“Blend This!” Event Recap – Frozen Drink Sales Growing Fast!

Blend This!In June, Kerry Foods and Stockton Graham & Co. co-hosted two “Blend This!” seminars in Charlotte, NC and Greenville/Spartanburg, SC. The events featured Jill Zimmerman, Kerry Foods Southeast Regional Food and Beverage Manager and Thom Swain, Stockton Graham & Co. Southeast Business Development Associate. Both Thom and Jill provided attendees with updates and detailed market data on one of the fastest growing food and beverage segments in the US with personal experience, industry statistics and samples.

What started as summertime treat, blended ice coffee and other frozen drinks are now among the fastest growing segments in the specialty beverage industry with estimated 2012 US sales of over $4 billion. This number is continuing to grow each year, with smoothie sales alone estimated to grow worldwide to over $9 billion in 2015.

During the events, Thom and Jill reviewed the current trends in these categories, ideas on how to capitalize on them, and the profitability of frozen drinks.

Beverage Trends
One consumer trend that has emerged in the hectic schedules of American daily life is the idea of eating several small meals throughout the day, with 38% of consumers claiming to do this. Also, 46% of women and 36% of men say they eat healthy most of the time, but indulge in a daily “guilty pleasure.”

In our industry, frappe sales are bigger than ever and growing at 25% over last year with a strong focus on indulgent frozen or ice blended options, especially in coffee shops, donut shops and even traditional food service restaurants. The frozen drink trend has gone mainstream with 20% increase seen in smoothies on Quick Service Restaurant menus from 2009 through 2012.

In terms of our own customer base, throughout this year frozen and ice blended coffee sales are equal to or greater than the number of specialty coffee prepared drinks utilizing the espresso machine.

How to Capitalize on these Trends
There are many ways that you can take advantage of this sales trends to drive additional gross profits for your store. The first step is to benchmark your store. Do you offer a selection of blended ice drinks, including coffee, creams and fruit options? Do you have the proper ingredients, equipment and serving options for them? You don’t need an extensive menu, but you should offer multiple choices to customers. Finally, you need to decide how these menu items will complement your mainline espresso and coffee offerings.

In reviewing the menu trends, consumers are looking for that reward treat, or “guilty pleasure.” While the basic ice blend café mocha is a mainstay, incorporating some different options such as cookies and cream, caramel swirl and blueberry-pomegranate will tempt customers to indulge themselves at your store. To keep the menu fresh and appealing, we learned that market surveys indicate that 41% of consumers like to try new beverages, so offering LTO’s (limited time offerings) that rotate regularly, as well as the opportunity to try new flavors will help build repeat visits as well as sales. Seasonal or holiday-themed food and drinks also help to create a sense of urgency with a “get it while it’s here” immediacy.

As a specialty coffee shop, you and your staff can also express creativity that appeals to the consumers’ sense of flavor adventure and thirst for innovation by offering unique combinations, customizations and garnishes all served with expertise and awesome service. This will help you  stay on top of new trends and flavor options each season.

To further capitalize on the profitability of frozen blended drinks, utilize your staff’s knowledge, customer input and national trends to create unique signature drinks for your store. Work with your ingredient distributor and manufacturers to get tips on how to market and promote them in your store using a variety of tactics from vendor-provided POS to sampling programs for new LTO introductions.

How Profitable are Frozen Drinks?
Like their espresso-based counterparts, frozen drinks have sales prices that range from $3.00 per drink (smaller sizes) to over $5.00 per drink for the more indulgent, elaborate and larger sizes. The cost of goods on these drinks typically should average 25% of their sales price, thus generating gross profit of $2.25 to $3.75 per drink. With even 30 sales a day that represents an additional gross profit contribution to your store’s profits of $90 per day, or $2700 per month!

Ice blended coffee and blended drinks may not fit every specialty coffee bar or program, but they are an important and growing part of many a retailers’ operation whose sales are growing rapidly each year. This segment has been a mainstay for many of the larger chains such as Starbucks and Coffee Bean and Tea Leaf, and it has recently attracted restaurants such as McDonalds, Burger King, Dunkin’ Donuts and others.

Stockton Graham & Co. associates can help you review your offerings, incorporate new drinks onto your menu and blend specialty coffee knowledge with successful business practices. Contact us today at 800.835.5943 or send email to inforequest@stocktongraham.com.