The rise of the drinks machines

With more than half of coffee drinkers choosing to buy their drinks from a machine rather than from a coffee shop (One Poll Buzzbites Report, May 2017), drinks-to-go offer c-stores a big revenue stream.

Sid Sidhu, owner of Kenilworth Budgens in Warwickshire, may have picked the perfect time to create a new coffee bar area in his store. He opened the area in May and since then coffee-to-go sales have “gone through the roof”, Sid reveals. “They are probably up about 40% since we brought in the new seating in May.”

Customers can get a drink from a Rijo42 machine, sit at a table to drink it, and use the in-store wi-fi.

The seating area was a big investment for Sid, but he is confident it is paying off.

“All in all, it’s cost us about £16,000,” he says. “The area is used by regular customers, tradespeople and even the local postie. They can come in and sit in our nice air-conditioned store rather than having to eat on the go in their cars.

“The area has been good for food sales,” he says. “We’ve also found that people are buying more newspapers as they want something to read while they have their drink.”

Mahmood Saleem, owner of Ardeer Services in Ayrshire, sites snacks next to his range of dispensed drinks to make sure he makes the most of traffic to the hot drinks machine.

“Next to the Costa machine we have cakes, croissants and pastries that are all made in-store,” he says. “Just putting the coffee and the baked goods together creates additional sales.”

Mahmood’s forecourt store has two main coffee points, including one Costa machine and a second within his Subway concession.

He believes these big brands help bring people in and offer good profits, which is vital for retailers as the coffee market continues to grow.

Simon Baggaley, Nescafé beverage solutions category manager at Nestlé Professional, agrees. “The trend for on-the-go beverage options is as strong as ever,” he says. “Our research shows that of the 53% of consumers who buy coffee on the move, one in five purchase their travel-friendly beverage from convenience stores, with just 40% buying from a barista.

“With the right machine, independent retailers can offer beverages-to-go with ease,” Baggaley asserts, “while putting them on the map as the go-to convenience store for their customers during their commute. It’s an excellent time to profit from the coffee market as it continues to thrive.”

Duncan Hill, md at HL Display, believes retailers should think carefully about where they position their beverages-to-go unit to get the most from its popularity. He says: “The main drinks-to-go fixture should be close to the entry of a store so that customers spot it as soon as they step through the door.”

It’s not only hot drinks that are bringing in the punters, though. Sid’s updated seating area has attracted lots of new customers thanks to the addition of a Snowshock Frappino machine. “We sell the drinks with a choice of syrups: vanilla, caramel and chocolate are the most popular,” he says. “We can also add fresh cream. We sell them in a large cup for £2, or with the syrup and cream for £2.50.”

Peter Campbell, md for Snowshock, believes iced frappes are becoming more popular, especially with younger consumers. He says: “The value of iced coffee has grown by 18%. The Millennials and Generation Z, in particular, are responsible for driving the trend – hot coffee no longer has the appeal it used to as these generations are looking for new ways to consume caffeine.”

He says its iced coffee Frappino is aimed particularly at the younger generations. “We’ve ensured that Frappino is everything they’re looking for – quality, sustainable ingredients, quick to make with extra luxuries such as edible chocolate straws, and with an added sweetness to counteract the bitterness of coffee.”

Dispensed drinks are delivering strong sales for Andrea Aston in her Save Local store in Colchester, Essex. The store is located just metres away from the town’s bus station, which means staff need to keep their drinks machines, including a fresh orange juice dispenser, topped up from early morning to late evening.

 

She says: “Our orange juice dispenser is very important. It just tastes better than any of the prepared juices.”

So successful is it that the store has become the biggest customer for its local orange juice supplier in the six months it has been open. The unit sits alongside a Costa Coffee machine and close to the store’s Slush Puppie dispenser.

It is the positioning that Andrea believes is so important to retailers when they are deciding whether to add anything new to their beverages-to-go display. “The main thing is that the units are right at the front of the store so customers can see them as soon as they walk through the door,” she says.

“Customers buy with their eyes so if the display looks good then they are going to be more likely to purchase.”

Harris Aslam, owner of Eros Retail – which operates seven Nisa stores in Scotland – has his own self-serve frozen fizzy slush brand, Skwishee, which launched in April.

“In the first three months of introducing the machines we have had an overwhelming response,” says Harris. “We’ve averaged three times higher sales per day than the busiest slush sales ever. Not only that, we also donate 10% of profits to charities providing clean drinking water throughout the world.”

Although the set-up cost is quite high, Harris is generating a 60% margin on each Skwishee sold, with the range retailing at £1.99, or £2.99 depending on cup size. Flavours include: super strawberry; frozen raspberry; lemon & lime fusion; grapes of the Caribbean; pineapple punch; and sour face.

Harris adds: “We’ve built up a great response just simply by using social media and with fun ideas such as edible straws,” he adds. The Skwishee straws are made from sugar and cost an additional 30p.

He is also looking to expand the brand, having run a series of in-store events. “We are planning lots more flavours,” he says, “as well as a Frozen Friday bogof promotion and bring-your-own-cup event where customers can get money off for using a reusable cup.”

 

Plastic waste

The beverages-to-go market does have its challenges, however. Concerns over plastic waste could lead to a ban on plastic straws and even a tax on the sale of disposable plastic cups.

Starbucks announced last month that it is rolling out a 5p paper coffee cup charge across all 950 of its UK stores following a three-month trial in London.

Mahmood is keen to embrace the change but says it is proving difficult to find suppliers that can provide more recyclable alternatives.

He says: “The effect of plastic is something we are concerned about, but at the moment there aren’t enough suppliers that can provide us with the right alternatives to disposable cups and straws.”

It’s an area retailers will have to keep an eye on should they want to keep taking away hot profits from takeaway drinks.