Drink it in: The growing importance of beverages on the bottom line

May 10, 2017 | by S.A. Whitehead

One take away from what could easily be described as the "Starbuckian" decade is that the right beverage menu drives traffic. This quite literal revenue "stream" may never have flowed as powerfully as it does today, which is why QSRweb recently posted a few questions about beverage trends to three major players in the industry  — Coca-Cola, S&D and Krystal.

Put simply, customers love to drink, both when they dine and when they don't. The key, however, is that not just any drink will do. Today's diners demand variety galore in beverages that are both nutritious and delicious, while also providing some type of memorable "experience" or even a great story about its origins or properties. 

As if all that wasn't enough, today's imbiber wants it weird, too. So, take that steamy cup of coffee, and put it in the deep freeze, or add something offbeat, tropical or ethnic. In fact —  and many may find this hard to believe —  leave out the alcohol in some of the offerings. But please, don't skimp on style just because that teetotaler or designated driver wants to stay sober.

And that's just the froth on the root beer. To learn more, read on for our three-way conversation with: 

  • Amy Vincent, director, local eating and drinking channel strategy and commercialization, Coca-Cola Company
  • Alice Crowder, VP of marketing, Krystal Company
  • Pam Everett, director of category management, S&D Coffee & Tea

Q: What are the big beverage trends in restaurants today? 
Coke:
Innovation is one of the most significant trends in the beverage industry right now. It is more important now than ever before, as it is the key to boosting incidence and sales. In fact, 66 percent of consumers say that a restaurant that offers interesting food and drink specials would tempt them to try the restaurant for the first time. Millennials in particular are driving the demand for innovation, as they seek out new, creative food and beverage options. 

Emerging beverage categories include specialty iced tea, as the majority of the fastest growing beverages on menus right now is variations of tea. ... Asian flavors, such as lychee and matcha ... green tea smoothies and cold-pressed juice, which is up by 519 percent on menus.

Krystal: We're seeing an increase in mid-morning and mid-afternoon snack occasions, and for these occasions, guests are looking for something easily consumable in their cars. But not just anything will do. Consumers, in general, are looking for high-flavor ... solutions that will help get them to their next activity.

S&D: Major trends in the market include cold-brew coffee, flavored teas, as well as more complex flavor combinations in beverages, often with an ethnic influence. Suppliers are responding to industry trends with ... cold brew coffee solutions ... interesting flavored teas ... and tea and coffee products that are versatile and can be used in applications such as cocktails, frozen drinks and specialty craft beverages.

Who's the typical customer for these types of promotional drinks? 
Krystal:
It really does vary. For example, Millennials love the intense flavor of our Slushies, but we've found that almost everyone appreciates the nostalgia inherent in the Kool-Aid brand. So the drinks have been popular with all ages.  

Our Caramel Mocha Frost has been a hit with guests looking for a mid-morning snack - especially those with a taste for something more indulgent. And our hand-spun milkshakes are a high-quality, decadent treat that span all dayparts and demographics. 

S&D: Generally, we see consumers interested in trying new S&D: flavors and often seeking a connection to their food and drinks. There is a desire for an authentic and unique experience, often connected by a "story" behind the food or beverage. Hence the popularity of origin-specific coffees, farm-to-table menus and family-style dining in many trending eateries and restaurants.

Who's the typical customer for these types of drinks and what are they looking for these days when they go out to eat?
Coke: 
Millennials play a major role in the foodservice industry. ... They are the most willing to treat themselves. Millennials are an especially important audience when it comes to specialty beverages, as they drive a larger share of overall beverage consumption than older generations and are more variety-seeking, drinking 4.3 beverage types a week. 
They value innovation and desire the same taste, ingredient integrity and variety they love in craft beers from carbonated soft drinks. For this demographic, food is more than just "something to eat" - it's an experience. In fact, 76 percent of millennials agree that "satisfying hunger for new experiences is important." Because specialty beverages are considered new, unique and innovative, millennials are drawn to them. 

Additionally, millennials are looking for healthy, functional beverage options that coincide with their lifestyle. Fresh, local and natural call-outs resonate the most with them, with 43 percent of millennials saying they would be most likely to go to a restaurant that uses local foods and ingredients. 

"The average American experiences 22 away-from-home situations every week in which he or she could purchase a beverage or food - that presents restaurants with more than 5 billion situations every week. Only half of those 5 billion situations include a beverage, with food or solo. The other half — when no beverage is consumed — is an untapped opportunity for foodservice operators."

Q: What are the biggest flavor trends for summer and how can restaurant menus use those concoctions to sell more menu items and bring in business?

Krystal: It's all about high flavor and nostalgia with a twist. That's why our Sprite/Kool-Aid Slushies are so successful. They're packed with the Kool-Aid flavor everyone remembers from childhood, but amped up in an ultra-cool, ultra-fizzy concoction that brings something completely new to summer.

Coke: Several emerging flavor trends that are proving to be successful include blackberry, ginger beer, grapefruit, passion fruit and pear. There are also many new varieties on the rise, such as adult sodas (root beer/ginger ale + alcohol), cold brew, almond milk and coconut water. Additionally, fruit flavors are appearing on more restaurant beverage menus in the form of aguas frescas, which often contain tropical fruit flavors, such as guava or tamarind. 

S&D: Generally our research shows that many coffee and tea consumers love the taste of their coffee and tea and... Cold variants of each of these beverages are becoming more dominant in the restaurant customer's purchases. Iced tea is in the top 3 when consumers choose beverages associated with summer, and iced coffee servings in QSR were up 19 percent year-over-year in December 2016. ...

Pineapple, coconut, hibiscus and melon flavors are all trending in tea, and cold brew continues to rise in iced coffee.  We're also seeing the expansion of flavors per beverage where a more well-known flavor element is paired with a trending flavor to create a more complex flavor profile, such as pineapple mango tea or dweet and salted cold brew iced coffee.

How big a market is there for non-alcoholic drinks, particularly in the summer?
Coke:
People are purchasing specialty beverages more frequently than ever before, making the market for these beverages a viable and opportunistic one for foodservice operators. In fact, according to Mintel, 70 percent of consumers are interested in trying new varieties of specialty beverages. 

Additionally, Mintel research shows sales of non-alcoholic specialty beverages are expected to increase 16 percent between 2014 and 2017, outpacing all non-alcoholic beverage growth in foodservice. The trend shows no signs of slowing. ...

In order to capitalize on the growing mocktail trend, operators should identify elements that will make their specialty beverage program obtainable through execution and set it apart within the market. Consumers are willing and expect to pay more of a premium price for a hand-crafted beverage, but it's important to note that recipes do not always have to be complex to be successful. ... One example of a popular mocktail is the Pineapple Iced Tea made with Gold Peak Unsweetened Tea, a splash of Minute Maid Pineapple Orange Juice and one pineapple wedge for a delicious, summer-themed beverage option with just 65-99 calories. 

Krystal: A meal is an experience, and part of what makes that experience complete is the beverage.  The more ... differentiating the beverage, the more it adds to the meal experience, and encourages guests to return. ... A good beverage program has choices that can stand alone ... or complement menu items.  

Can these types of beverages complement or work against the food ordered?

S&D:Generally our research shows that many coffee and tea consumers love the taste of their coffee and tea and choose it to accompany any number of foods.  There is certainly a culinary element to developing flavor profiles that complement cuisine, particularly in tea since it is often ordered to accompany a meal.

Coke: Food and beverage pairings are becoming increasingly important in foodservice for both the alcoholic and non-alcoholic categories. For this reason, we offer a unique food pairing feature ... that allows visitors to select from a number of food categories ranging from barbecue to Asian to desserts. They can then view all beverages - categories and individual products - that pair well with that food type. ...

The first step to a competitive menu is to offer distinctive food, and from that, a one-of-a-kind drink to create the perfect pairing. While beverages account for 30 percent of a typical foodservice operator's profit, they can generate even greater sales when paired with food. The average American experiences 22 away-from-home situations every week in which he or she could purchase a beverage or food - that presents restaurants with more than 5 billion situations every week. Only half of those 5 billion situations include a beverage, with food or solo. The other half — when no beverage is consumed —  is an untapped opportunity for foodservice operators. 

Further, beverages influence outlet choice in nearly half of all away-from-home eating and/or drinking occasions. By offering food and beverage pairings on their menus, operators have a clear, significant opportunity for growth. 

Tell us how your brand's beverage business helps, hurts or just alters your operations and overall success by taking our 10-minute survey. Then watch for the forthcoming comprehensive report on this important business element. 

 

Photo: iStock


Topics: Business Strategy and Profitability, Food & Beverage, Operations Management



S.A. Whitehead

Award-winning veteran print and broadcast journalist, Shelly Whitehead, has spent most of the last 30 years reporting for TV and newspapers, including the former Kentucky and Cincinnati Post and a number of network news affiliates nationally. She brings her cumulative experience as a multimedia storyteller and video producer to the web-based pages of Pizzamarketplace.com and QSRweb.com after a lifelong “love affair” with reporting the stories behind the businesses that make our world go ‘round. Ms. Whitehead is driven to find and share news of the many professional passions people take to work with them every day in the pizza and quick-service restaurant industry. She is particularly interested in the growing role of sustainable agriculture and nutrition in food service worldwide and is always ready to move on great story ideas and news tips.


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