Tea Craze Refreshes Sales

Tea Craze Refreshes Sales

By Lisa White, Contributing Editor

It wasn’t that long ago that juice and tea beverages were being overshadowed by the hard-charging introduction of energy drinks, thirst-quenching ‘ades’ such as Powerade and Gatorade and the ever-evolving lines of bottled water, which continue to emerge.

However, a resurgence in ready-to-drink (RTD) ice tea brands such as Gold Peak—part of Coca-Cola’s RTD tea portfolio—and AriZona are bringing the forgotten segment back into focus. Now, c-stores are inundated with new and unique flavors, healthier ingredient profiles and effective marketing programs. As a result, tea and juice sales are on an upswing.

According to market research firm Nielsen, iced tea sales totaled nearly $1.6 billion in c-stores in the 52 weeks ending June 3, 2017, almost a 10% increase compared to the previous year.

By comparison, c-store sales of juice in the 52 weeks ending June 3, 2017 totaled more than $2.2 billion, a drop of 2.6% from 2016, according to Nielsen.

Refrigerated juice and drink smoothies led the way with more than $223 million in sales in the channel, followed by orange juice at more than $213 million. This was followed by lemonade at almost $59 million and refrigerated fruit drinks at $35 million.

The influence of changing consumer preferences on overall sales is unmistakable.

“In today’s c-stores, the tea and juice categories are being given more space and a larger assortment of flavors and brand assortment are also being provided,” said Brian Ferguson, chief merchant at Knoxville, Tenn.-based Pilot Flying J, which operates about 550 locations nationwide. “This is primarily being driven by the tea category. Additionally, as the breakfast and lunch segments grow, both categories continue to shine through bundle deals. Teas and juices have also become very popular items in private labeling, as consumers demand the freshest product available.”

COOL OFFERINGS C-store retailers are noticing a shift in the beverage climate favoring tea more so than juice.

“Both the juice and tea categories are seeing growth in c-stores due to the increase of both flavors and styles,” said Ferguson. “That being said, as the consumer continues to move from carbonated soft drinks to more natural and lower-calorie beverages, we are seeing a larger growth in the tea category. Although still growing, the rate of growth within the juice category has slowed slightly due to the negative connotation of its high sugar content.”

Fruit-flavored teas are hot across the country, but the type varies, depending on location.

“Within the tea category, fruit flavored teas, including peach, mango and watermelon, are always a consumer favorite, while premium tea, including black, green and white, continue to have more and more success,” said Ferguson.

“Looking at juice, this category is always evolving as premium, pressed, smoothies and Kombucha (fermented sweetened black or green tea used as a functional beverage and touted for its health benefits) are all beginning to disrupt the traditional juice landscape.”

The quest for unique flavors has led to the emergence of new brands, including China Mist, a line of naturally-flavored teas from Farmer Brothers in Scottsdale, Ariz., and Brooklyn’s ITO EN North America’s iced-steeped cold-brew ready-to-drink line.

MORE TEA “The biggest thing we’ve seen in tea growth is more consumers opting for iced tea,” said Melissa McPherson, category manager for NOCO Express, a Tonawanda, N.Y.-based chain of 37 locations. “Customers are no longer looking for sweetened varieties; they want more unique flavors.”

The biggest seller at NOCO Express and On the Go stores is Teavana’s Pineapple Blueberry flavor.

The chain redid its beverage sets last spring and has since seen a big uptick in its beverage sales, with some exceptions.

“We haven’t had as much growth in juice,” said McPherson. “It seems like, for us, many customers have been opting more for waters, teas and energy drinks. We attribute this to consumers looking to reduce sugar intake. Even though juice is considered healthy, people are migrating toward water.”

At York, Pa.-based Rutter’s Farm Stores, which has 68 locations, cold vault trends from 2016 seem to have carried over through the first half of 2017. This has favored all beverages, with the exception of juices.

“Carbonated soft drinks hold the top spot for packaged beverage unit sales, however we continue to see the share of the category decrease,” said Chuck Moyer, Rutter’s food service category supervisor. “Energy drinks, bottled waters, enhanced beverages, ready-to-drink coffees and teas continue to lead the way in category growth.”

MORE OPTIONS By comparison, dispensed beverages have seen the same carbonated soft drink trend, although with a push for more non-carb options.

“Iced teas and lemonades continue to show promising growth,” said Moyer. “Whether this is a fountain option or fresh brewed tea, customers continue to seek new and fun flavor options.”

Due to the potential, Rutter’s has chosen to offer both as part of its dispensed program. Lemonade and Rutter’s branded iced tea are available as fountain options that can be modified with flavor shots. In addition, its locations offer a fresh-brewed black tea, green tea and iced coffee option that can be customized using flavored syrups at the condiment bar.

MORE VALUE C-stores are implementing juice and tea promotions and paying more attention to placement at the store level to bring added visibility to these beverage varieties. For example, the majority of NOCO’s stores include a full door dedicated to tea, while juices are situated by iced coffee or grab-and-go dairies.

“We have a Teavana promotion running right now and have seen great movement due to that,” said McPherson. “We also held a Snapple promotion in May and June that did well, too. Customers are seeking value in these drinks.”

At Pilot Flying J locations, both tea and juice beverages can be found both in the traditional cold vault as well as throughout its deli cold cases. As a result, the opportunity for bundle sales is always there.

According to Ferguson, the chain has had success in offering the traditional “2- for-1” deal.

“We have also been successful in bundling the beverages with breakfast and food offerings,” he said.

Pilot Flying J continues to put a larger emphasis on brand and flavor assortment as well as on premium products.

“As the consumer continues to demand this assortment and premium offering, core juices, including apple, orange and cranberry, have lost space to these super premium brands,” said Ferguson.

Packaged juices and teas seem to have a leg up in terms of expanding beverage programs.

“Based on what I am seeing in-store and consumer habits, I would expect the functional and premium beverages to continue to grow in the space, as more people continue to seek alternative refreshment options,” said Ferguson.

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