A new generation of single-serve, resealable beverages is coming to market this spring to quench consumers' thirst for easy, on-the-go food products. They're selling well in food service, convenience stores and on-site food venues.
But many supermarkets, which have quickly embraced other convenience-focused products, seem to be lagging in stocking these items. They are not the noncarbonated drinks and sports quaffs found in Center Store. Rather, these new items -- ranging from drinkable yogurt to orange juice -- are bound for the dairy case.
"Those [single-serve dairy drinks] are selling so well in convenience stores, the biggest issue right now is out-of-stocks," one industry source told SN.
Research completed last summer by International Dairy Foods Association's MilkPEP and Information Resources Inc., Chicago, shows sales of single-serve milk in plastic containers climbing each year at a double-digit rate. Convenience stores were quick to grab hold of them, continuing to stock more flavors and brands ever since Dean Foods' Chugs hit the market four years ago.
Not surprisingly, convenience stores, which already vie with supermarkets for breakfast and lunch customers, have sought ways to make the most of these single serves. Some are merchandising them in three places -- with to-go sandwiches; in a refrigerated upright and at the counter; and in ice banks right up by the register.
Supermarkets, too, could plant some of the items near or in their grab-and-go cases, but they also could give them more flair in the dairy case itself, where weekly shoppers might look to purchase the drinks for the coming work or school week, according to industry sources.
Southland Corp., Dallas, with more than 5,200 7-Eleven convenience stores in the United States, stocks at least a dozen stockkeeping units of single-serve milk, vitamin D and flavored, in plastic containers -- double the number it had two years ago, officials there said. Sales have grown over the last two years, and the company is anticipating more movement in the category with new product introductions and promotions on the way, they said. 7-Eleven is known in the industry for its well-honed distribution system, and that system serves it well when it comes to this category.
"With our daily delivery system serving our stores, we are able to jump on new introductions very quickly and thus maximize our sales," said Kurt Schumacher, dairy category manager for 7-Eleven Stores.
The chain is currently reviewing the products' space allotment and will make adjustments as necessary, Schumacher said.
"We carry five SKUs from Hershey, four from Nestle and typically three to four from local dairies. We also have three SKUs of Dannon Frusion. The best-selling of them is NesQuik chocolate milk. We have them cross merchandised with sandwiches in some markets."
Supermarkets have also reported a boost in sales where they've cross merchandised single-serve milks, or installed secondary displays.
In a spot check of supermarkets across the country, SN found a couple that are either cross merchandising the products with grab-and-go lunch or setting up a second intercept. Others just appear to have put the subcategory low on their priority list.
Shaw's Supermarkets, East Bridgewater, Mass., saw little movement from the dairy case, but when their supplier, Garelick Farms, Franklin, Mass., installed vending machines at checkout for the products, sales went up, said Shaw's spokesman Bernie Rogan.
"But in the dairy case itself, space allocation is less than it was two years ago. There's very little movement there. Where we really see movement [in single-serve beverages] is flavored water, especially our signature, flavored, sparkling water."
Garelick Farms, however, is quite pleased with its sales from vending machines at Shaw's and would like to put them in more, said Garelick's brand manager Michael Touhey.
"Sales at Shaw's are 3-to-1 from the machines compared to the dairy case," Touhey said.
Meanwhile, in the Midwest at Dick's Supermarkets, Platteville, Wis., Greg Larsen, merchandising/operations director for the chain, said that while sales of flavored milks in single-serve plastic containers are double the sales of those in paper cartons, the sales figures are not dramatic.
He did say, however, that he sees a future in the supermarket for such a convenient product and that penny profit on a pint of 1% chocolate milk in plastic is better than on an 8-ounce paper carton of the same product. Dick's cross merchandises the milk in some of its stores in a refrigerated case, along with other beverages, near grab-and-go sandwiches.
Queen Anne Thriftway in downtown Seattle has added roughly a third more SKUs of the products, but that's primarily been driven by the arrival of new products coming into the market in the last two years, said Rick Smith, dairy manager at the store. He doesn't cross merchandise the product with sandwiches or have a secondary display "because we just don't have the space."
At another chain with relatively small stores in Manhattan, where real estate is especially hard to come by, officials have not even considered a secondary display for single-serve dairy, even though other cold beverages are offered near grab-and-go lunch offerings.
"They take up their rightful amount space in the dairy case, but it's minimal. It's not a category that's big, and it's not growing for us," said John Riley, dairy buyer for Morton Williams Associated, which has seven stores in Manhattan and two in the Bronx.
One reason he doesn't cross merchandise the products in a secondary spot like other beverages is because "they're less stable, more vulnerable [than juices and sodas]." Another reason is just lack of space, Riley said.
But consultants SN talked to pointed out that cross merchandising needn't take up a lot of geography.
"It doesn't have to be a vending machine or cooler. It can be a tub of ice. Those waist-high ones that you see bottles of ice tea and soda in. They don't take up much room. There should be one in the deli. There's so much sales opportunity with these products," said Jerry Dryer, president of J/D/G Consulting, a Chicago-based firm that works with manufacturers and retailers.
In the meantime, there seems to be no end to the single-serve drinks in the dairy category that are coming onto the market. The yogurt companies are adding drinkable yogurts, and Tropicana has just come out with a four-pack of OJ to Go in 14-ounce, reclosable plastic containers.
