Brewing New Ways to Grow Co ee Sales

Brewing Brewing NEW WAYS TO GROW COFFEE SALES

From bean-to-cup to made-to-order, c-stores appeal to individual tastes to capture more coffee customers.

Anne Baye Ericksen • Contributing Editor

September heralds the return of pumpkin latte

fanaticism. Of course, any motivation that compels people to pop into your store is a welcome event. But can the hot coffee category rely so heavily on seasonal trends when cold brew and nitro keep turning up the heat?

“Seasonal trends help, but I think they are getting a little ho-hum,” said Tony Sparks, head of customer wow for Curby’s Express Market. The Lubbock, Texas-based convenience store startup opened its first site earlier this year and has plans to debut two more in the coming months.

To be fair, customers’ fascination with fall flavors hopefully will continue, but some c-store owners and category managers seek to inject new energy into hot coffee sales year-round because it’s a massive customer demographic.

According to the 2022 National Coffee Data Trends (NCDT) annual report from the National Coffee Association, Americans drink 656 million cups of coffee every day. What’s more, coffee products generated more than $79.5 million for U.S. convenience stores for the 52 weeks ending July 10, per IRI. On the whole, coffee gained dollar and unit sales of 6.4% and 5.5%, respectively. Single cups grew by 8.1% in dollar sales and 3% in unit sales.

To reinvigorate the hot side, Champlain Farms tested a bean-to-cup program last year, installing one machine in each of its 40 stores in Vermont and New Hampshire. Dave Simendinger, president of Wesco Inc., the chain’s parent company, located

Filtering Figures

Despite price increases, unit sales are up for most co ee products.

Product Type $ Sales % Change vs. Year Ago Unit Sales % Change vs. Year Ago Price per Unit % Change vs. Year Ago

Ground Co ee Single-Cup Co ee Instant Co ee 2.8% 8.1% 23.6% 4.3% 3.0% 16.8%

Whole Bean Co ee 15.9% 41.5%

Ground Deca einated Co ee -6.6% -14.3%

Co ee Additive/Flavoring 16.7% 19.2%

Instant Deca einated Co ee 20.5% 4.2%

Source: IRI OmniMarket Total Store View, Total U.S. Convenience, Latest 52 weeks ending July 10, 2022, received July 26, 2022

Price per Unit % Change vs. Year Ago

-1.4% -1.4% 5.0% 5.0% 5.8% 5.8% -18.1% -18.1% 9.0% 9.0% -2.1% -2.1% 15.6% 15.6%

in South Burlington, Vt., said the results were an impressive 10–20% increase for the category.

“But the real success was the drop in waste. We had stores wasting upwards of $10,000 a year from making coffee and tossing it after a few hours. It also contains a cappuccino (option), so we were able to eliminate that equipment from our coffee bars. This created more space and cut the electric bill. Also, when you open a store there is no need to make coffee. With a bean-to-cup machine, you are ready to serve your fi rst customer,” he explained. “This year, we will be adding a second machine and possibly a third in select stores.”

Curby’s opted to enter the made-to-order arena with hot coffee, cold brew and specialty drinks like its top-selling blended Café Chiller. It also offers 15 SKUs of made-to-order energy drinks. Although this marketplace is crowded with the likes of Starbucks, 151 Coffee and Dutch Bros., Sparks believes now is the time to adapt the model to the convenience store environment.

“Anything Dutch Bros. can do, we can do, too. We only hire people with experience in that type of format. We want coffee art people,” he said.

To capture consumers who prefer traditional brews, Curby’s will add several roasts in standard self-serve airpots by the end of this month.

CREATING CRAVINGS

Wholesale coffee prices are subjected to various factors: supply chain kinks, environmental effects on crop production and political fallout. Sanctions on Russia, a major coffee-consuming country, are starting to drive down global wholesale prices. Domestically, however, infl ation has forced stores to reconsider pricing strategies. “There’s no question this hurts business,” said Simendinger. “Our customers make it clear to our associates they are saddened by the higher costs with all of our products, and I simply encourage my associates to try to keep it positive.”

Economic conditions plus a highly competitive marketplace only emphasize the importance of marketing for the category. Sept. 29 is National Coffee Day, and last year, convenience stores promoted a variety of deals, such as $1 cups, free coffee to loyalty members, digital coupons and coffee proceeds donated to charity.

Neither Sparks nor Simendinger revealed specifi c plans for this year’s event, but both businesses offer multi-purchase promotions every day, such as buy 10 get one free. At Curby’s, made-to-order meal packages include a cup of coffee. It also has concentrated promotions through social media platforms, including TikTok and Instagram, to help reach millennials and Gen. Z, pivotal populations. NCDT reported a record number of people between the ages 25 and 39 are regular coffee connoisseurs.

Indeed, Sparks hopes the affection for caffeine, hot and cold, will keep individuals of all ages popping in despite lingering concerns over infl ation. “In some respects, (coffee) is an inexpensive luxury. People talk themselves into having this luxury and will cut back on something else,” he said. CSD