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Chilly Profits: Building Sales through Blended and frozen Beverage by Laura Everage

As any cof­fee café owner knows, one of the most impor­tant keys to suc­cess is hav­ing diver­si­fied prod­uct line. No longer is generic ‘Coffee of the Day’ a suf­fi­cient way to sat­isfy a customer’s desire for a great tast­ing qual­ity cof­fee. Even when that cof­fee is hail­ing from a spe­cific farm that is pro­duced in a man­ner that is good for the envi­ron­ment and the peo­ple who pro­duce it.

Aside from diver­si­fy­ing cof­fee and espresso-based bev­er­ages, cof­fee café own­ers have been enjoy­ing suc­cess from the frozen and blended bev­er­age cat­e­gory. In fact, it is now con­sid­ered an essen­tial sta­ple for cof­fee cafes, and why wouldn’t it be, the “frozen bev­er­age” cat­e­gory sales con­tinue to grow, with Mintel report­ing cat­e­gory sales are expected to increase 68 per­cent between 2007 and 2012, with most of that growth occur­ring in 2010.

Planning for Success Across the board from con­ve­nience stores to quick ser­vice restau­rants, oper­a­tors are mak­ing room for frozen bev­er­ages and smooth­ies on their menus. And, what makes it so appeal­ing to café own­ers, is that cus­tomer inter­est is high, and so are prof­its. “Since its incep­tion, the iced blended drinks have always been one of the high­est profit mar­gins in a cof­fee house,” explains Lynn Merriam of Java Frost. “The aver­age mar­gin ranges between 65 and 70% for a $3.50 to $3.99 frozen bev­er­age. And, they have a proven track record for all seasons.”

The chill of February may be here, but now is the time to start think­ing and plan­ning for warm weather months. To make the most of this cat­e­gory, start think­ing about updat­ing your selec­tion now, by test­ing new prod­ucts well in advance of the warm weather. “Don’t wait until the weather changes and then start scram­bling to get your frozen and blended bev­er­age selec­tions final­ized,” says Desiree Mimlitsch, direc­tor of mar­ket­ing for Big Train. “By test­ing prod­ucts ear­lier in the sea­son, you can final­ize your offer­ings well before the sea­son arrives. Through sam­pling poten­tial new fla­vors and frozen bev­er­age com­bi­na­tions, you can get cus­tomer feed­back early enough before the sea­son hits.”

Hot Trends in Frozen Beverages There is no doubt that adding cold, frozen bev­er­ages to the menu will grab the atten­tion of a broader demo­graphic and boost sales dur­ing a sum­mer sea­son. Izzy Griffith, buyer for Visions Espresso reminds retail­ers to be sure to “under­stand your clien­tele and region before you begin to cre­ate your offer­ings.” Just like the cof­fee and espresso cat­e­gory, frozen bev­er­ages and smooth­ies offer café own­ers the oppor­tu­nity to speak to a broad range of con­sumers.” Some like blended or iced bev­er­ages because they are look­ing for indul­gence; oth­ers are look­ing for an indul­gent expe­ri­ence that is a bit less indul­gent on the calo­ries. As for what to offer, Griffith sug­gests to “stick to the best sell­ers, and then pro­mote exotic, sea­sonal and healthy blends to grab the atten­tion of a broader demographic.”

While frozen bev­er­ages made with organic and Fair Trade ingre­di­ents are grow­ing in pop­u­lar­ity, it is the fresh and fla­vor­ful taste com­bi­na­tions that draw con­sumers to the cat­e­gory. “In the spe­cialty bev­er­age indus­try, we see the fresh or frozen fruit is pre­ferred over the pow­der or syrup based mixes,” explains Griffith. “The grow­ing aware­ness of liv­ing healthy will con­tinue to steer the mar­ket in this direc­tion. And, the avail­abil­ity of sin­gle serve fresh frozen fruit pack­ages tells us por­tion con­trol and con­ve­nience are also trends.”

Mimlitsch points to retail estab­lish­ments such as the Pinkberry yogurt shops, based in Los Angeles, that are help­ing drive con­sumer inter­est in health­ier bev­er­ages made with fresh ingre­di­ents – as well as a tart fla­vor pro­file (Pinkberry’s sig­na­ture taste). To that end, Big Train recently intro­duced the Tart Smoothie Mix. In addi­tion to the refresh­ing light cit­rus fla­vor that is per­fect alone or when paired with dif­fer­ent fla­vors, the line has pro­bi­otics, which is good for healthy diges­tion plus no trans-fat or hydro­genated oils. The inclu­sion of pro­bi­otics in the line touches on the grow­ing trend of frozen bev­er­ages made with func­tional addi­tives. “More tra­di­tional good-for-you ingre­di­ents will con­tinue to be in demand,” explains Mary Toohey of America’s Food Technologies, Inc. “Ingredients with estab­lished ben­e­fits con­sumers under­stand will be pop­u­lar. However,” she warns, “retail­ers must be care­ful with the claims they make regard­ing func­tional additives.”

But health­ful offer­ings won’t sell them­selves. “This is where con­sumer edu­ca­tion is very impor­tant,” explains Mimlitsch. “Consumers can read labels at a retail store to find the nutri­tional con­tent of a prod­uct, but with frozen bev­er­ages, it is the oper­a­tor who must do the explain­ing so that cus­tomers can under­stand the dif­fer­ences in more nat­ural choices.”

The Right Equipment To make it all hap­pen, oper­a­tors are search­ing for all the right pieces, from prod­uct and equip­ment, right down to mar­ket­ing mate­ri­als. When it comes to equip­ment, oper­a­tors are look­ing for high per­for­mance and low main­te­nance options. Whether it is the new Blendtec 15 AMP Extreme, with its 2 jars and blades, The Blending Station® Advance from Vita-Mix, or the lat­est from Waring, today’s gen­er­a­tion of blenders and other frozen bev­er­age dis­pensers are quite intu­itive to use, cut­ting down on oper­a­tor error, while increas­ing speed of ser­vice and consistency.

For instance, The Blending Station® Advance lets you blend any recipe to per­fect con­sis­tency at the touch of a but­ton. With 93 speeds and 34 dif­fer­ent blend­ing pro­grams, each com­bin­ing the right speed and tim­ing, the machine helps elim­i­nate guess­work and allows café oper­a­tors to cus­tomize their blenders to pro­duce sig­na­ture drinks all with a sim­ple pro­gram­ming chip.

Island Oasis has spent the past few years devel­op­ing a prod­uct line specif­i­cally for the spe­cialty cof­fee indus­try. The turnkey sys­tem includes the line of Barista Fria prod­ucts that can be used in a vari­ety of cof­fee bev­er­ages and fruit smooth­ies. Adding to the ease of the pro­gram, Island Oasis offers mar­ket­ing mate­ri­als to help drive sales along with equip­ment designed to make prepa­ra­tion of the bev­er­ages fast, easy and vir­tu­ally fool-proof. ‘The won­der­ful thing about this pro­gram is that it offers retail­ers every­thing they need to build a suc­cess­ful frozen bev­er­age busi­ness,” explains Matt Brandenburger, who heads up the Barista Fria divi­sion for Island Oasis. “We bring the company’s 25 years of expe­ri­ence as a leader in the restau­rant and bar busi­ness, to the spe­cialty cof­fee indus­try, and offer a pro­gram that will help raise the bar for retail­ers. The Barista Fria bev­er­ages are extremely easy to cre­ate. Simply add the mix – in fla­vors rang­ing from straw­berry to mocha to spiced chai – then hit the but­ton and the machine shaves the ice and blends a drink in 8 sec­onds, a pitcher in 10.”

Reinvent Your Café Destination bev­er­ages are a sure-fire way to boost sales, espe­cially in this econ­omy. Retailers must open their minds to new ideas, be cre­ative and rein­vent exist­ing drinks by adding fla­vors you already have on hand.

Delivering value to the con­sumer is the key to increas­ing sales, and value can be cre­ated by offer­ing a prod­uct the con­sumer per­ceives as being dif­fi­cult to pre­pare at home, and offer it in a con­ve­nient form,” explains Toohey.

Whether that is deca­dent offer­ings, such as deli­cious choco­late and ice cream blends; light offer­ings using yogurt or fruit blends with green tea; or quick energy with an extra shot of espresso and pro­tein, build­ing cus­tom frozen bev­er­ages with sig­na­ture recipes that meet the needs of a vari­ety of con­sumers is the key to suc­cess,” adds Toohey.

Then, once your menu is set, make sure your com­mu­ni­ca­tion plan is well inte­grated. Toohey notes the var­i­ous ways to con­nect with cur­rent cus­tomers as well as those who have yet to ven­ture into your café. “Explore your options,” she says, “update your web­site, blog, sam­ple your new offer­ings at com­mu­nity events, pass our fliers and coupons to local busi­nesses. Have a plan! Reinvent your café!” CT

Cost vs Quality in Specialty Beverages

Lower cost of goods equals savings — Serving quality equals customer loyalty. Which represents a better value?

Every day, Specialty Retailers sit at a crossroads where the decisions they make can either make or break their businesses. The debate has existed since man started trading, thousands of years ago. Do I serve my customers’ products that cost less, or do offer them higher priced, higher quality products? That question is made even more relevant in this down economy.

Historically, most Retailers in this economic climate take the “low cost route”. That is an understandable knee-jerk reaction to a problem that needs deeper analysis to get to the bottom-line. But, we are talking about human behaviour in scary financial times.: Your decision on this one important point will directly translate into what kind of culinary experience your customers will have in your store, and whether they come back to repeat that experience with you, or with a competitor?

THE INTERNAL DEBATE

You have a product that you have successfully served to your customers for years. But, things have slowed down due to the weak economy, and you are wondering what you can do to build up your bottom line. A supplier comes to you and says, “I can sell you blended iced coffees or chai latte tea for $15 a case less than what you pay now.” That can get the juices flowing; $15 a case less is quite a savings. However, before you move forward take time to consider this question: Why can’t my supplier sell at that price?

Companies who want to enter a crowded category, such as ours, often will offer very low pricing as an initial strategy to get customers to switch. After doing so, historically they raise prices back to standard industry pricing. Be careful not to get caught as a pawn in this strategy. What if your customer doesn’t like the new product as much? What does it mean, financially, if you lose a customer?

This math may help. You currently purchase one case a week from your present supplier; a $15 saving for 52 weeks equals $780.00 per year. Your customer comes in five days a week and orders a drink each day at $3.50 times 260 days per year equals $910 per year. The difference is obvious.

TRUE VALUE

The above math is powerful in its ability to show where true value lies. Lose one or two customers and you haven’t achieved your goal of building more profit. To the contrary, you have lost something very valuable, “Your customers”, but also money. What it also proves is in the Cappuccine hierarchy of value, “Customers” carry much more value to your business than lowered cost of goods. Now, if you were not running a Specialty Store it might change the value equation. But, as long as you are selling Specialty Coffee, the true value holds.

If the above is true then doing everything to get and keep your hard earned customers is appropriate, including actually going back and re-defining the quality of what you serve. If you believe that getting and keeping customers is a good reason not to downgrade for lower pricing, then it could also be a good reason to upgrade to even better products.

WHO ARE YOU?

Remember, McDonald’s is sitting there waiting to get your customers With their offer of low price and consistent mediocrity. If you’re a Specialty Coffeehouse, do everything you can to prove that you are, by differentiating yourself from the McDonald’s of the world.

Liquid Assets

Specialty Frozen Beverages

by Michael Rubin

From Coffee Talk Magazine, August 1997

 

From Seattle, the specialty coffee capital of the U.S., through the rest of the country, the specialty coffee phenomenon has crossed all social borders. Coffeehouses have become a popular social destination for both the middle-aged “post-disco” crowd as well as for younger generations, who often lean toward the low-key ambience of a cafe over the cacophony of more traditional evening destinations. The combination of exhilarating concoctions and stimulating conversations appears to be a viable replacement for the more expensive cocktails and cover charges at bars and nightclubs.
As coffee’s influence has spilled over into the realm of entertainment, the coffeehouse is uniquely situated to satisfy the rapidly evolving appetite for new and unique beverages. Look on the menu board at that popular new spot that just opened around the corner from you: frozen mochas, latte’ vanillas, vanilla lattes, chai, mint mochas, Italian sodas, granitas, Oreo shakes, smoothies, frappes, freezes, snickerdoodle mochas.
Early on, U.S. coffeehouse owners recognized the need to offer frozen coffee beverages. With sales of hot coffee falling each year as warmer weather arrived in the spring and summer months, frozen coffee was a natural to boost sales in this traditionally slow period.
So, baristas began to set up granita machines in their shops. They discovered that the granita machine was an excellent marketing tool. But with every new category comes a learning curve. Along with its excellent promotional attributes, the granita machine also had an Achilles’ heel. For a granita machine to operate properly, the product in the machine must have a Brix level between 11 and 22. Brix is a measure of the ratio of sugar to water in a solution. Too much sugar and the product will never freeze; too much water and the product will freeze solid.
Recognizing the dilemma, beverage manufacturers began creating mixes that, when poured into the granita machine, had the proper Brix level. With a new generation of improved granita machines, the mixes are an excellent option as a vehicle to make frozen or coffee beverages.
Along with the granita machines came a new wave of powerful commercial blenders with the ability to quickly produce customized frozen beverages. Coffeehouse owners created frozen beverage recipes that were well received, but they were time-consuming to make and the results tended to be inconsistent. In answer to this problem, companies created instant super-premium mixes that quickly and simply re-created the coffeehouse recipes. Some mixes require the addition of coffee or milk; others just require water. Either way, these mixes have been well received and are widely used.
Just Starting Up?
Any business offering specialty frozen beverages must have recipes, menus, and menu boards that reflect the store’s particular theme. The business theme and beverage names must be consistent with each other. By creating unique proprietary beverages, served with an appealing presentation, you let your customers feel that these were specially created for them.
Such special drinks are simple to do. Try blending Oreos, M&M’s, or several of your espresso beans into your mochas. Take a cue from the ice cream business. Some manufacturers offer mixes that can be used as a beverage base. Blend these bases with espresso to create signature mochas, lattes, or vanilla lattes. Use the same base to create smoothie-type drinks by adding fruit or fruit juice. Whipped cream, flavored syrups, and shaved chocolate are great tools for adding a personal touch to any of these types of beverage. As in any competitive market, it’s the attention to the small details that will set your beverages apart.
Time and Again
Large chains are aware of the importance of consistent quality. They educate their employees so that the frozen mocha served today will be the same as the one served tomorrow. If today’s customer comes in tomorrow, he or she will find no variance in the flavor and consistency. The incredible value of consistency should never be overlooked. If you make your beverages exactly the same every time, from employee to employee, if you create a company wide formula that ensures consistency, your sales are sure to grow. Independent operators lie awake nights trying to figure out the age-old question, “Why aren’t the customers coming back?” They should look closely at three areas: product quality, product presentation, and consistent preparation.
How to Choose New Products
Choosing new products can be an arduous feat. There are so many choices. You can read the trade magazines and send for samples. You can inquire at your local distributor. Both are excellent options. I recommend that you use a combination of the two methods with one added ingredient. Go to your nearest Starbucks, Gloria Jean’s, 2nd Cup, or Au Bon Pain and see what’s on their menu. Think about it. These companies spend millions of dollars each year marketing and advertising, trying to educate consumers on the virtues of the products they offer. Take advantage of this incredible opportunity. Offer products similar to that of the big boys. Your customer base comes from the same pool of consumers that is being educated by the Starbucks of the world. So, if Starbucks has Frappuccino, carry your own up-scale version to satisfy your customers who want a frozen coffee-chocolate blended drink. If they serve chai, it is appropriate that you serve your own special chai beverage. Whatever products you decide upon, always try to add your own creative touch. If the chains do their chai hot or over ice, do yours blended with ice or in a granita machine.
Set your business apart.
Pictures are a much more powerful selling tool than the written word. When sourcing your products, make sure to ask if point-of-purchase materials are provided. Most companies will do so at no charge, since the easier they make it for your customers to purchase, the more often you will order from them.
Michael Rubin is the president of Cappuccine, Inc., a manufacturer of specialty frozen drink mixes based in southern California.