PRICEWATCH Profit checker Hot beverages

Behind the numbers

Some £268m-worth of hot beverage sales go through convenience store tills every year, 70% of which comes from coffee. But this week’s data shows that retailers should consider a wide range of hot drinks, with options to review pricing across segments.

Smaller count lines can provide an oppor- tunity to widen margins: 69% of retailers are charging up to 69p on Cadbury Instant Hot Chocolate 28g, nearly double the most-common price of 35p set by 30%. Meanwhile, 68% are going as high as 80p on Cadbury Wispa Frothy Instant Hot Chocolate 27g, more than twice the 39p set by 31%.

At the premium end, 53% are selling Lavazza Qualità Rossa Ground Coffee 250g for above its most-common price of £4.39, with some charging £6.80. Retailers selling Tassimo Costa Latte Coffee Pods could also take a second look: 52% charge above the most-common price of £5 for a 16-pack, some going as high as £7.05.

Yorkshire

SIZE 12,500sq ft

TYPE Residential

TOP PRODUCTS

Royal Chai Karak Chai 400g

Royal Chai Masala Chai 400g

Nescafé Original 300g

Hot beverages sell really well in the winter time, while margins have dropped slightly in the summer. Come winter time we extend our range of hot drinks as much as we can. We mostly use Nisa to supply this category. Our ethnic lines like Royal Chai do well along with Nestlé Everyday and Nestlé Instant. We sell larger packs, which do well with cost-of-living affecting people who make drinks at home instead of going out. Instant coffee and tea bags sell as well and we have not had any real availability issues with these types of products.

Priyesh Vekaria

STORE Carlton Convenience (One Stop)

LOCATION

Salford, Greater Manchester

SIZE 1,200sq ft

TYPE Residential

Our average margin on hot beverages sits at 30%. We sell supermarket value packs, which means customers can benefit from buying bigger pack sizes, but they’re not having to go to the supermarket to buy them. Retailers should keep a variety of market-leading brands. We keep Nescafé, Twinings, PG Tips, Tetley and Typhoo. Own brands are a staple on our shelves as customers need to see a price comparison point. We sell Nescafé at own-brand prices and make a strong margin as our customers have an opportunity to make that trade-up.