Fountain Of Success

Dispensed drinks are rising to the occasion as retailers turn toward private label offerings

“This is something you have to see to believe,” explained Mike Garlick, vice president and general manager of Hit-N-Run. “I didn't believe it when I came here seven years ago.”

In a world in which we think we've seen it all, what could he possibly be referring to? Would you believe sales of a fountain drink? See. You have to see it to believe it.

While fountain drinks have long been a staple in the convenience store channel, many retailers are turning to their own formula to compete with the cooler. In the case of Hit-N-Run it is the famous Hummdinger. “We have a nice little niche product here,” Garlick said. “Twenty-five percent of our volume comes from fountain soda.”

Impressed by that number? Try this: one of its locations sells 75 Hummdingers an hour, making it Hit-N-Run's highest volume store for fountain drinks, according to Garlick. Located within a 20-mile radius in southern Illinois, the company's six stores (two in Alton and one each in Wood River, East Alton, Granite City and Bethalto) rank the highest in PepsiCo's convenience channel, according to Garlick. “It really is an interesting situation.”

Hit-N-Run has been in business since 1972. It introduced the Hummdinger in 1983 and has been promoting it ever since. In fact, Garlick said almost all of the retailer's promotions include the Hummdinger.

However, don't ask him for the formula — it is top secret. He would only divulge that it “is an interesting formula of syrup, carbonation and additives that make us unique.” Garlick did add that all of Pepsi's flavors are represented, plus the stores offer different flavored squirts. “We use 80,000 gallons of syrup a year in our six stores,” he noted.

The Hummdinger is such a draw in the area that the company sees improved sales despite the cost — which is only 99 cents for the 32-ounce drink. “When everyone else was lowering their price and selling fountain drinks for 69 cents, we didn't budge, and our sales increased 10 percent year over year,” he explained.

Bottom Line

• One Hit-N-Run location sells 75 Hummdingers an hour.
• Private label drinks have grown as fountain dispensers have expanded from six valves to 16 valves.
• Valero is rolling out its Flavor 2 Go fountain drinks after the success of its Fresh Choices bottled brand.

And other area retailers struggle to keep up with them. “We are butted up against a lot of quick service restaurants, and they have trouble selling their [meal] deals,” Garlick said. “People will buy their tacos but then come to us for fountain soda.”

The Hummdinger has even taken on a life of its own, in some respects. Customers have started a Hummdinger fan page on Facebook and some pose for pictures with a Hummdinger in their wedding dress, he added.

Though it may arguably have the most interesting tale to tell, Hit-N-Run is not the only convenience store chain with a booming private label fountain drink business.

Recently Valero threw its hat into the same ring. The national convenience store chain has offered private label bottled drinks for several years, known as Fresh Choices, and decided to expand the offerings with its Flavor 2 Go drinks at the fountain, according to Bill Day, executive director of media relations. The fountain drinks are only available in a select number of Valero locations, but the plan is to roll them out to all stores, he added.

Also, the national roll out may be based on the warm reception the drinks have received. Day did not give specific sales numbers, however, he did say that “anecdotally, they have been very popular.” Which should come as no surprise since the bottled Fresh Choices are a favorite among customers. “People like having a choice.”

As for that choice, Flavors 2 Go comes in three flavors: Cherry Limeade, Rootbeer Float and Orange Dreamsicle. “We specifically decided not to try to compete with the cola flavor,” Day explained.“That market is pretty well served.”

Offering private label fountain drinks is catching on and is a good way for convenience store operators to move customers to the fountain. According to Trey White, executive vice president of sales and marketing for SunnySky Products, the beverage manufacturer entered the private label fountain drink arena about five years ago and, today, convenience store private label is a large part of the company's business.

“Since then we have seen triple digit increases year over year. Our products are in 5,000 and 10,000 stores across the country,” he said, adding the retailers range from medium- to large-size convenience store chains, foodservice and grocery stores.

The increase in private label drinks at the fountain may be attributed to the fact that more operators are buying their own equipment, which gives them more flexibility over what choices they offer, White said. And more retailers are also getting into the private label game in general.

“A lot of mid- and large-size convenience store chains put a lot of money into their brand and a lot of these companies are utilizing that, putting their name on products in the store — from food to snacks to cold dispense,” he said.

Additionally, over the years, fountain dispensers have changed from, historically, six-to-eight valve machines to 16-valve machines, he explained. “The opportunity is there to sell something different,” White explained. “C-store operators want to move their customers from the cooler to the fountain, and to do that you have to offer customers something unique. The smart c-store operators are taking back their secondary valves.”

Houston-based SunnySky Products has its own on-site research and development facility where it offers custom development, manufacturing and packaging to retailers. Services include private label blending and manufacturing, brand creation and development, new product development, packaging, product distribution, packaging and creative concept development and first-run production quality control.

“A c-store operator can come here with an idea or a formula, and we can develop it for them,” White explained. “One of our biggest draws in private label fountain drinks is being able to offer our customers a unique, high-quality product at or below what they pay now. We try to be the innovated manufacturer. We bring them ideas, help them get their product into their channel, and help them with the roll out.”

In fact, a convenience store chain can have its own fountain drink, from idea to roll out, in as little as 60 to 90 days, White explained.

“The growth is exploding,” he said.