Marketplace, based in Cranston, Rhode Island, caters to customers on the go by selling 79-cent fountain drinks every day. To offer variety as the weather warms up, “we’re introducing a line of enhanced energy drinks,” said Peter Rasmussen, director of operations, Neon Marketplace. “We’ve worked with product development, culinary experts and Red Bull to build some incredible concoctions, and we’re looking forward to introducing them to consumers who want a premium energy drink experience beyond just a can.” 

Rasmussen notes that consumers have become increasingly price conscious. “During the pandemic, family sized ready-to-drink and 12-packs sold well,” Rasmussen said. “The difference now is that fountain is growing, and on the packaged beverage side, there is less brand loyalty. We’re seeing higher take rates on lower-price-point products in the category.”

Last summer, 7-Eleven, based in Irving, Texas, added several new drinks to the fountain, including AHA sparkling water, craft lemonade, vitaminwater zero, Replenish Zero and an energy drink by Quake. Customer response was positive. 

“We continue to expand and evolve what is available on our fountain with a focus on new and exclusive products,” said Megan Edwards, senior category manager of propriety beverages, 7-Eleven. “Our market research and testing tell us customers are looking for fruity and flavor-forward options, as well as interesting, unexpected combinations.” 

One example is the MTN DEW Major Melon Slurpee, which was the most popular limited-edition flavor for 7-Eleven in 2021. “Because of this, we will be adding it to our Big Gulp lineup this spring, combining a distinct watermelon flavor with classic MTN DEW,” Edwards said. “Customers can also try the limited-time-only Brisk Blood Orange, which boasts the unique taste of Brisk Iced Tea mashed with the intense flavor of blood orange.”

BETTER FOR ME 

The pandemic produced plenty of changes in consumer behavior and attitudes. A large percentage of shoppers say they’ve become more conscious of the importance of good health, and as a result, many are seeking functional beverages, such as energy and sports drinks, fortified juices and enhanced waters, when they want cold refreshment.

Customers are looking for fruity and flavor-forward options, as well as interesting unexpected combinations.

In fact, “71% of shoppers say the pandemic made them re-think their priorities,” said Carlton Austin, director of convenience retail strategy and commercialization, Coca-Cola. “Their top three desires are now more time with family and friends, improved physical health and improved mental health. 

“We’ve found that 83% of c-store shoppers are willing to pay more for dispensed beverages with functional benefits, but they aren’t willing to sacrifice great flavor in that pursuit,” he said. “We are finding success with several functional dispensed options that offer great taste and unique benefits that are low- or no-sugar.” 

Some of these are AHA sparkling water, which comes in a variety of flavors from natural sources; POWERADE, a functional sports drink containing vitamins B3, B6 and B12; and a selection of Minute Maid Zero Sugar Lemonades made with real lemons. Other summer beverage offerings from Coca-Cola are Fanta’s new LTO fountain program, Barista Bros. iced coffees for the fountain and a variety of bubbler beverages. 

“While innovation is important, retailers should also be sure to market traditional favorites, such as Coca-Cola, Diet Coke and Sprite,” said Austin. “They drive a substantial portion of the convenience-store beverage business, so it’s critical to place an emphasis on both.” 

GREAT EXPERIENCE 

One of the best ways to give convenience customers a premium in-store experience is to maintain a consistent schedule of cleaning and maintenance throughout the store, especially in areas where food and drinks are merchandised. With sanitation and convenience in mind, Coca-Cola has created a high-tech but contact-free way for shoppers to get their favorite fountain drinks. 

While innovation is important, retailers should also be sure to market traditional favorites.

The Coca-Cola Freestyle 7100 beverage dispenser features more than 80 beverages across six categories, including more than 30 low- and no-calorie options and 40-plus caffeine-free choices. It is equipped with a camera and Bluetooth connection for future consumer engagement capabilities and has the option to add new categories and alternatively sweetened beverages through bag-in-the-box lines. 

“As the COVID-19 pandemic reshaped the world and shifted consumer behavior, we developed a touch-free innovation for Coca-Cola Freestyle units,” Austin said. “Guests scan a QR code on the Freestyle machine with their internet-connected smartphones without having to download an application or share any personal information. Scanning the code prompts a digital experience like that of the Freestyle touchscreen, allowing them to select their beverages and pour them—all without touching the machine’s screen.”

Convenience-store traffic has not yet returned to pre-pandemic levels. But according to Coca-Cola’s research, “spend per trip is up 39% or $4 per trip, as shoppers are looking to accomplish more in a single trip,” he added.