Canadian Vending

Features Equipment Technology
Niche Products Could Mean Profits

Consumers view chilled drinks as more valuable and fresh


March 31, 2008
By Cam Wood


Topics

As North American culture shifts from the values and lifestyle of
yesterday, the changing landscape of society means beverage companies
must continually tweak and refine their marketing approach.

As North American culture shifts from the values and lifestyle of yesterday, the changing landscape of society means beverage companies must continually tweak and refine their marketing approach.

“Companies have moved away from the idea of a target core market to a broader demographic,” said the Beverage Marketing Corporation’s Gary Hemphill.

“Consumers’ lifestage needs and attitudes are creating more opportunities for focused products and brand targeting.”

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Last month, Canadian Vending reported on Hemphill’s presentation at the NAMA Spring Expo, and three beverage categories that are enjoying phenomenal growth. There are some beverage categories, aside from carbonated soft drinks, that vending operators must take a serious look at, and monitor their own consumers’ reaction.

As such, Hemphill said, more and more niche beverages are emerging. And the consumer is thinking more about their “need” for a beverage, above their “desire.”

This redefinition is likely to impact every aspect of the beverage industry, and is likely to complicate the business landscape for vending operators. Hemphill believes underneath the huge challenge facing operators, with the decline in carbonated soft drink consumption continuing, there is an opportunity for success.

“A lot of innovations have come as companies have seen consumer interest in new beverage categories,” said Hemphill. “Innovation that is geared to the functional benefits of the category.”
One category that he identified as needing some innovation is that of fruit beverages. The category has been weak in recent years, mostly due to pricing and the perception of natural sugars being just as harmful as added sugars. However, recent studies have shown that perception to be inaccurate.

“But the consumers view chilled drinks as more valuable and fresher,” Hemphill said, as a selling point.

And while schools and government facilities have targeted carbonated soft drinks, a leading replacement has continued to suffer through lacklustre performance – milk.

“What has happened is that marketing has worked to level off the category performance, but there is no growth. The consumer’s interest in milk is primarily in low-fat categories.”

But all is not doom and gloom in the niche categories, Hemphill said. One particular area should be examined closely – especially with the arrival of warmer weather: ready-to-drink
beverages.

While ready-to-drink coffees have suffered through bouts of innovation and product failure, ready-to-drink teas boomed by 26 per cent last year.

“These are positioned well for today’s lifestyles and the market,” said Hemphill. “We have seen, and continue to see, consumers’ interest increase.”o