7-Eleven Dispensing New Iced Coffee

New equipment added to U.S. stores; medium beverage discounted in June

Published in CSP Daily News

DALLAS -- 7-Eleven Inc. has introduced its own version of iced coffee with a new marketing campaign that references cup sizes, cheap dates and love at first sight. Available in French Vanilla and Mocha flavors, the new iced beverage met with success in pilot programs earlier this year, so the company believed there would be great demand for the product, it said.

New refrigerated beverage dispensers deliver the iced coffee at 4,500 U.S. 7-Eleven stores. The machines are located either near the Slurpee and Big Gulp self-serve cold-drink machines or on the hot-beverage bar. [image-nocss] Unlike frozen coffee drinks, 7-Eleven customers dispense the coffee drink over ice in new clear cups.

A month-long ad campaign in June is featuring promotional radio spots and outdoor, metro rail and bus transit advertising in select markets, online viral marketing including a new 7-Eleven iced coffee website and coupon emails, store signage and point-of-purchase displays.

Two sizes are currently offered, medium (16 oz.) and large (24 oz.), with the exception of Long Island, N.Y., area stores, where corresponding sizes are 20 and 28 oz. To encourage trial, prices for the new 7-Eleven drink will be discounted in select markets during the month of June (99 cents for the medium size, according to the retailer's iced coffee website, www.icedcoffee.7-eleven.com). July, the price will jump to $1.99 for a medium, and $2.49 for a large, reported The Orange County Register.

The multimedia campaign was designed to appeal to habitual iced coffee consumers, the company said. The campaign was created by FreshWorks, a consortium of Omnicom companies serving as Dallas-based 7-Eleven's advertising and marketing agency.

According to trend data from NPD Group's Consumer Reports on Eating Share Trends (CREST), young adults between the ages 18 and 34 make up 39% of the iced beverage's consumption. Iced coffee is hot and getting hotter, showing year-over-year double-digit increases. Servings of iced and frozen coffee drinks have shown a 20% increase during the first months of 2009 over the same time period last year, according to data from the CREST report.

"If taste tests are any indication, this is one of the best beverages we've ever introduced," said Jay Wilkins, 7-Eleven brand manager for cold beverages. "As the beverage machines rolled out across the country and the stores introduced iced coffee, it has become an instant hit."

The new iced coffee is the same in all markets except Long Island, N.Y. In 2005, 7-Eleven began an iced coffee test in that market, the same place it introduced Americans to coffee in to-go cups more than 40 years ago. The Long Island version differs from the iced coffee being introduced nationally in that it is stronger and less sweet to meet local taste preferences. The CREST study reports that 30% of all cold coffee drinks in the U.S. are sold in the coffee-loving Northeast.

The 7-Eleven beverage team plans to capture some noncarbonated beverage drinkers with this self-serve iced-coffee drink, the company said. "Our iced coffee is value-priced to compete not only with coffeehouses and donut shops," Wilkins said, "but also with bottled coffee drinks."

He added, "We are positioned to compete on taste and value and become the most convenient hot and cold coffee destination for all consumers."

Wilkins said he believes iced coffee will also draw more women into 7-Eleven stores. "Hot coffee drinkers skew male, while more females prefer iced-coffee drinks," Wilkins said. "To ensure that we reach the broadest group of coffee drinkers, 7-Eleven needs to offer both hot and cold coffee drinks."

Iced coffee-drinkers also tend to be younger, and 7-Eleven is looking to reach young adults between the ages of 18 and 34, typically on-the-go college students and young professionals. According to the National Coffee Association, coffee consumption among 18 to 34-year-olds has recently hit record highs.

With double-digit growth rates, the iced-coffee category accounts for between 15% and 20% of sales within quick-serve restaurants and coffeehouses, and consumption could reach one trillion cups this year, according to Nielsen AdViews Competitive Tracking.