The C-store Perspective on Beverages

Convenience stores are a major channel for beverage sales because they generate high volume and present a unique opportunity to launch new products. Todd McFarland, category manager for beverages at Exxon Mobil Corp, Fairfax, Va., spoke to P-O-P Times about trends in beverages and the company's approach to in-store merchandising. Exxon Mobil operates 335 On the Run convenience stores nationwide and is continuing to convert its existing outlets to the format.P-O-P Times: Describe the current environment for packaged non-alcohol beverage sales in convenience stores. How do you determine what to carry?McFarland: In our retail environment, we manage limited space. The customer is driving product selection within the store, and it's our job to satisfy those requests from the customer. As the customer becomes more aware of product through advertising, trial opportunities and overall marketing, the consumer demand for that product increases. I determine what products we will sell by ascertaining the consumer demand.We look at industry trends and product availability, from macro to specific market opportunities. Red Bull is a great example of how this works. It's not yet in full national distribution -- it started on the West Coast and progressed through the market. The product is out in front of the consumer and the company uses the media to drive awareness market by market. As awareness increased, they created a subcategory and we need to support that. The manufacturer drives awareness, and I satisfy demand.P-O-P Times: What types of products are hot right now?McFarland: Anything you drink that impacts the way you feel. If you can feel it, we can sell it. We're now in the second coming of the energy drink, the second phase where the segment is defined and viable, distribution of the leaders is increasing and awareness is significant. Themarket continues to broaden based on the success of Red Bull and "me-too" products, but it will shake out this year.Also, brands like Mountain Dew Code Red that are appealing to a younger consumer, offer drinkability and are higher caffeine, lower carb with a higher sugar count. SoBe also continues to do a good job with driving youthful, edgy brands. Snapple Elements jumped into the energy arena, and is capturing that opportunity. Of course, you still have Coke and Pepsi trying to figure out how to re-energize their brands, and both are doing it now with lemon. There's a lot to the idea that everything old is new again. Right now, the market is an interesting combination of the nostalgic and the cutting edge.P-O-P Times: What's your approach to merchandising beverages in-store?McFarland: Even with everything going on trend-wise, it's a basic business. In simplest [merchandising] terms, you have to be in-stock with the right product your customer wants and have it where they want to purchase it from, based on how they shop our stores. We do market research and we know they want limited clutter and noise on the floor.A strong direction is the idea that every time you drink something you want to eat something and vice versa. So, the hungry/thirsty aspect could be addressed because it takes care of a known customer decision process. The industry success stories about co-promotions between snacks and beverages are there. The challenge is implementing it into your format, taking into consideration available space and the number of messages you can convey and still avoid clutter.Point-of-purchase merchandising conveys the quality of a brand. If the P-O-P is not high quality, it indicates to me that the brand is not high quality. I'm looking for a consistent visual message I can convey across all in-store locations, and I want to take advantage of the manufacturer's investment in developing a brand. It all goes full circle back to the idea that they drive awareness and I support the brand.P-O-P Times: What are your criteria for accepting in-store materials?McFarland: We consider elements such as the visual aspect, efficient use of space and ease of assembly. If it's difficult to put together, it won't be put together. Simplicity is key. We like repetitiveness -- if we've used that system of assembly before, then we don't have to re-teach our store staff.P-O-P Times: What's your message to beverage marketers regarding in-store display pieces?McFarland: Don't be afraid to challenge the existing boundaries. You're promoting an industry that's been around for 100 years. It's not a really complex industry, but the challenge is keeping it fresh, alive and new. Strive to make what's old new again -- I don't see enough of it, there's too much "me-too" stuff. I keep hearing, "This is what we did last year. Here's the same piece this year." If it needs to make noise, flash, convey sound or interact with customers, make it do it. If your research shows that my customer identifies with these things, then do them, because it will help us sell more. You have the research, but I'm not seeing a lot of research-backed P-O-P pieces.

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