Foodservice@Retail: Grocerants: Comment on the types of beverages people seek today, and why they make sense for grocerants.
Randy Raymond, The Coca-Cola Company: While carbonated soft drinks (CSDs) still command the largest share of away-from-home beverage purchases, other categories, like bottled water and ready-to-drink (RTD) tea are also experiencing massive growth. For example, the still and premium water category has the highest collective dollar growth of any beverage category, driven by Millennials and multicultural shoppers. Also, as some shoppers continue to prioritize wellness, the RTD tea category continues to grow, as many feel the category aligns with the wellness trend. In response to these changing consumer needs, The Coca-Cola Company has introduced products like Gold Peak RTD Tea Lattes and new flavors of popular products like DASANI Sparkling. For grocerants, it’s more important now than ever to offer a broad beverage portfolio that encompasses and meets these varying shopper needs.
FRG: How best to tailor grocerants’ beverage choices to appeal to Millennials, families, ethnic diners, and other key customer groups?
Raymond: In general, offering a broad beverage portfolio is the best way for grocerants to ensure they are meeting the varying needs of different customer groups and leveraging consumer insights whenever possible. For example, we know Millennials are more variety-seeking than previous generations – they drink 4.3 different beverage types a week, compared to 2.5 different beverage types for Gen X and older. They’re key to driving sales of a variety of beverage categories, from CSDs to premium bottled water. Because they place greater value on beverages, they’re willing to pay more for them (approximately 16% more). In short, Millennials underscore the importance of offering a wide variety of beverages to appeal to all shoppers.
FRG: Share examples of how choices tailored to local trading areas might differ in flavor mix, product forms, key messages.
Raymond: Tailored choices to local shoppers is an important part of maximizing sales. At The Coca-Cola Company, we’re committed to being our customers’ most trusted and valuable partner – we refer to this promise as our Coca-Cola Commitment. To deliver on this commitment, we offer six core capabilities, one of which is tailored outlet-level activation. We share an unmatched collection of activation toolkits and assets, helping our customers leverage each store and every employee to deliver a great experience for the consumer and profitable growth. We work with our retail partners on a regular basis to execute and leverage these tailored marketing and product solutions, and ultimately do everything we can to set them up for success.
FRG: Describe how pairing beverage flavors/forms with different types of cuisines and eating occasions elevates the dining experience.
Raymond: Thoughtfully pairing a specific beverage with a particular food can incredibly impact the dining experience. Offering products that can help enhance the consumer’s experience is something we’re passionate about – after all, 58% of total Coca-Cola volume consumption is with food. Selecting a beverage with complementary flavors to food is the most important element of determining the best food and beverage pairings. On our website www.CokeSolutions.com, we provide foodservice operators with a tool that allows them to explore which beverages pair well with particular cuisines. For example, we suggest pairing sparkling citrus beverages like Sprite or FRESCA with Asian food, as the combination of citrus and light carbonation is a perfect balance to sauce-heavy and rich dishes such as pork satay or fried eggrolls.
FRG: Specify how effectively and consistently beverages grow the grocerant meal tab and profit margin.
Raymond: Beverage sales are basket-size drivers for grocerants. But currently, grocerants experience a lower rate of beverage and meal/snack bundle purchases than restaurants. This lower bundling rate for beverages suggests that bundle opportunities can help grow sales of food and beverage items and increase profits. Our research shows that merchandising a complete meal rather than a single entrée can increase purchase intent by 12%. Besides driving larger baskets, combo meals simplify and improve the shopper experience: 74% of shoppers agree that combos make it easier to order, and 61% agree that combos save them money.
The key to growing sales of combo meals and bundled items is communicating the offer of a complete meal (entrée, side and drink) throughout the path to purchase. Proximity also plays an important role: As the number of meal occasions grows for grocerants, convenient access to beverages is key, especially for shoppers who prefer to shop the perimeter. Grocerants can leverage merchandising displays such as an ambient beverage rack, a cooler of ice-cold beverages, or a strategically placed fountain dispenser. Merchandising food and beverage items together reinforces the combo meal and bundle offer message and drives basket size.
FRG: Discuss beverage-only opportunities in grocerants that may not include meals - say, a dad and child get drinks while mom shops, or an adult nurtures a beverage while using a laptop.
Raymond: Most foodservice operators don’t realize how large the growth opportunity is for away-from-home beverages. Even at The Coca-Cola Company, we didn’t fully understand the extent of this untapped opportunity until we conducted an in-depth away-from-home landscape study. We found that the average American experiences 22 away-from-home situations each week in which he or she could consume food or beverages. Those situations include running errands, working out, meeting up with friends, etc. In total, there are about 5 billion total weekly life situations, and as it turns out, half of those situations currently include a beverage.
In particular, eight away-from-home situations have higher rates of beverage consumption, and represent the greatest opportunities for grocerants to grow beverage sales. They are: a break in the middle of the work/school day, commuting from work/school, running errands, commuting from home, working out, food/beverage run, meeting with friends, and leisurely shopping trip.
FRG: Describe serving options at the grocerant, and the plusses of each to grocerant operators.
Raymond: Shoppers select packages based on specific needs across immediate-consumption occasions. For example, plastic bottles are re-sealable and transportable, fountain beverages are served with ice, which many shoppers prefer with meals, and aluminum cans and glass bottles feel colder in shoppers’ hands. What and when they eat also both contribute to package choice. Having the right assortment of brands and packages to fulfill these needs is critically important; grocerants are well positioned to fulfill them.
Today’s trend in packaged beverages is that people want smaller, premium packages. The company meets this consumer need by offering small package sizes, like the 7.5-ounce mini cans and 8-ounce glass and aluminum bottles. These smaller packages help to encourage informed choice for shoppers. We also continue to innovate and introduce new packaged beverages, such as Gold Peak RTD Tea Lattes and Coffee, Dunkin’ Donuts RTD Coffee, and Sprite Cherry.
The company also constantly expands fountain offerings to include options for every taste, preference and lifestyle, so grocerants can provide a variety to meet customers’ varied needs. We’ve brought new products like DASANI Sparkling, Coca-Cola Life, Blue Sky and vitaminwater to fountain. The Coca-Cola Freestyle platform gives operators the ability to offer a wider range of beverages with a smaller equipment footprint than ever before. Our proprietary research shows that more choices lead to more sales, with 42% of Coca-Cola Freestyle consumption coming from brands that aren’t otherwise readily available. Coca-Cola Freestyle has demonstrated the ability to drive incidence (total beverage sales growth of 5%), traffic (3% rise), and better value perception (guests reported a 15% better perception of outlets with the dispensers).
FRG: Suggest ideas for building beverage buzz at the grocerant.
Raymond: The Coca-Cola Company helps customers build beverage sales in a number of ways: Menu board development tools encourage combo meal sales.
An innovative suite of occasion-based solutions encourages beverage sales. This cross-category initiative leverages consumer insights to ease shopping and drive sales. The program enables retailers to bundle multiple categories of Coca-Cola beverage products with complementary adjacencies – such as hamburger buns paired with Coca-Cola, or pasta paired with Gold Peak Tea, in a self-standing merchandising solution. The displays themselves include occasion messaging to attract shoppers to the offer. They’re placed in areas of the store, such as perimeter or deli, where Coca-Cola products and the complementary items wouldn’t otherwise be available. A deli-based activation of this strategy delivered a 98% rise in deli sandwich revenue and a 70% increase in average basket participation for the retailer.
Additionally, grocerants should consider offering something unique to stand apart from competition. One example: create a beverage destination anchored by a branded, open-air cooler with a wide assortment of the most popular immediate consumption brands, like Coca-Cola, Diet Coke, Sprite, smartwater and vitaminwater to enjoy with any meal or refreshment occasion.
Grocerants could also feature a specific merchandising technique for a particular need, shopper target or brand strategy – such as offering a unique assortment of beverages like Honest Tea and ZICO that appeal to health and wellness-oriented shoppers.