Beverages Overview

By  Samantha Strong Murphey, Freelance writer

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Functional Fruits

One big trend in beverages—the inclusion of nutrient- and antioxidant-rich “superfruits”— continues, although the fruits will continue to battle to be the flavor of the day.

“You get a lot of proliferation,” Herzog says. “You start with a drink and then you’ve got shampoo, face cream and house cleaners, and it gets a bit saturated.”

In other words, the novelty sometimes wears off. With continued interest among consumers in healthier options, Herzog expects this trend of volatility to continue.

“Watch for coconut water next,” she says. “It’s being put into everything now.”

Also, as sweetener blends continue to evolve, she says, low-calorie and zero-calorie drink varieties will grow to satisfy healthconscious consumers.

“We’ll definitely see more and more functional beverages offering nutrients, vitamins and probiotics,” she says. “And, of course, energy drinks will continue to be big.” 

The 12.5-ounce Solution

Coca-Cola plans to launch a 12.5-ounce bottle at a price point of about 89 cents in 2012. Analyst Bonnie Herzog, managing director of beverage, tobacco and consumer research for San Francisco-based Wells Fargo Securities, believes other companies will follow suit.

“The idea is that by offering smaller package sizes at a lower price point, they are responding to people’s increased focus on portion control as well as appealing to people who want to spend less than a dollar,” says Herzog. “I think it will encourage the consumer to come in and spend the change they may have in their pocket.” Herzog predicts that the 12.5-ounce may eventually replace Coke’s 20-ounce bottle, but even if it doesn’t, this launch will drive a trend of size variety.

Try, Try Again

If the economy picks up in 2012, consumers’ experimental spirits will, too. Joe Vonder Haar, managing partner with iSEE Store Innovations and a former Anheuser-Busch executive, says convenience stores need to be prepared to do what they do best: provide consumers with a way to try new things at minimal cost, one bottle at a time.

“Back in the day, beer companies would have new product launches in the neighborhood taverns for sampling,” he says. “Or you’d have to spend a small fortune in the off-premise trade on a multipack to get a taste.”

But the new generation of consumers looks to convenience for trial.

“You don’t have to spend $8 to $10 to fi nd out if you like something or not in the c-store,” Vonder Haar says. “Convenience stores have to be ready to perform with trial items and ready-to-go items. That’s where their sweet spot is.” 

Craft Beer Strikes a Balance

Microbrews will most likely continue to drum up frenzied interest. According to Vonder Haar, knowing how to approach this trend will be one of the most important moves c-store owners can make in 2012. According to syndicated data through December 2011, craft brews still make up only 2.1% of c-stores’ total alcohol sales.

“How do you participate in the craft segment that requires you to be a mile wide and an inch deep—tons of variety, but no stock—without harming the premium beer segment, which still makes up the bulk of your business?” Vonder Haar says.

His answer: Manage your inventory like you’d manage a stock portfolio. “It takes a balanced approach,” he says. “You would never manage your business with 100% high-risk stock (the craft beers), but you do need them for growth. You also need your blue-chip stocks (your domestic premiums) to pay the rent.”  

Less than once a month

Craft beer, hard cider and lemonade, and malt liquor are more likely to be consumed at this low frequency vs. other alcohol beverage categories, according to Mintel International. Craft-beer customers “purchase and savor these beverages with the fervor of seasoned wine connoisseurs,” the fi rm says.  Plain Vanilla Trend If the economy continues to sag in 2012, look for a return to classic beverage fl avors such as chocolate, vanilla and strawberry. “There’s a back-to-basics trend going on that’s a refl ection of the weakened economy,” says Hemphill. “With a weaker economy, people tend to go back to what they know best. They revert to the familiar and aren’t as adventurous.”

It Pays to Have Class

When the economy takes its toll, you’d think sales of more expensive beverages would suffer more than cheaper drinks. Au contraire, says Gary Hemphill of Beverage Marketing Corp., a New Yorkbased market data and consulting company.

“White-collar, more educated consumers are faring better because the economy has treated them differently than blue-collar consumers,” he says. Because of that, more expensive items typically purchased by whitecollar customers (tea, coffee, energy drinks) have held up better. “In part that’s a refl ection of the polarization of consumers,” Hemphill says.

2 points: Growth in incidence of energy-drink consumption, according to Mintel International. The firm finds that most growth in the consumer base came from adults 18 years and older, rather than growth in the actual incidence of drinking.

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