Walk into any Wal-Mart Neighborhood Market, and it's the very first thing you see: beverages, ready to go.
The Grab It & Go bar, located just inside the entrance of stores in Wal-Mart's growing supermarket-only chain, offers self-serve breakfast pastries, newspapers and fountain drinks -- coffee, soda and frozen beverages -- using a drop-box "honor system." The idea caters to consumers hurrying off to work in the morning, said Sharon Weber, a spokeswoman for the Bentonville, Ark.-based retailer. Yet, it can also be a reminder to stop by for longer later, or simply an invitation to shop the store while enjoying a drink.
"It's a scene right out of a C-store," observed Jeff Weston, general manager of national accounts for Nestle Waters USA, the Norwalk, Conn.-based bottled water supplier. "And I think that's the direction we may see [supermarket beverages] going in the future."
While a C-store won't necessarily arise in every supermarket lobby, retailers and their suppliers are frequently using the single-serve beverage as a means to provide consumers with the variety and convenience they demand -- and as a tool to drive profits and beverage category growth. This means finding strategic locations to place coolers, displays, and the items inside them. It isn't limited to the checkout lane, either.
Many, like Wal-Mart, are greeting their shoppers with a cold beverage selection. Dave's Marketplace, a seven-store chain based in Warwick, R.I., placed a 12-foot cooler near the entrance of its newest store in East Greenwich, R.I., and packed it with various New Age beverages, energy drinks and juices. Signs encourage Dave's customers to enjoy a drink while they shop, and bring the empty container to the cashier.
"We've been amazed at how well it's done," Bob Fabiano, director of grocery operations, told SN. "We're already looking at how we can get a similar set-up into our other stores."
Fabiano said the idea behind the cooler was to take advantage of the trend toward alternative beverages and of the traffic from the gym next door. The case includes such drinks as Tazo, Snapple and Arizona teas, Red Bull, Odwalla, Clearly Canadian, Fuze and boutique soda brands like Stewart's.
"We used to try and sneak a few of these items into the Coke and Pepsi coolers, but [suppliers] don't like that," Fabiano said. "We want to have the right items for our customers, and we want to have them cold."
Elsewhere, Dave's stores have reconfigured their dairy cases to hold additional single-serve juice items. "We got about four feet of space in the dairy case by cutting a little from the butter and margarine section and other little bits here and there," Fabiano said.
Cold beverage cases in front of the store aren't necessarily successful everywhere. Minyard's Food Stores, Coppell, Texas, experimented with such a program a few years ago, but found it was not profitable, said Joe Boyd, beverage category manager. The chain instead focuses its single-serve efforts on the checkstand.
"We try and get our coolers as close to the express lane as possible. But we have 72 different stores and 72 different floor plans, so no two are exactly alike," Boyd said.
Coca-Cola gets the coveted express lane space at most of Minyard's stores because its products are generally the best selling, Boyd said. He added that Ozarka water at some locations is among the chain's most popular, and that among single-serve beverages, it's hard to beat the profit of Red Bull's energy drink, which retails at $1.99. Minyard's displays that product in a cooler near the front of the store as well. "Great item," Boyd noted. "Never have to discount it."
K-VA-T Stores, Abingdon, Va., is putting its single-serve efforts behind its private-label carbonated soft drinks and waters, said Rick Kelly, beverage category manager. "I think overall, corporate brands are going to continue to grow in penetration because they have as good a quality as national brands at a significant cost savings to the consumer," Kelly said. The chain's Food Club sodas and waters are merchandised in their own open-air refrigerated unit, as are national brands from Coke and Pepsi.
Major suppliers like Coca-Cola, Atlanta, see the single-serve beverage as a tool for retailers to build shopper loyalty, and drive overall category growth and profit dollars. As a result, Coke is looking beyond the checkout line to displays that sell warm product and introduce new ones.
"Our strategy is evolving to move single-serve beyond cold into a combination of warm and cold, and tools that bring single-serve to where it hasn't been before," said Sean Seitzinger, director of retail strategies for Coke. "We're trying to add incremental placements in pharmacy, in deli and in store lobbies. We're executing more warm placements such as toppers on fast-lane merchandisers offering a broader array of products. We've created mobile dump bins that are inexpensive for retailers to execute, but offer the solutions consumers are looking for."
Single-serve has helped Coke introduce new products like Vanilla Coke that don't have velocity to merit shelf space right away and support the focus on brand over price, which can help retailers profit, Seitzinger said. An example is Coke's new Treat Yourself Light display, a merchandising installation featuring the company's various diet brands in different sizes.
While the checkout lane remains prime real estate for single-serve beverage placement, competition is fierce -- not only between brands, but also among categories such as magazines and candy, said Westin of Nestle Waters. The trend toward self-serve checkout can diminish those opportunities as well, he said, noting that Safeway has reduced the number of front-end beverage coolers in its stores.
"We look for other opportunities in the store," Westin said. Notable among such efforts is an endcap display at Publix stores where single-serve units of Nestle Waters' Zephyr Hills brand surround a cooler; a display in the produce section of some Safeway stores in the West offers instant redeemable coupons on water multipacks.
