Sales of dispensed beverages in 2024 are gaining share on packaged beverages after consumer behavior due to the COVID-19 pandemic spurred a shift that benefited the latter. Don Burke (pictured), senior vice president at Pittsburgh-based Management Science Associates Inc., shared this information with convenience-store retailers and suppliers at CSP’s 2024 Cold Vault Forum in Schaumburg, Illinois.
Dispensed beverages, hit hard by health-safety concerns during the pandemic, have started to regain popularity the first quarter of this year, with 52% of sales coming from this category compared to 48% in packaged beverages in convenience stores, Burke said. By comparison, dispensed beverages were 44% of share in 2022’s first quarter and packaged beverages were 56%.
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Total beverage dollars in the convenience channel are down 2% so far this year, driven by a 9% decrease in packaged beverages. Total packaged beverage dollars, including fluid milk, have continued to decrease each month since February 2023. Meanwhile, dispensed beverage dollars are up 6%, Burke said.
Packaged beverages have an advantage over dispensed beverages, Burke said, because “you only have so many dispensed beverages that you can provide to customers,” Burke said. “With packaged beverages, and this is actually one of the strengths of this category, you have the opportunity to go with some of the smaller manufacturers and in many cases, it’s the smaller manufacturers that are innovating more than the major manufacturers today and are bringing up flavors and everything that consumers are looking for.
“You’ll find that's a real strength of this category,” Burke added. “It’s something you need to leverage going forward.”
How those new products are displayed is also important. In the cold vault, it’s very difficult for consumers to find new products—or harder than it is on a regular shelf, Burke said.
“You have to feature the new products you’re bringing in, not only in the mobile [app] but also try to put them near the cash register so customers see them,” he said.
The top 10 manufacturers account for only 45% of total packaged beverage dollars compared with 74% of total dispensed beverage dollars in convenience.
Here's how the segments in packaged beverages performed in the convenience channel:
- Of the top five packaged beverages (excluding fluid milk) subcategories, all are down more than 8% in 2024’s first quarter. The only subcategory that enjoyed a positive year-over-year percentage change in 2024’s first quarter is enhanced water, at 3%.
- Juice/juice drink dollars have continuously decreased each month since January 2022.
- Ready-to-drink iced tea dollars were up all of 2023, with 2024 dollars showing signs of continued growth.
- Dollars for carbonated soft drinks and energy have continuously declined each month since late 2022, with some months dropping more than 25%.
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