Drinks brands adapt

31 May 2011

NEW YORK: Pepsi, Coca-Cola and Dr Pepper are rolling out various brand extensions to attract price-conscious shoppers in convenience stores and similar locations.

Tom Greco, Pepsi's chief commercial officer, told the Wall Street Journal it is "aggressively expanding" the reach of 16-ounce bottles, available at 99¢, via this route, as an alternative to the 20-ounce line, costing $1.50.

Elsewhere, PepsiCo has launched products such as additions to the Gatorade portfolio called Limon Pepino, or lime cucumber, aimed primarily at the Hispanic audience.

Moreover, the organisation is running deals covering combined purchases of drinks alongside crisps from its Frito-Lay stable as a method to enhance revenue.

"If traffic declines, you have to get the basket size up," said Greco.

The impetus behind this model results from the greater amount earned per ounce in C-Stores and petrol stations than is typically the case in supermarkets.

Industry title Beverage Digest reported convenience outlets made up 10.4% of soda volume sales last year, a 10.8% slip on 2009.

The American Automobile Association has also revealed that rising gas prices mean 70% of drivers want to make savings on non-essential aspects of travel.

This in turn suggests that developing and marketing new products are vital to securing buyers.

As with Pepsi, Coca-Cola provides a 16-ounce variant of its trademark brand retailing at 99¢, now contributing 20% of sales to the convenience segment.

"The channel is critical for generating new profit," Katie Bayne, Coca-Cola's president, sparkling beverages, North America, said.

Dr Pepper Snapple has also introduced six packs of cans, supplementing the standard offering holding 12 units, in C-stores and petrol stations.

The smaller option commands in the range of $1.99 to $2.49, measured against $4.99 for the larger item.

In a parallel move, the firm sells bottles which are just one litre in size, compared with the regular two litre container, for between 99¢ and $1.19.

David McMichael, Dr Pepper Snapple's vice president of sales to convenience stores and gasoline stations, believes such initiatives can fulfil an unmet need.

"There's still that customer who has four quarters in his ash tray that he wants to scrape together and spend on a beverage," he said.

Data sourced from Wall Street Journal; additional content by Warc staff