Healthy fun drinks sell well for nonfood stores - Food Merchandising for Non-Food Retailers supplement

Discount Store News, July 4, 1988

Healthy Fun Drinks Sell Well for Nonfood Stores Soft drink sales are growing in nonfood stores, and so are sales of bottled waters, juices and juice enhanced bottled waters.

Beverage sales in nonfood chains are growing at what buyers say is a steady 10% to 15% rate a year.

Soft drinks, which are used by about 95% of all households in America, are up significantly, buyers say, but they are also reporting dramatic growth in bottled water sales, juice sales and the sales of juice enhanced sparkling bottled waters. Asceptic packs of juices are also doing well throughout the country.

Tea is also selling well in many nonfood chains, and buyers say it seems to have become a year round rather than just a seasonal item. Several buyers said coffee is a good item to promote "when you can get the right price," but they add that it is more of a seasonal item and also a harder category to compete with because food chains price it so aggressively.

Juice & bottled water drinks are hot

Buyers tell Fm that soft drink sales are strong even when they are not being advertised, but buyers also say that one of their hottest new categories right now are healthy drinks: bottled waters, juices, and juice enhanced sparkling bottled waters.

In the last year, chains like Wal-Mart, K mart, Target, Venture, Longs, Walgreen's, K & B, Eckerd, Thrifty, Osco and the Sav On division of Osco, have all done promotions highlighting juices and juice enhanced drinks like Ocean Spray, Welch's, Dole, Motts, Seneca, Treetop, Sundance or Calistoga.

Many of these chains are also generating, what some buyers call "fantastic growth," from the bottled water segment, both with spring water brands like Poland Springs in the northeast and Oasis in Texas and with carbonated brands like plain Perrier and Perrier enhanced with essence of fruit like lime and lemon.

A number of nonfood chains now have bottled water sections in their regular beverage departments, and several are expanding these departments to include new types of drinks like Perrier's Calistoga Sparkling Juice and Stroh's Sundance Sparkling Juice, both of which were launched less than two years ago.

Both Sundance and Calistoga are appealing drinks by themselves, plus they make excellent substitute for alcoholic beverages, particularly the sweeter drinks like wine coolers.

Calistoga is still primarily a regional brand, available just on the West Coast, but Perrier has just launched another sparkling water/ juice under its Poland Springs brand which is available in the northeast.

Sundance, however, is now in national distribution, and Stroh's is giving the brand strong support both in print and on national TV and radio. A company source says the brand's '88 sales could exceed $100 million, which would be very good for an item that wasn't even around two years ago.

New additions to the beverage mix

So far, Wal-Mart has become the first major discount chain to stock Sundance on a permanent everyday basis. Management is also putting Sundance into its Sam's Wholesale Club stores in a special shrink wrapped four-pack case.

Longs on the West Coast now features Calistoga in many of its stores everyday as well as Perrier everyday. Some Eckerd stores in Texas have Calistoga as well as Perrier everyday, and Perrier is in everyday distribution in Peoples and Dart drug as well as in some Chicago and Florida Walgreen's.

The Price Club in San Diego, Calif., also stocks shrink-wrapped four-pack cases of both Calistoga and Sundance everyday, and so does Price Savers in Cincinnati. Sam's Wholesale Club also carries both brands, and there is a chance that Perrier may soon show up in Wal-Mart on an everyday basis. Discussions are underway.

Target and Venture are both promoting Sundance about three times a year and so is Longs Drug, Thrifty and Sav-on, all in California. Drug Emporium, a deep discount drug chain headquartered in Worthington, Ohio, is testing it for everyday distribution in several markets.

This spring, Venture promoted the Sundance four-pack at two for $4. Food stores generally retail the four-pack at between a $2.69 and $2.99 everyday price.

One source said Venture's opening order of about 3,000 cases sold through in a single week-end because of the price. "It was a great price," he said, "and the promotion worked fine as a traffic builder, but the stores made money on it too. We took between a 5% and 10% margin."

The food chains on the West Coast, where the brand and the category originated, give the category an average of about 30 linear ft. in their everyday bottled water department. On the West Coast, many food chains give bottled water about 60 to 80 linear ft. in their stores.

One buyer told Fm that the category is right for todays market. "Everyone is thinking healthy right now," he says, "and everyone is dieting. Many people choose to only drink juice or bottled water when they go on diets, and many others use the juice enhanced drinks as thirst quenchers after they exercise or exert themselves physically in some way. "They're no longer just a West Coast item. They seem to sell well all over the country with maybe a few exceptions like some southern regions and some of the more conservative cities like Detroit."