CSNews Exclusive: Innovation Heats Up Cold/Frozen Dispensed Sales

NEW YORK -- Welcome to summer -- the time of year when the mercury rises, along with sales of cold and frozen dispensed beverages.

Frozen dispensed beverages, a particularly seasonal category, saw per-store sales rise 4.8 percent last year as consumers sought ways to beat the heat, according to the 2010 Convenience Store News Industry Report. While this increase is respectable in any year, posting such an increase in a tough economy is even more remarkable.

To keep customers interested in frozen beverages this summer, convenience store retailers are mixing things up with new promotions, flavors and products.

New Jersey-based Quick Chek Food Stores in April completed its "Name it…Claim it" promotion, where the chain asked customers to submit names for its frozen dispensed beverage section.

"As part of our focus on cold dispensed beverages, we felt it was important to engage the target audience, and a name for the product would help us to differentiate it," said John Schaninger, vice president of sales and marketing for more than 120-unit Quick Chek, adding the in-store section previously had no brand or name associated with it, and this program was designed to develop a name that would resonate with the category's target age group.

The winning name, "Quick Freeze," was selected from more than 1,800 entries. The winner, Francis LaMonica of Tinton Falls, N.J., was randomly chosen from a pool of more than a dozen contest participants who entered "Quick Freeze" as their name of choice. As the grand-prize winner, LaMonica was subsequently awarded a Nintendo Wii along with free Quick Chek Quick Freeze drinks for one year.

Six runners-up also received free Quick Freeze drinks for six months.

And to celebrate the launch of Quick Freeze, Quick Chek is hosting daily Happy Hour events in stores throughout the summer season, when all fountain and Quick Freeze drinks will be half price from 3 to 7 p.m.

The goal of the Happy Hour events are to "drive traffic and trial, and bring awareness to the department," said Schaninger, who declined to specify the effect the promotion had on sales. The special campaign is being promoted in stores and through radio ads, as well as digitally on the chain's Web site, Facebook profile and e-blasts. As of press time, there was no end date for the promotion.

In the Midwest, a similar contest by West Des Moines, Iowa-based Kum & Go is currently underway. The Kum & Go Name Our Cup Contest asks customers to submit their name for the convenience store chain's 32-ounce fountain drink online at www.nameourcup.com.

"In the summer months Kum & Go likes to offer our customers a great price point for 32-ounce fountain [drinks] -- this year is 59 cents -- and engage our customers in some fashion," said Meggan Kring, director of corporate communications for Kum & Go, adding two years ago the retailer held the Pop vs. Soda campaign, and last year it gave away $50,000 for its 50th anniversary. "Overall, our contests are a fun way to get our customers involved, and give our most loyal customers an opportunity to win great prizes," she said.

The 32-ounce fountain drink is one of Kum & Go's most popular items at the chain of more than 425 stores, and the drinks do not currently have a name or brand associated with them, she said.

Customers could submit names until June 30, and as of press time, Kum & Go had received 30,000 entries. Customers then voted for their pick of the finalists throughout July. In September, Kum & Go will launch the winning name on a newly designed cup, explained Kring. The customer with the winning submission will also receive $10,000 and a year of free fountain drinks from the chain.

Prolific Products, Fancy Flavors
Convenience store chains are also looking at new products and exotic flavors to spice up the frozen dispensed beverage section.

For the past seven months, six Southwest Convenience Store locations in Texas have tested self-serve f'real milkshakes, smoothies and blended coffee drinks, and the chain is in the process of identifying more stores to expand the program.

"I search for unique products that differentiate us from our competitors," said Brian Shutler, foodservice manager for the retailer, who noted he began investigating f'real as a viable option for his stores after seeing it at a foodservice tradeshow. "This is a product no one else had, and f'real has a turnkey program with zero waste. The product is frozen and customers make it themselves, so it is low labor."

All types of customers purchase the f'real drinks, said Shutler, noting there are product options for the calorie conscious (smoothies) as well as those looking to indulge (milkshakes). The six machines are located in a variety of c-store locations, including interstates, college areas, remote locations, corporate areas and neighborhood stores. The stores seeing the best response so far has been the neighborhood and corporate locations, while the most popular varieties are the milkshakes -- although smoothies are gaining steam since the supplier repackaged and reformulated the offering.

"When we initiated it, I had an expectation of what I thought the program should do on an annual basis. We launched in December in the dead of winter, and it met our annual expectation in one month," said Shutler. "We knew we had a hit from the start."

Marketing includes vendor-supplied point-of-purchase and signage materials, and there has been no need to promote the program with coupons, he said. In addition, f'real representatives have helped draw attention to the products through two-hour Happy Hour events at stores, where they pass out full-size samples to customers. "People line up for as far as the eye can see. It's been a really big help on their part," he explained.

And educating customers on the use of the self-serve machines hasn't been an issue, according to Shutler, who explained the detailed instructions and merchandising elements on the machines work well. As for maintenance issues, he noted there have been no problems with any machines to date, and f'real representatives check in on a regular basis to ensure things are running smoothly.

Meanwhile, offerings at the frozen dispensed beverage section are getting makeovers following broad food industry flavor trends of increasingly exotic flavors and combinations, in efforts to resonate with consumers search for new tastes.

Mango passion fruit is one frozen dispensed beverage flavor that was ready to be rolled out to Quick Chek stores' frozen dispensed beverage sections as of press time. Other new and unique flavors featured recently were Full Throttle and watermelon, according to Schaninger.

For Kum & Go, Sunkist Cherry Limeade was recently rolled out to the chain's Koolee-branded frozen dispensed beverage sections, and has been a hit with customers, said Kring. But best-selling flavors at the chain remain the national brands — Mountain Dew in the chain's northern markets and Dr Pepper in the chain's southern regions.