Pump It UpDo RTDs and energy drinks fit your bill?
By Monique Balas
In our 24/7 world of multitasking and mass marketing, convenience stores are legitimate competition for coffeehouses. Americans on the go are trying to get as much as they can out of each stop they make, and they don’t always have time to wait for that made-to-order, double, extra-hot, nonfat latte.
But that doesn’t mean scaling back on your special brews or slighting your skillful baristas. A cooler of carefully selected ready-to-drink (RTD) beverages can provide just the right blend of convenience and capital. The non-alcoholic RTD segment is an $80 billion industry—and growing. The refrigerated or shelved drinks come in about as many flavors and configurations as you can imagine, from a plain-Jane plastic bottle of water to an artfully glass-contained Kombucha Wonder Drink. It’s just a matter of deciding what’s right for your store and what your customers are asking for.
RAMPING UP YOUR CREATION
If you’re still looking for easy ways to diversify your menu aside from RTDs and energy drinks, why not do your own home brew? Some coffeehouses find customers crave iced tea year-round, and it can add a homemade balance to the pre-packaged drinks you sell.
The Daily Grind Café in Pueblo, Colo., offers customers an unsweetened raspberry Zing iced tea. Brewed in the same Bunn drip machine used for hot tea, it’s easy to make and always a crowd-pleaser, says co-owner Charles Sole. “We carry it year-round, and believe me, even though it’s freezing cold outside, there’s still a demand for it.”
The shop can brew any of its 50 teas as iced tea simply by putting the teas through the espresso machine, making sure to keep the grouphead clean. Usually six shots of tea are enough for a 32-ounce cup; then they put it in a mixing tin and pour it over ice. “It’s very popular, actually,” Sole says. “You would think it would burn the tea and make it taste funny, but it really doesn’t.”
WHY OFFER RTDS?
Many coffeehouse operators find there are few drawbacks to carrying products that add convenience (for themselves as well as customers) and profit with little labor. At Coffee Break in Elizabeth City, N.C., owner Josh Clayton sells Shock Coffee’s single-serve drinks, Pepsi products, water and some Fuze beverages.
The profit margins aren’t noteworthy, but Clayton says the convenience and choice that RTDs offer are worth their weight in coffee beans. Typically, Coffee Break will make about 60 cents on a bottle of water, 40 cents on a Shock single-serve drink and 35 cents on a juice. Clayton believes his location may contribute to the popularity of the RTDs he sells. Just west of the Outer Banks and one of the few specialty coffee stores around, Coffee Break’s location allows customers to stock up on drinks before embarking on long road trips. The cooler sits near the cash register so as not to take away from the aesthetics of Clayton’s store, and the items complement standard coffeehouse fare. “Really, it’s just an added incentive for the business owner and the customer,”
At The Daily Grind Café in Pueblo, Colo., customers can find SoBe teas, Shock Coffee products, Fuze Beverages and other RTDs stored in a soda cooler by the entrance. “Being in a business area, it just makes sense,” says co-owner and general manager Charles Sole about adding RTDs. The Daily Grind gets plenty of tourists and college students who like the grab-and-go options. The Daily Grind is a family-run business, and Sole says they carefully select the products they offer, preferring small businesses to big-name brands. And one cooler is enough, he says. “I think it adds to the business, but I think if we added any more, it would probably take away from it. If we sold any more, people would have a hard time making choices.” Plus, his father is a chef, and Sole has a healthy skepticism for the pre-packaged. “We would rather have it fresh, something made right there, hands-on,” he says.
Ready-to-drink alternatives give customers options, says Patrick Gabrish, director of foodservice sales for Pacific Natural Foods, which makes single-serve, naturally flavored soy and almond drinks that are ideal for children or people who don’t like coffee. “You’re satisfying the needs of your customer,” he says. Ready-to-drink beverages also make great point-of-purchase items, says Jeff Rosen, president of Shock Coffee, whose products include single-serve latte and mocha drinks. “They’re going to come in and buy habitual drinks, then buy (an RTD) as an add-on,”
Energy add-ons to house-made drinks can put a jump on your bottom line, provided they make sense for your customer base.
Josh Clayton, owner of Coffee Break in Elizabeth City, N.C., estimates he makes a 300-percent profit margin on the protein and vitamin C supplements he sells. He keeps it simple: 20 grams of whey protein, which he sells for 75 cents, and 25 cents for a 500-milligram shot of vitamin C. “The protein is good year-round,” he says. “The vitamin C is really popular [in the winter]—everybody’s trying to ward off colds.”
Before opening Coffee Break, Clayton conducted polls to get feedback from future customers. They opted for the two add-ons, which he gets from GNC and Dr. Smoothie. The vitamin C supplement has a tangy taste that’s disguised in smoothies, but the protein powder has virtually no taste at all, Clayton says. People add the protein to just about any drink.
Energy add-ons are a new but welcome component to the made-to-order drink, says Ben Weiss, CEO of Boosta Shot Energy Mix. The liquid mix has a neutral taste that can be added to any handcrafted coffee drink. Customers like the customization and freshness they can get from adding an energy shot to the espresso drink of their choice, he says. The drink carries particular appeal to a young demographic of people who enjoy extreme sports. That segment is growing up and may be seeking an alternative to traditional energy drinks like Rockstar or Red Bull.
Many shops opt for creative ways to utilize the shots in their drinks. “Lots of retailers serve it as a shooter: You put 3/4-part Boosta Shot with 1/4-part syrup. You can really have fun with the shot,” Weiss says. And he agrees with Clayton that profit margins for energy add-ons are wide. “The cost of a Red Bull can is $1.25 roughly,” Weiss says. “Well, in 3/4 ounces, you can deliver the same boost of energy, but for only 25 cents to 27 cents.”
The Daily Grind Café in Pueblo, Colo., offers “white lightning” espresso as an additional energy boost, but no add-ons such as protein powder or Boosta Shot. Given the slow pace of the café’s historic downtown location, co-owner Charles Sole says there is no need to offer add-ons. “If we were in some place like Seattle or Denver where a lot of people were coming and going, I definitely would carry something like that,” Sole says.
Teal says that his Bev-Rev product, which has been on the market for about a year, is finally taking off. It’s an easy sell—no matter what the customer orders, baristas just ask if he or she needs an extra boost. “There’s nothing better,” he says, “than something that can be an add-on for every drink they sell.”
Coffeehouse operators should add RTDs for another reason, Rosen says: to compete with a rather inconvenient competitor. At many convenience stores, the food, the RTD beverages and even the quality of the coffee have all perked up noticeably, he says, and people will often get a cuppa joe while filling their gas tank. Rosen says coffeehouse retailers need to fight back and add something the convenience store sells: ready-to-drink beverages. “They could either do that or start putting gas tanks in front of their shops.”
Another smart way to compete with the mini-mart: energy mix-ins. Sure, you can simply offer the same canned drinks that customers find at the 7-Eleven. You can even blend a Red Bull with a juice drink for the energy boost. But if you do that, “You end up with a watered-down, not-very-good-tasting energy drink,” says Darin Teal, founder of Gosh That’s Good! and longtime coffeehouse owner. Rather than go where many a convenience store has gone before, Teal created Bev-Rev Energy Mix-In, the coffee industry’s first such flavorless product. Baristas can add Bev-Rev to any drink of the customer’s choice, hot or cold. Consumers get the same energy boost as they would from a Rockstar Energy Drink at a fraction of the cost.
Most coffeehouse operators charge 50 to 75 cents for a shot of Bev-Rev, while customers are accustomed to paying a few dollars for a canned beverage that generates the same results. Profit margins are also miles apart: An RTD energy drink costs about 85 cents to $1 wholesale, while Bev-Rev costs between 12 to 25 cents per shot. Plus, it’s in a made-to-order drink, where customer loyalty is most readily built. The appeal of Teal’s product comes largely from the fact that it can be tied in with a drink that the customer wants. If she wants a hot chocolate but still needs caffeine, she can have her drink and feel it, too. “There’s such an unlimited array of flavors they can get,” Teal says. “They don’t have to be tied in to drinking Rockstar every day.” Teal says another innovative way for a coffeehouse to use Bev-Rev is by creating a house drink. “The best thing to do is to come up with your own energy drink, call it a catchy name and make your own signature energy drink,” he says.
ENERGY DRINKS AN ADDED BOOST
But with people seeking energy from a can any way they can get it, RTD coffee and tea selections aren’t always enough. Now a $6.6 billion industry, energy drink sales shot up by nearly 50 percent in 2006, according to beveragedaily.com. This trend is primarily driven by an increasing awareness for health and wellness, according to Michael Bellas, chairman and chief executive of the Beverage Marketing Corporation, on beveragedaily.com.
* Artista Gourmet’s EnERGY + Syrup is an energy-boosted flavoring available in several
* Big Train’s Add-A-Boost is a blend of vitamin and minerals. bigtrain.com
* Caffe D’Amore’s RoBOOSTo is an Italian energy drink with added caffeine. caffedamore.com
* Gosh That’s Good! Bev-Rev can be added to any hot, cold or blended beverage to make it an energy drink. goshthatsgood.com
* Oregon Chai’s The Energy Chai Super Concentrate adds common energy drink ingredients to its chai brand. oregonchai.com
* Princisco’s Boosta Shot, a “botanical-based” energy mix, can be added to any beverage.
* Shock Coffee’s hyper-caffeinated coffee is its own energy drink, billed as having 50 percent more caffeine than other coffees. shockcoffee.com
Another potential factor is the need to squeeze in more and more activities, speculates Sharon McPhetridge, co-owner of Friends Espresso in Prineville, Ore. “I think people are so busy they forget to eat and they need something to pick them up,” she says. “It’s a quick fix, it’s fast, and they like the feeling of them.” McPhetridge doesn’t offer energy drinks at her coffeehouse, but she and her partner do offer them at their other business, Prineville Athletic Club. They sell Gatorade’s Propel Fitness Water, G2 (Gatorade’s low-calorie offering) and XS Energy Drink. They’ve considered offering the energy drinks at Friends but just “haven’t gotten around to it yet,” she says.
Consumer demand is what led Teal to create Bev-Rev when he noticed the trend at the Gosh That’s Good! retail store. “We talk to end users, the guys with drinks in their hands,” he says. “It was really obvious early on that these energy drinks were [becoming popular].”