Convenience stores concerned about their hot beverages section being hit by the credit crunch can count on niche teas to lift their spirits. While overall the hot drinks category is down 1.9% annually in convenience stores, according to AC Nielsen January figures, Fairtrade and specialist hot drinks are bucking the trend.

Tetley's Green Tea and Redbush have seen remarkable growth, up 10.4% and 20% respectively. Tetley customer marketing controller Simon Attfield claims that Tetley Redbush now has a 48% share of Redbush sales in the c-store sector.

Furthermore, those shoppers who have bought into Fairtrade and organic lines appear to be sticking with them. According to Gina Overton, shopper marketing manager at CaféDirect, the total Fairtrade hot beverages market in convenience is up 35%.

The strongest performers are Fairtrade roast and ground coffee, up 177%, and Fairtrade hot chocolate, up 22%. But instant is also holding up well. Cafédirect's Classic Blend 100g is up by 19% in volume and 8% in value, says Overton, while its Organic Decaffeinated Instant is up 3% in value and 2% in volume.

"Given the continued accelerated growth in Fairtrade hot beverages there is clearly an opportunity for retailers to cash in. These latest figures are typical in a recession, where sales of premium lines do well as consumers opt to entertain at home," Overton says.

Other major brands keen to push their ethical stance have also been reaping the rewards. Last year Kenco heavily promoted its work with the Rainforest Alliance, which encourages sustainability in coffee growing regions.

According to Jack Pipe, convenience sales director at Kraft Foods, this initiative has paid real dividends, helping the Kenco freeze-dried portfolio grow by 9.8%. Kenco is currently running a number of price promotions through the convenience channel across its Kenco Rich Roast and Smooth Roast variants, which are available in limited-edition £2 pricedmarked 100g jars.

Good value may be important at the moment, particularly as the multiples are pushing hard on price, but it is clear that for today's consumers choice is also vital.

According to Attfield, convenience retailers really need to keep a close eye on how the likes of Tesco Express and Co-op are approaching the hot beverages category given the economic crunch.

"C-stores should go and take a look at what their competitors are doing and see for themselves exactly how much space is being given over to the category. Grocery is still being squeezed on space, but if you go into Tesco Express or Co-op you'll see three shelves or one entire bay given over to tea there," he says.

The critical thing for c-stores, says Attfield, is getting what he describes as the 'value equation' right. That equation means firstly making sure you stock the right range, then making sure the customer knows you stock it and, finally, making sure the customer feels they are getting value for money - even if they are paying more than the local supermarket.

The perfect fit

Limited shelf space is, of course, a major issue for c-stores, but retailers, it seems, could be losing out by being too unadventurous when it comes to hot drinks.

Overton says that there is still reluctance among some retailers in the independent sector to stock Fairtrade products, but she believes they are definitely missing out on sales as a result.

"Limited shelf space will remain an issue and Fairtrade is more expensive, but the latest figures should convince retailers that there has never been a better time to stock Fairtrade. We've recently launched Teadirect tea bags in packs of 40s, which gives consumers a low entry point into Fairtrade and takes up less shelf space."

She adds that all Cafédirect products are now available in sixes and in shelf-ready packaging, proving that the brand takes the convenience channel very seriously.

Slow off the mark

However, Murray Leslie, managing director at Gala Coffee which produces the Lyons coffee brand, isn't as convinced that the c-store channel takes niche brands as seriously as it should. He is a little disappointed that its One Cup Coffee bags haven't been embraced by the channel. The round bags contain 30% Rain Forest Alliance coffee and were introduced to the market just over two years ago.

"The product is performing very well - we're currently enjoying like-for-like sales growth of 20%," says Leslie. "However, we are a little surprised that not all convenience store chains have taken the product on, as it really is an ideal product for the convenience store shelf."

He says that many of the firm's customers are actually instant coffee drinkers who try it out as a 'safe and easy' venture into real coffee. "Once they taste the difference, they're hooked. This is great for the retailer from a value and margin point of view given the slightly higher cost per cup."

The potential for premium and speciality brands within convenience is also being reflected in the growing number of manufacturers in this field developing SKUs specifically with the impulse channel in mind. Twinings, for example, launched its Options Café Coffee at the end of last year and has been delighted with initial sales. "Its sachet format makes it particularly suitable for impulse," says Twinings sales director Neil Manders.

"We are investing in developing channel-specific SKUs that will further grow this area of the Twinings business. For instance, for Ovaltine we produced 50% extra-free packs exclusive to the convenience channel and continue to work closely with operators to ensure they offer the right range to their customer base."

Splashing the cash

It seems that across the board some of the category's biggest brands are reaching deep into their marketing budgets in the face of recession, rather than cutting back.

In October last year Horlicks underwent the biggest brand overhaul in its history and introduced its new pillow-shaped packaging designed to promote the product's sleep-inducing credentials. GlaxoSmithKline Nutritional Healthcare is currently investing £2.5m in a Horlicks media advertising campaign across IPC's magazine titles, where consumers will receive a free three-month magazine subscription when they buy two specially marked promotional packs of either Horlicks Original, Horlicks Light or Extra Light.

Organic and Fairtrade brand Clipper has just undergone the biggest rebranding exercise in nearly 10 years and all packs have been completely redesigned.

"The rebrand was part of our total brand repositioning," says head of marketing Gill Hesketh. "We asked tea drinkers what was important to them and, unsurprisingly, they told us it was all about taste. We were confident we had a fantastic blend, yet weren't communicating that on the pack."

She adds that people don't have to pay extra for ethics when they buy Clipper as it is similarly priced to PG Tips and Tetley, and she sees the convenience channel as key in giving consumers a Fairtrade and organic choice in store.

"Our convenience business is extremely important to us. We need to be available when someone has run out of Clipper tea and has to dash out for a top-up."

She says that the company's core range for convenience is Clipper Pure Green Tea, Fairtrade Everyday and Organic Everyday. Its coffee core range is the 100g Fairtrade Organic Instant Coffee and 100g Fairtrade Organic Decaf Instant Coffee
ones to watch...

Fair ways

Jacksons of Piccadilly is launching the Definitive Colombian Excelso Fairtrade Coffee. The firm has also added Sencha Green Tea, Sencha Green Tea with Lemon, and Sencha Green Tea with Mint to its Fairtrade range.

rrp: coffee £3.75; tea £1.59

tel: 01264 648181

Purple passion

Soft drinks firm Nichols has been celebrating an increase in Vimto sales. Consumer research revealed that people are adding hot water to the cordial and drinking it as an alternative to tea and coffee during cold weather.

rrp: 725ml £1.45; 1.5ltr £2.39

tel: 01925 220122

Back to black

Kenco's premium Carte Noir brand has seen 10% value growth year on year. The rise is due in part to café consumers cutting back by drinking at home, Carte Noir is available to convenience retailers in a case of six 100g pricemarked jars.

rrp: £3.39.

tel: 01242 236101

That's hot!

Nestlé's Skinny Cow hot chocolate is currently sponsoring Paris Hilton's British Best Friend series on ITV2. "This hits our target audience right on the bulls-eye," says Nestlé UK trade communications manager Graham Walker.

rrp: £2.79

tel: 020 8686 3333

In good taste

Clipper has rebranded its products in a bid to emphasise their taste, in addition to their ethical values. The company claims to have launched the first Fairtrade tea back in 1994 and claims to be the number-one selling Fairtrade tea brand.

Tel: 01308 863344
Big spender
Nestlé is set to spend a whopping £24m on Nescafé in 2009. The first phase of the spend was the relaunch of Nescafé Original with an improved, intense flavour. The new version hit shelves in February, supported by a £3m marketing campaign.

Trade communications manager Graham Walker says: "Not only will this reinforce the iconic status of the brand, it will benefit the coffee category as a whole. Brands tend to come into their own in a recession. Consumers know that value isn't necessarily about price and for this reason you find that brands do particularly well out of times like these."

Meanwhile, Nestlé's Skinny Cow recently signed up to a £1.7m media campaign. "Hot chocolate as a category is doing well and is up 11% in convenience, so it is an area where convenience retailers really have a big opportunity."
retailer opinion

Nigel Owen

"Our hot beverages are doing well right now. Fairtrade hot drinks have really picked up over the last six months. Some lines have doubled in sales, such as our Cafédirect coffee.

"PG Tips and Typhoo loose teas are a hit with our elderly customers.

"The flavoured teas are also starting to sell. We currently do two flavours of Twinings tea, but we're looking to double that."

Nigel Owen, Londis, Malpas, Cheshire

Roger Rawlings

"Hot drinks are selling steadily in my store. Our best-seller is 40 Tetley tea bags for 99p. Even though at £1.89 the

80-pack is better value, customers like to buy a box for under a pound.

"My slowest seller has been the 59p Fresh Brew, which is our economy option. It is usually bought in the morning by workmen, but it's not selling as well as it should, so I'll switch to a different economy brand soon."

Roger Rawlings, Skellow News, Doncaster