By Pat Pape
No matter what name it goes by — Slurpee, Slush Puppie, Alligator Ice or Arctic Blast — the frozen dispensed beverage has become a convenience store essential.
Although frozen dispensed beverages make up a small portion of the average convenience store’s overall sales, about 75 percent of all convenience stores currently sell them. The product is attractive because the gross margin has stayed around 50 percent for some time, and the drinks have made convenience stores a destination for many shoppers.
The category got its start in 1965 when 7-Eleven introduced the original frozen dispensed beverage, dubbed Icee. Later, the name was changed to Slurpee, and the product was relaunched with a series of amusing radio commercials that captured the imagination of the Baby Boom generation. Served at a chilling 28 degrees, the drink came in a variety of vivid colors and tasty flavors.
Within a couple of decades, amusement parks and movie theatres also recognized the value of frozen dispensed beverages, and today the popular drinks can be purchased in food courts and quick-service restaurants around the world. Research indicates that consumers typically consume the refreshing drinks during the afternoon or the “snack daypart.”
From 2007 to 2008, the frozen dispensed beverages category saw a modest drop in sales, from an average of $354 to $344 per month, when comparing the first three quarters of each year, according to NACS State of the Industry data (see chart on page 55). But Suzanne Gardner, marketing director for Portland-based YoCream International Inc., believes that focusing on three important qualities — flavor, variety and branding — will help any frozen beverage program excel.
One of YoCream’s best-known brands is Jolly Rancher, with Twizzlers and Bubble Yum rounding out the candy-based favorites. “The products taste just like the candy,” Gardner said. “And you don’t have to educate customers about the brands.”
Giving the customer variety is de rigueur, and eight beverage barrels are always better than two, as proven by Nice N Easy Grocery Shoppes, an 89store chain in New York. The company has begun rolling out a proprietary branded frozen beverage program — Chillville — which offers customers a choice of carbonated and noncarbonated flavors, plus an energy drink.
“Our stores had two and three barrels before,” said Jack Cushman, vice president of foodservice at Nice N Easy. “But when we gave the product 12 linear feet of space, plus added the right colors and gave the product its own identity, it seemed to take off.”
In addition to flavors, customers want color choices too. “Of course, red is a staple,” Gardner said, but “[i]f you have two barrels and merchandise the same flavors all of the time, it’s just not exciting. You must offer the customer more variety.”
To give customers that variety, YoCream markets sugar-free Ice Breakers-brand drinks, which are especially attractive to women, weight-watchers and people who cannot consume sugar for health reasons. The company also converted Jarritos-branded bottled sodas, the top Hispanic soda brand in the United States and a Mexican icon, into a frozen beverage.
Eye-catching graphics are essential for promoting the product, said Gardner, noting that YoCream provides stores with an array of branded POS materials to ensure customers know about the products. “Graphics have to complement the program,” agreed Gerald Smith, founder and chairman of Missouri-based Alligator Ice, which creates colorful cups, signage and decals aimed at boosting frozen drink sales. In addition, the company uses an Alligator Ice demo van for mobile promotions and sampling.
Just when it seems that every possible frozen beverage flavor has been invented, along comes something totally new. The development team at Steve’s Frozen Chillers of Boynton Beach, Florida, wanted to create a good-for-you frozen drink that women would like, and as a result, came up with a mixture of green tea and pomegranate, which has been tested in several Florida Circle K stores.
“It’s made from real brewed green tea and pomegranate extract and has the benefits of both,” said Steve Schoen-berg, president. Steve’s also offers mango peach sweet tea.
Currently, the company, which will create custom flavors to client specifications, is working on two new tastes that are expected to attract a younger crowd: root beer float and bubble gum. Additional flavors are in the concept stage. “From the time you think up a drink, it takes about a year to get it just perfect,” Schoenberg said.
In March, YoCream will introduce the Rockstar energy drink in a frozen beverage format in the original flavor and Punched, which has a fruity taste. The company also has seen increased interest in Fruitquake, a frozen smoothie made with real fruit juice and juice purees.
A year ago, 7-Eleven combined Slurpee and coffee to produce the Slurpuccino, available in two flavors: café latté and hazelnut. The frozen drink targets men and women ages 18 to 34, because more than 75 percent of Slurpee drinkers are under the age of 34.
“Slurpuccino capitalizes on the consumer-driven trend of coffee-flavored products,” said Jay Wilkins, brand manager for Slurpee and fountain drinks. “While it may be more of a grown-up Slurpee, we believe young adults and older teens will enjoy it as well.”
A non-dairy frozen cappuccino is the number one seller for Steve’s Frozen Chillers. “In taste tests, it scored higher than the Starbucks or Dunkin’ Donuts products,” said Schoenberg. Alligator Ice recently rolled out Al’s Famous Iced Coffee, which can be served frozen or poured over ice. The concentrate is available in a one-gallon bag-in-the-box or 64-ounce bottle and comes in four flavors: French vanilla, mocha, hazelnut and regular.
“It compares to a four-dollar Starbucks’ product,” said Smith. “But a retailer can sell a 12-ounce French vanilla for $1.69 and get a 60 percent margin.”
Convenience store foodservice programs are growing in value as lower cigarette and fuel margins impact the bottom line. As two recent reports indicate, a good foodservice program can draw repeat customers and help build brand loyalty in an ailing economy.
In November, the National Restaurant Association’s Restaurant Performance Index, which tracks the outlook for the U.S. restaurant industry, fell to a record low of 96.7 percent, a 0.4 percent drop from October. Experts believe that away-from-home diners have cut down on restaurant meals and are trading down to lower-cost meal providers.
In addition, a December report from The NPD Group said that 6 percent of the roughly 62 billion commercial foodservice meals and snacks consumed annually are purchased from retailers — food, drug, discount, department and convenience stores. “People who were eating out at high-end restaurants now eat at fast-casual restaurants,” said Gardner. “C-stores have to bump up the offerings to make those customers happy. They need to give them variety and options and the brands they can feel good about.”
In today’s economic climate, a quality foodservice program gives convenience stores the best opportunity to increase sales and drive traffic. Thanks to a wide range of flavors and well-known brands, frozen dispensed beverages can be positive contributor to a retailer’s foodservice plan.
Pat Pape is a contributing writer to NACS Magazine.