Business on beverages

  • Beverages are a profitable product
  • Why installing outlets with beverages is profitable for retailers
  • Which drinks to sell in chains
  • Beverage outlets – a profitable way for retail

Trying to outperform competitors and meet market requirements, many retailers try to satisfy as many consumer demands as possible in one place. That is why many large retailers open corners with coffee and other beverages, as this is one of the basic human needs. Why such innovations are necessary and what benefit they bring to retail, we will tell you in this article.

Beverages are a profitable product

The first ideas about selling drinks and snacks in large chains started 15 years ago, when in the USA, coffee to go outlets started to be installed at petrol stations and retail shops, says Alexander Shubin, Managing Director of MyRetailStrategy. Now this trend is actively developing in Russia too, as according to the research of many chains that have already installed coffee corners, it attracts additional traffic and stimulates sales of basic products. 

The choice in favour of coffee and other beverages is not accidental, as it is a key human need. Such a product as beverages remains popular among people of all ages and never loses demand. 

The high demand is also confirmed by statistics of consumption of various beverages in the world. Over the past year, the entire world population drank at least 460 billion litres of bottled water, 289 billion litres of tea, 246 billion litres of coffee, 234 billion litres of carbonated drinks and 55 billion litres of juice products. 

On this, the growth of soft drinks consumption will continue to grow. According to Mordor Intelligence, the soft drinks market will show a compound annual growth rate of 4.7% during the period from 2021 to 2026.

Therefore, beverages always remain a relevant product with high demand. At the same time, takeaway beverage outlets help to satisfy the need of customers who prefer to take a drink in a cup on the go more and more often.

If the popularity of takeaway drinks is clear, what benefit does it bring to retailers who install such outlets in their chains? 

Why installing outlets with beverages is profitable for retailers

Despite the fact that the core business of large retailers may vary, many of them are starting to install and develop the service of “coffee to go” in their outlets. This trend is due to the fact that beverage outlets have their own benefits that help to develop business and increase customer loyalty. Let’s consider what benefits a small coffee shop or beverage station can bring. 

Improving the customer experience

As mentioned earlier – many retailers are trying to cover as many customer needs as possible in one place. And as the demand for takeaway drinks grows, so does the need for customers to grab a tasty drink somewhere nearby. So, with self-service coffee shops, retailers can easily fulfil this customer need. 

For example, when customers go shopping in a grocery shop, they can enjoy a natural and aromatic coffee, which helps to improve the shopping experience as a whole. So in this case, beverages for customers are an additional service that has a positive impact on customer loyalty and helps create more pleasant shopping experiences. 

Smart coffee shop

Increasing traffic

In addition to creating a favourable shopping environment, retail beverage outlets also work well as a lead magnet for new customers. According to research, the simplest coffee vending can increase the flow of customers in a shop by at least 1-1.5%.

When customers come in to buy coffee or any takeaway beverage, they are also faced with the goods and services provided in the shop where the beverage outlet stands. And while the coffee is being prepared, they may have a desire to buy something else. For example, if the coffee shop stands in a grocery shop, the client may remember the need to buy some products or take some food with the coffee. So, in Azbuka Vkusa, according to Dmitry Salavatov, head of the Cafeterias business area, coffee zones help to attract new visitors and familiarise them with the range of ready meals. Therefore, beverage outlets can provide retailers with new traffic.

Also, according to the Shchegol barbershop chain, thanks to coffee shops in their outlets, they have discovered a new source of traffic. Coming just for a coffee, some visitors made the decision to get a haircut.

Therefore, the benefit is obvious: good coffee and quality drinks will always attract new visitors who may be interested in other goods and services. Also, thanks to good drinks, customers can run word of mouth, which will have a positive effect on increasing traffic.

Increase of average cheque

A separate benefit that a beverage outlet can bring to retail is an increase of the average cheque. 

Making purchases in a shop, a customer may potentially be interested in drinks that, for example, are sold in a nearby coffee shop. According to Mikhail Burmistrov, General Director of Infoline-Analytica, a cup of coffee on average increases the amount of a cheque in a grocery shop by 25-30%. For example, the average cheque in an average grocery shop may be 350 roubles, and the client will pay at least another 100 roubles for coffee, which will bring an additional benefit.

Also, increase of the average cheque with drinks can also work in the opposite direction by stimulating extra sales. If a person knows about the tasty coffee in the shop, they may buy other products and services when they come in for it. If retail chains associate customers not only with a wide range of products but also with quality drinks that can be taken away, then they will have an incentive to visit the shop more often and increase their average cheque through spontaneous purchases. 

Growth of sales

One of the key benefits that will give retailers installing takeaway beverage outlets is an increase of sales and final profits in shops.

To begin with, it is necessary to note that coffee, and any other drinks, is a profitable product for sale. The cost of one cup of drink is on average 30-40 rubles, and it is sold at 2-3 times the price. Therefore, the final markup can be as much as 300%. And if we take into account the high demand for takeaway drinks, such outlets can bring substantial additional profit to the retail industry.

Furthermore, according to various studies conducted by grocery chains and other retailers, shops with coffee outlets inside show an average sales increase of 10-12%. In other words, drinks that are additionally offered to customers are in demand and help to increase overall sales. For example, in the shop “Zorka and Milka”, sales of coffee in coffee shops installed inside account for 20% of the chain’s monthly revenue. And in Vkusvill, coffee makes up 6.5% of the total turnover, and sometimes this figure reaches 10%.

So, with the correct placement of a beverage outlet in a retail store, companies can expect to see a significant monthly increase in turnover.

Which drinks to sell in chains

At the moment, among many retailers, there is an increasing tendency to install coffee zones in shops. This is due to both the growing consumption of coffee among the population and the increasing popularity of the coffee-to-go format.

However, coffee is not the only beverage that has a high demand. In addition, coffee can be described as a seasonal product, as its consumption on hot days is reduced and cold drinks are preferred. 

That is why a new trend is now increasingly developing – outlets with various takeaway drinks. Such outlets, similar to self-service coffee shops, take up a minimum of space and can be located anywhere, even in the smallest shop. The distinctive feature is the variety of drinks for any season and any customer need.

One existing example is Multi-beverage technology, which was developed by i-Retail. This technology allows to pour different beverages through a single dispensing node, including:

  • Coffee
  • Filter coffee
  • Cocoa
  • Tea
  • Lemonades
  • Fruit drinks
  • Water

This technology has a number of advantages that will be a plus for any retailer:

  1. Eliminates the problems of seasonality

A wide range of beverages allows to keep sales at the same level and satisfy the needs of consumers all year round, because in hot weather customers will be able to drink cold drinks, and on cold days to warm up with hot coffee or tea.

  1. Suitable for various business areas

The distinctive feature is that this technology can be presented in a variety of designs: from desktop versions, to robotic kiosks. 

  1. Space optimisation

Despite the wide range of beverages available, the equipment does not take up a lot of space and does not require additional space to prepare each drink.

  1. Reduces pouring and maintenance time

Specially developed technology and equipment allow you to pour any beverage in a minute and reduce service time by 10 times

  1. It has specialised software

All outlets that work on Multi beverage technology have specialised software that not only allows you to have full control of the operation, but also has many advantages: a powerful marketing module, loyalty system, online monitoring, reports and more.

Beverage outlets – a profitable way for retail

So, installing takeaway drink outlets is a good way for retail to communicate with customers and expand their business, as it has a number of significant benefits:

  • Growth of sales
  • Increase of average cheque
  • Attraction of new customers and traffic growth
  • Loyalty increase

Moreover, thanks to new technologies such as Multi beverage, new opportunities are opening for retail to attract and retain customers not only with coffee, but also with various other beverages to suit all tastes. And as beverages will always remain a relevant product with high demand, this is a great direction to improve the business to suit the needs of consumers.

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