In the bustling world of foodservice, a refreshing wave is sweeping across the landscape: cold beverages are making a splash, setting new trends in consumer preferences and sales growth. Recent data from NACS Magazine, citing SOI figures, reveals an intriguing shift within the convenience sector. While the foodservice category as a whole has experienced a surge in sales and gross profits, a notable divergence has emerged. All foodservice subcategories, with the exception of hot dispensed beverages, have seen year-over-year sales growth. This trend underscores a cooling in consumer demand for hot coffee beverages, a phenomenon not confined to convenience stores alone but also permeating fast casual chains, like Starbucks and Tim Hortons.
Starbucks provided a compelling snapshot of this shift during their Q3 Earnings call last year. Astonishingly, cold drinks now account for 75% of their sales. The company attributed this seismic change to the surging popularity of cold espresso beverages and cold foam, along with the green tea-based Refresher product line. In a swift response to the cold beverage boom, Starbucks expedited the rollout of new cold foam blenders to all U.S. company-operated stores, achieving an impressive feat of agility just in time for the summer rush. Starbucks CEO Laxman Narasimhan hailed this rollout as "one of the fastest...in our history in terms of how it's reached all our stores," underscoring the brand's proactive stance in meeting evolving consumer tastes.
This trend is largely fueled by younger demographics, who crave more engaging, personalized, and expressive caffeinated experiences over the traditional cup of joe. Mintel's research reveals that for Gen Z consumers, cold coffee drinks serve as a "gateway" into the broader coffee market, highlighting the demographic's thirst for variety. Social media platforms, particularly TikTok, play a pivotal role in shaping these preferences, with 60% of Gen Z consumers recognizing TikTok as a vital source of coffee-related information.
This dynamic has prompted foodservice players and convenience store operators to innovate, focusing on blended drinks and flavored coffee offerings to captivate this consumer segment. As the coffee landscape evolves, store operators are reminded of the importance of agility in innovation, balancing the preservation of brand identity with the introduction of new products and in-store experiences.
Reflecting on Starbucks' journey, CEO Narasimhan emphasized the brand's enduring ability to reinvent its offerings and connect with customers, stating, "The Starbucks brand always had an amazing way of finding a path forward reinventing itself and continuing to find relevance with customers over the last 53 years. We have continued to reinvent not who we are, but what we do – and how we connect with our customers.”
This ethos of measured reinvention and rapid responsiveness to consumer trends is noteworthy for the entire industry as it navigates the shifting tides of consumer preferences.
VideoMining’s in-store behavioral analytics and AI tools are capturing and decoding convenience store shopper insights on a regular basis, and offer retailers and CPG brands the opportunity to see for themselves how this consumer shift is playing out in their stores and among their shoppers to support better decisions on cross-merchandising, store planning, layout and design, and more.