Channeling juice, non-carbonated drink growth into mass retail

Drug Store News, Oct 9, 1995

When it comes to sales of non-carbonated beverages, the mass market retail industry has turned on the juice.

In a beverage survey conducted exclusively for FM, the percentages of households that reported buying juices and flavored iced teas at discount department stores, warehouse clubs and drugstores increased dramatically since last year.

For example, at discount department stores during the year, the percentage of people buying bottled iced teas quadrupled, from 2% in 1994 to 8% in this year's survey, while the percentage of people buying juices increased by 10 percentage points, to 23% of the 450 randomly selected households.

"Probably not unlike most companies, we recognize the importance of mass discounters, and we try to develop plans for new products accordingly," said Mike Bach, managing director for Coca-Cola Foods, maker of Minute Maid juices and Hi-C fruit drinks.

Coca-Cola's research indicates that total category juice and juice drink sales at mass market retailers increased 19.3%, while juice sales at supermarkets grew only slightly, increasing by 2%, according to Bach.

"When you see those numbers . . . you want to be a part of that business," Bach said. In what was partly a response to this trend, Coca-Cola introduced a six-pack of new 7.7-oz. cans of Hi-C earlier this year. "They were immediately well-received by the mass trade," Bach said.

He said that while many "grocery stores dragged their feet," most major mass retailers have been behind the new Hi-C cans since they were launched. "They just jumped on them," Bach said.

David Covitz, vice president and gmm of hard lines at Ames, said the new Hi-C cans have increased sales of all juices merchandised on the shelf. But Covitz added that juices and iced teas sell much better when served cold in refrigerated cases at the front of Ames' stores. Ames mandates that each store must have at least one refrigerated case, but if space allows, many district managers add more cases. Covitz said the refrigerators spur impulse sales and help maximize sales-per-square-foot totals.

There are many players in the convenience-type beverage industry, like Snapple and Arizona, that have national prominence," Covitz said. "They are seen as a snack-type food, which the mass merchants have been involved with for quite a while, and customers are very comfortable buying them from us."

Bach said he feels the increased sales of juices and other non-carbonated beverages are a result of mass retailers focusing more on those drinks.

"You can't go in and out of a Wal-Mart, Target, Venture, Kmart or Caldor store and not see a juice or juice drink in an ad or in a display.

"Mass market consumers are very familiar with brands, and when they see a good value, they're going to stock up," Bach said, noting that shoppers buy a higher volume of beverages when they buy them at a discounter.

Other interesting findings from the FM survey related to non-carbonated beverages were:

* Nestea and Arizona iced teas gained in popularity since the 1994 survey, at the expense of Lipton and especially Snapple, which fell 10 percentage points in the survey.

* Minute Maid continued to pack the most (fruit) punch in the juice category, but was only one percentage point above Tropicana, which was mentioned by 14% of the surveyed households as the preferred brand, compared to 11% last year.