Roundtable Report: Coffee Talk

Cup count, customization trends steam up roundtable discussions

By  Angel Abcede, Senior Editor/Content Development Coordinator

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In the way counting sheep leads many to a good night’s rest, convenience retailers wondering why their coffee programs are keeping them up all night may need to start counting cups—especially if they really want to track how their strategies are doing.

The trends surrounding hot beverages—from coffee metrics to order customization—continue to evolve for convenience retailers, according to session speakers and retailers present at CSP’s Hot Dispensed Beverages Meeting held in Chicago in March.

“When we introduced our new coffee program, our managers started feeling inspired, invigorated,” said Greg Lorance, dispensed beverage category manager for Cumberland Farms Inc., Framingham, Mass. “They felt like they had a real chance to fight the coffee wars.”

Lorance was one of several retailers at the three-day conference who shared stories about what they did to improve their coffee. But for Lorance and others taking the podium, the challenges were great—and continue to be.

Addressing about 100 attendees, speakers said cross-channel headway and customers’ financial concerns may affect the way convenience retailers have to approach the hot- and cold-dispensedbeverage categories.

In terms of the economy, David Henkes, vice president of Chicago-based Technomic Inc., did not paint a rosy picture. He said Technomic’s survey numbers from January 2014 show consumers are still spending less than hoped. “When they do spend,” he said, “they’re careful to search for value and indulge only when it makes sense.”

Political gridlock, Obamacare and an uncertain job market have created distress, he said: “When you talk to consumers, there’s still not that optimism.”

On an individual level, primary concerns include household financials, grocery prices, health care and gas prices, Henkes said. It’s a malaise that can stifle any new initiative.

And yet a number of trends bode well for c-stores, especially for hot dispensed beverages. Henkes named several:

  1.  Hot beverages are big business. The numbers are strong for all channels.
  2. Beverages drive traffic. It’s what many customers come into the store for.
  3. Hot beverages provide incremental sales and profit growth. Data is showing that coffee drinkers spend more than the average customer.
  4. Higher-end hot beverages help c-stores compete with other channels. Moves in this direction are proving successful on many levels for convenience retailers.
  5. The morning day-part is critical, but others are emerging. Customer are pushing the demand for coffee beyond traditional time frames.
  6. Hot-beverage customization is appealing and becoming an important preference.
  7. “Branded” coffees, including c-stores’ own proprietary brands, are growing.
  8. Consumers want flavor, another important ingredient in a successful program.
  9. Seasonality affects hot-beverage sales. As in other categories, seasonal offers are a means of increasing sales, variety and customer appeal.
  10. Sustainability resonates. Such messages mean something to customers, but retailers have to discover what this trend means to them.

C-stores have a unique advantage, according to Joe Chiovera, a principal consultant at XS Foodservice and Marketing, Lewisville, Texas. Unlike other channels, c-stores can create environments in which customers can comfortably make a cup of coffee to their own unique tastes, with coffee-dispensing and condiment-mixing areas giving them the necessary room.

“C-stores can take back the coffee customer,” Chiovera said. “But they have to understand the competitive market, cater to and meet the demands of [their] core customer and continue to understand the needs of desired customers.”

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