Whether reviewing your hot drinks range for shoppers buying to drink at home or straight away, you need to cater for the latest trends. Olivia Gagan finds out what to focus on to warm up sales
There can’t be many Britons who don’t reach for a cup of tea or coffee at some point during the day – which suggests hot drinks products should be an easy sell for retailers. However, this is a competitive category which is evolving all the time. At home, decaf, fruit and herbal products are competing with traditional black tea and coffee as health-focused drinks grow in popularity. In-store, providing hot drinks-to-go has become a vital consideration, too, as customers increasingly choose to buy takeaway drinks to enjoy on the move. With these trends in mind, how should you manage this category?
Serving hot drinks in a newsagents or a convenience store wasn’t commonplace until relatively recently – but then neither was the presence of international coffee chains in almost every town and city.
Kamal Thaker, of Stop Shop News in Edgware, London, runs a busy 800sq ft store. He bought a Nescafé & Go machine to meet growing customer demand for a hot drinks-to-go offering. “I went for this machine because it wasn’t very expensive to buy and set up – about £150. It has proved to be good value. The machine paid for itself very quickly, and it is now an extra business stream for us,” he says. Prices are modest to differentiate the store from local chain and independent coffee shops, ranging from £1.20 to £1.50 for Nescafé-branded coffees and teas.
Scott Graham, of McLeish in Inverurie, also sells hot drinks-to-go in a town full of small tea rooms and coffee shops. He chose a Tchibo machine and, like Kamal Thaker, opts to keep prices low to beat the competition, pricing below Tchibo’s RRP of £2.10. Even though his customers love a bargain, he has noticed their demands are becoming more sophisticated and says sales can be boosted by offering flavour add-ons and seasonal products. “Hot chocolate is a big seller in winter, and people are now looking to get better value through adding syrups,” he says.
The machine paid for itself very quickly, and it is now an extra business stream for us
Marshall Kingston, senior manager for out-of-home at Tetley, says choosing a branded hot drinks machine works well, because busy customers will look for brands they recognise and trust. For decaffeinated products, where good flavour is crucial, this is even truer. “Known brands and assurance of taste are important across the board, but are the number one priority when considering a decaf drink,” he says.
Once you have chosen your machine, positioning it correctly is key to driving sales. Food to go provider Aryzta Food Solutions supplies Seattle’s Best Coffee machines. Paul Whitely, head of UK marketing, recommends placing impulse food products next to hot drinks machines and changing them through the day. “Shoppers can pick up pastries in the morning then doughnuts or cookies in the afternoon while they wait for their coffee to pour,” he says.
On the shelf
Meeting a range of shopper needs is essential for making the most of your on-shelf hot drinks offering. Tetley’s Marshall Kingston recommends stocking a mix of caffeinated, decaf, herbal and fruit drinks that cater for morning, afternoon and evening. “As the day goes on, the taste and requirements from hot beverages changes. Decaffeinated drinks become more important later in the day, and consumption of fruit and herbal teas increases in the evening,” he says.
Sales of health-focused teas are on the rise, and stocking these can help draw in new shoppers.
“Tea is a really exciting category right now. When we talk to PG Tips drinkers, we see the way they want to enjoy their tea is evolving,” says Noel Clarke, vice president for refreshments at Unilever UK and Ireland. Unilever has responded to changing tastes by launching PG Tips The Tasty Decaf and PG Tips Perfect with Dairy-Free – the former to cater for demands for better-flavoured decaf products, and the latter designed to blend with non-dairy products such as soy and almond milks.
Trends aside, understanding your customer base and meeting their needs is perhaps the biggest key to success. Robert Kirkwood stocks a compact range of pricemarked coffee and tea products in his Fife store alongside an Espresso Essential bean-to-cup machine, which serves hot drinks for a £1. “My shop is near a housing estate, so products and prices are very much dictated by budget. I try not to chop and change the core range on my shelves. My customers expect to see pricemarked Nescafé Original and Kenco instant coffee,” he says.
That said, as the colder months approach, he will bring in a few local products such as specialist teas for Christmas. Tetley’s Kingston agrees that offering a premium or local tea alongside standard brands can draw shoppers in. “Everyday black teas are still a top choice, but at breakfast, a more premium offering such as a breakfast tea is a good bet, too,” he says.
What to stock: Top suppliers tips
Senior brand manager, OOH, Tetley
Top tip With on-the-go, think variety. Offering different teas, coffees and decaf options to cater for different tastes and age groups will encourage sales throughout the day. A positive experience of something new that a customer does not normally drink at home could have a positive knock-on effect for pack sales in store too.
My must-stock Tetley On-the-Go Cups
These branded cups have double walls for better heat insulation. They integrate with sip-lids and drip-free drawstring tea bags for a low-mess cup.
Marketing manager, Lyons Coffee
Top tip Frugal shoppers are more frequently opting to drink fresh drinks at home without the price tag associated with out-of-home coffee. That said, coffee drinkers don’t want to compromise on quality, so consumers are now looking for quality coffee both in and out of the home.
My must-stock Lyons Coffee Bags
These bags are filled with 100% freshly ground coffee, sealed into individually wrapped foil bags. They are designed to be brewed in a cup with boiling water.
Channel controller, Taylors of Harrogate
Top tip We’ve noticed coffee drinkers are no longer satisfied with poor-quality instant coffee, but still want fuss-free options. Also, fruit and herbal teas have gained a lot of attention recently as consumers are looking for caffeine-free options and widening their repertoires.
My must-stock Taylors of Harrogate Coffee Bags
The bags work just like teabags and are filled with fresh roast and ground coffee in an easy-to-use ‘brewing bag’.
VP for refreshments, Unilever UK & Ireland
Top tip Research conducted by PG Tips found that tea drinkers are struggling to find products that complement specialist diets, such as dairy-free, so it’s important to offer consumers who are changing their diets an option that matches their lifestyle to help increase sales in store.
My must-stock PG Tips Perfect with Dairy-Free
This offers a blend of tea which complements dairy-free alternatives for those with specialist diets.