Coffee is key to driving convenience store grocerant niche Ready-2-Eat and Heat-N-Eat fresh food sales according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions (www.FoodserviceSolutions.us). Get this U.S. retail value growth for ready-to-drink coffees is projected to reach nearly $1.6 billion between 2017 and 2022, according to Euromonitor International. Conversely, cold brew has experienced 150% revenue growth in the past year alone.
Fresh quality hot coffee in the morning is the key to meal, and menu bundling all day long according to Johnson. Fresh coffee remains a hot prospect in convenience stores, even in the face of newer innovations in the packaged coffee arena, and mix & match bundling is key to a successful grocerant niche platform according to Johnson.
Just consider this in 2017, hot dispensed beverages were the second largest category in foodservice at 14% of sales, according to data from the National Association of Convenience Stores (NACS) State of the Industry Report for 2017.
Coffee continued to lead this category, making up 58.6% of sales, followed by cappuccino (18.5%) and refills (12.2%). Competition for convenience store retailers in hot dispensed beverages comes primarily from quick-service restaurants and let’s face it fast food restaurants self-imposed restrictions on mix and match bundling; thus capitulating incremental market share for breakfast to the convenience store sector according to Johnson.
The cappuccino subcategory has performed strongly between 2015 and 2017, and it showed improvement in 2017 in average store sales, gross profit dollars and gross margin percentage. Customers want their coffee fresh, affordable and consistent, according to NACS. Once again this is an area fast food restaurants have stumbled at best.
Should fast food restaurants expand their coffee offerings? Consider this specialty hot coffee is also a rising star in the coffee world, according to data from the Specialty Coffee Association. The market share of specialty coffee, in cups, increased from 40% in 2010 to 59% in 2017, with an average of three cups consumed per day, per drinker. Consider the menus of Burger King, Wendy’s, and Chick-fil-A what do you think a good coffee program could do for AM daypart sales?
Are you capitulating market share to your competitors? Why? Do you need outside-eyes for inside results? Foodservice Solutions® specializes in outsourced food marketing and business development ideations. We can help you identify, quantify and qualify additional food retail segment opportunities or a new menu product segment and brand and menu integration strategy. Foodservice Solutions® of Tacoma WA is the global leader in the Grocerant niche visit Facebook.com/Steven Johnson, Linkedin.com/in/grocerant/ or twitter.com/grocerant