There is no question that CSDs are the driving force behind fountain sales in quick service restaurants (QSRs) and c-stores across the nation. But with the health and wellness trend well underway and good-for-you eateries sprouting—like Pizza Fusion, makers of organic pizza, and salad joint Mad Greens—consumer's purchasing patterns, when it comes to beverages, have begun to shift.
Nestlé FoodService is one beverage company that has taken the initiative to create a fountain-dispensed beverage that gives the health-conscious consumer another option.
In October 2007, Nestlé FoodService launched Sjora, a good-for-you fountain-dispensed beverage that is a blend of about 10 percent milk and 5 percent juice. Kathy Lenkov, communications manager, Nestlé FoodService North America, describes Sjora as a "very light-tasting refreshing beverage. "It comes in two flavors, Mango Peach and Tropical Pineapple; both are available in diet versions. Sjora has no high fructose corn syrup, no carbonation and no caffeine, the company reports.
"Sjora is a healthier beverage choice for a healthier menu," says Lenkov. Through test market research, it was found that healthy-concept food locations across the US could be loosing up to 40 percent of their customer base simply because they weren't offering a healthy alternative to soda. "With Sjora, we have found that this is a way to capture the incremental sales from," she adds, "those people who are leaving without anything or tap water."
Sjora is now being offered at Mad Greens, a Colorado-based salad restaurant, and also will soon be available at Camille's, a chain of about 100 units in 35 states that offers soups, sandwiches and salads. The cost of the beverage will be the same as other dispensed beverages at a particular location.
"QSRs competitive issue was that if they didn't offer a comparable assortment that consumers are looking for then they may end up going to another store to make their beverage purchase," says David Bishop, partner at Willard Bishop, a consultancy firm based in Barrington, Ill.
When discussing the quick-serve restaurant segment, Jim Dinkins, vice president, marketing for Coca-Cola FoodService, is quick to point out that CSDs are still, by far, the No. 1 seller when it comes to fountain-dispensed beverage sales, mainly the reason being the use occasion where soft drinks pair well with food. "But," he says, "there are trends showing that consumers are interested in other alternatives." And for some QSRs, offering those alternatives can prove to be difficult and not cost-effective due to space constraints.
As a result, Coca-Cola FoodService has taken initiatives to help its customers better serve the needs of their consumer. One example being the recent launch of a Variety Tea Tower that dispenses four flavors of Gold Peak Tea, which was released as a RTD product in 2006. The tea tower dispenses sweetened and unsweetened Black Tea, Green Tea and Raspberry Tea. Dinkins reports that while The Coca-Cola Company saw double-digit growth in its tea sales on the retail side of the business, teas were only growing at 2 or 3 percent in its food service channels.
"It's hard for our customers to offer the variety that consumers want that they can get in bottled products," says Dinkins. The Variety Tea Tower, explains Dinkins, is a bag-in-the-box product that is in a simulated urn. "We found this to be very exciting for our customers because they are looking for a very high quality branded tea that can be dispensed in an operationally simple way."
Bishop points out that "healthier," however, could also mean low calorie. "It's not fair to completely write out CSDs just because the largest component of CSDs is the regular soft drink. Even though the category is declining, it doesn't reflect clearly to a lot of people that diet may actually be growing," he says.
In fact, another initiative Coca-Cola FoodService has made is expanding Coke Zero, the beverage that helped catapult Coca-Cola's 2006 sales with its taste like Coke without the calories platform. According to Dinkins, Coke Zero was expanded to more than 10,000 restaurants last year in the US with plans to add another 25,000 accounts in 2008. In addition to Coke Zero, Sprit Zero and Caffeine-Free Diet Coke also have been expanded.
Convenience Trends
According to the National Association of Convenience Stores' (NACS) State of the Industry Report, fountain-dispensed CSDs represented nearly 90 percent of sales in 2006 compared to non-carbonated beverages, which made up less than 1 percent.
The non-carbonated, cold-dispensed beverages have seen some growth though. NACS also reports that the category had a nearly 10 percent growth in average store sales from 2005 to 2006. But according to Bishop, the growth of the non-carbonated segment will depend on volume.
"Many convenience stores have anywhere between 10 and 20 fountainheads," he explains, where most c-stores average about 50 cups sold per week per fountainhead. "So, one consideration a retailer would have to make then is, 'if I am to put ready-to-drink teas, juices, or milk-based products on the fountain will I be generating the type of volume that I am currently getting from existing products?' If not, then there is cost benefit analysis that these operators are going to go through."
Dinkins adds: "We don't really see this as a situation where you've got the carbonated beverages and everything else and one is growing at the expense of the other. We see it as the whole pie is growing because people are interested in beverages, and that's a good thing."
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There is no question that CSDs are the driving force behind fountain sales in quick service restaurants (QSRs) and c-stores across the nation. But with the health and wellness trend well underway and good-for-you eateries sprouting—like Pizza Fusion, makers of organic pizza, and salad joint Mad Greens—consumer's purchasing patterns, when it comes to beverages, have begun to shift.
Sjora is now being offered at Mad Greens, a Colorado-based salad restaurant, and also will soon be available at Camille's, a chain of about 100 units in 35 states that offers soups, sandwiches and salads. The cost of the beverage will be the same as other dispensed beverages at a particular location.
"It's hard for our customers to offer the variety that consumers want that they can get in bottled products," says Dinkins. The Variety Tea Tower, explains Dinkins, is a bag-in-the-box product that is in a simulated urn. "We found this to be very exciting for our customers because they are looking for a very high quality branded tea that can be dispensed in an operationally simple way."
