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                                                                        January 2019
Coca-Cola Targets C-Store Customers with New Beverages in 2019   

By Dale Buss

Coca-Cola is focusing on convenience-store outlets more than ever, illustrating its growing commitment by introducing a slew of extensions of its existing brands. The beverage giant is even adding new brands to its c-store portfolio, in launches planned for early 2019.

The new brands and products include Far Coast, a new cold-brewed-coffee line, as well as extensions of the Dunkin’ Donuts CPG line, Sprite, Simply Juices, and Smartwater. Each new product will be available in single-serve packages, the favored purchase form for c-stores.

The flurry of new products reflects the rising importance of the c-store format for Coca-Cola and the beverage industry in general, and also the evolution of the traditional channel into a more dynamic place to peddle drinks.

Among other things, Coca-Cola is addressing how c-stores have emerged as the cutting edge of product availability and experimentation for Generation Z, whose oldest members now are in their early twenties. More than 21 percent of convenience-store shoppers now are between the ages of 16 years and 24 years, the company says, higher than a year ago. And Generation Z shoppers average 7.8 trips per month into a c-store.

“That’s huge,” J.C. Harvey, director of retail channel strategy and commercialization for Atlanta-based Coca-Cola North America, told CPGmatters. “The c-store is their default store. And that is helping the c-store evolve beyond what a gas station used to be. It’s attracting these new consumers and driving new trends in beverages.”

To be sure, at the same time c-stores represent many on-trend developments in new beverages, channel customers also remain uncommonly devoted to the carbonated soft drinks that remain the foundation of Coca-Cola’s business, with five percent growth in value in retail sales in c-stores of the company’s sparkling portfolio during the second quarter of 2018.

“People remain loyal to CSDs; they’re still the biggest category of sales in c-stores after gasoline,” Harvey said. “But we’ve always been known for CSDs from the c-store standpoint. What we’re seeing now, with all this innovation, is that we’re growing our trial and getting consumers to try new beverages. We see opportunities expanding beyond CSDs, and that’s also important to our own evolution as a company.

“Everything we’re launching in 2019 is part of the continuing evolution of Coca-Cola into a total beverage company known for carbonated soft drinks but with a lot of products that are on trend for people who want more variety and choices,” he said.

Packaging is a major part of that. The fact that all the new products are available in single-serve formats “is a great way to get trial, because single serve typically is the lowest price point,” Harvey said. “And we know that the cold vault in c-stores is where most people go to purchase those beverages. This is another reason that it’s very important for us to make sure innovations across our entire portfolio go into c-stores.”

Many of the new beverages are available in smaller sizes that meet a growing consumer preferences for single-serve beverages that are smaller than the typical 20-ounce size, he said.

Here’s the slate of new Coca-Cola products described by Harvey that are streaming into U.S. c-stores these days. While they’ll all be available at some point in the regular grocery channel, convenience stores are definitely the initial distribution focus for many of them:

Far Coast: A first cold-brewed-coffee brand for Coca-Cola, it will offer a “super-premium experience” that reflects a blend of coffees from Ethiopia and Latin America, Harvey said. It’ll come in “a unique, resealable aluminum bottle. You can take a little sip and save the rest for later,” he said. Sales of cold-brewed coffees have grown by 260 percent in dollar volume over the last year.

Dunkin’ Donuts Shot in the Dark: The coffee-espresso blend already has been available regionally under Coca-Cola’s distribution arrangement with pre-packaged, Dunkin’-branded bottled beverages since early 2017. Shot in the Dark includes a touch of cream and sugar, comes in three flavors, and is packaged in 8.1-ounce slim cans. “It also follows that trend of more convenient packaging,” Harvey said.

Smartwater Alkaline and Smartwater Antioxidant: The two new variants of America’s No. 1 brand of premium bottled water will be vapor-distilled like all Smartwater products and include added electrolytes for taste. Alkaline will be ionized to ensure that its pH level is 9-plus, Harvey said, while Antioxidant will be infused with Selenium. “People are asking for more from their water,” he explained, with sales of alkaline beverages up more than 117 percent recently and sales of antioxidant beverages of by 10 percent. After these two varieties launch, he said, Smartwater will be “the only premium-water brand that has a full portfolio for [retailer] customers and consumers.”

Minute Maid Tomato Blend: It’s the first 100-percent vegetable juice that Coca-Cola has launched, and includes juices of tomato, carrot, celery, cucumber and beet, giving it a reddish-orange tinge. Each serving will include 100 percent of the daily recommendation of Vitamin C and 140 percent of Vitamin A.

Simply Smoothies: Extending Coke’s Simply juice franchise, the smoothies will be 100 percent fruit juices and purees and natural flavors, and non-GMO verified. Coming in 8-ounce containers, the smoothies will launch in strawberry-banana, mango-pineapple and orchard berry flavors.

Sprite Lymonade [cq]: This will include a splash of lemonade and be made with 1-percent real juice. “It’s about following the trends and being a total beverage company,” Harvey said. Sparkling lemonade is a fast-growing category, with sales up by 136 percent over a year earlier. “We saw that trend and said ‘We have the largest lemon-lime soda in the market. How can we innovate?’”

As a beverage-market leader, Coca-Cola is a giant in category management in c-stores. “We have a lot of actual insights that we drive with our proprietary data,” Harvey said. “We work collaboratively with [retailer] customers to identify specific needs and tailor their assortment: Who are their specific shoppers?

“That’s a big difference for Coca-Cola versus our competitors. We’re able to take that data and overlay it with geographic data and help our customers build a planogram that reflects their growing business as a whole.”

Does the fact that c-stores comprise an increasingly important platform for beverage innovation mean that it’ll be the first format where Coca-Cola experiments with cannabis-infused beverages?

Harvey demurred. “To be clear, we are not interested in cannabis- or marijuana-based drinks at this time. What we are doing – like many in the industry – is watching the growing trend of non-psychoactive [cannabis-based] drinks.”

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