April 25, 2011 1 Comment
Convenience Store News recently published an article reporting that Ready-To-Drink (RTD) teas are gaining sales within convenience stores (link here). The speculation is that the tea beverages are gaining sales not from new product introductions or increased shelf space, but rather from the emerging trend for healthier beverages. It should also be noted that it is the trend is more related to consumer’s perceptions, that the tea itself may not actually be healthier, but the belief that is is healthier is driving the category’s growth in convenience stores. And based on the similarity of price points against carbonated soft drinks and bottled water, RTD tea’s growth is sourced from these two other categories.
Since the emerging beverage trend has been around for the last few years, can all this growth really be attributed to the trend? This isn’t to say that the trend of consumers looking for healthier drink alternatives is not relevant, but there are other factors coupled with this trend that are likely driving tea sales. After some quick though, two additional factors that may contribute to the tea’s growth are seasonality and price & promotions.
Given a convenience store’s limited cold vault space, a lot of vaults adjust their shelf space based on seasonality and popularity. For example, winter’s months will see more juices and water to combat colds and flus, while summer months will see space expanded for teas, isotonics (sports drinks), and energy drinks. The article reports that two of the convenience store retailers have not really had to adjust their shelf space to generate this growth, but there is also no mention of which season the growth is accounted for. If it were the summer months of 2009 and 2010, then the shelf space for RTD teas would already have been expanded and thus facilitating this growth.
The other factor affecting tea sales is the price & promotions for the different types of drinks within the beverage category – not just tea products themselves. Summer months are normally the more heavily product-promotion months, and given the state of the economy the last few years it would not be surprising to see more aggressive price promotions on beverages. And if the product itself is not on a manufacturer-funded promotion, the convenience store retailer themselves may try to lower the regular selling price of RTD teas and other summer seasonal beverages to create a stronger price gap with other products. Since consumer perception is key, the larger price gap would mean that teas are a better value for their dollars and thus choose the tea beverage.
That said, the consumer need has to be there in the first place for the sale to even have any factor of influence. If a consumer was not thirsty, price conscious, and in search of healthy drink alternatives, that sale for the AriZona tea or Nestea or Lipton product would never have occurred.