On a hot summer’s day, there’s nothing quite as refreshing as a frozen dispensed beverage. “This category not only quenches the thirst of customers but also has high margins for retailers,” said Jayme Gough, analyst for NACS.

Overall, sales of frozen dispensed beverages grabbed 1.22% of in-store sales in 2018, according to NACS State of the Industry data. While frozen dispensed is the second-smallest percentage of sales (3.6%) within foodservice, the category clocks the second-highest gross margin at 56.71%.

“Frozen beverages continue to thrive on variety and innovation as consumers—especially millennials and Generation Z—love to explore this category,” said Randy Raymond, director of foodservice in retail for Coca-Cola North America. “Frozen dispensed beverages remain an important category with continuous opportunities for c-stores.”

Cold Sales

Frozen dispensed beverage sales rise and fall with the weather. “This is a category that trends well in the warm weather and dips in the colder months,” said Gough.

A colder spring impacted sales of frozen dispensed beverages at the three-unit Bridge Stop chain, headquartered in New Auburn, Wisconsin. “Sales have been down because of the cooler temperatures, but sales pick up as the summer heats up,” said owner Dwain Trowbridge.

At the Crossroads Pantry in Markle, Indiana, a cool, rainy spring damped sales of frozen dispensed beverages, but manager Danielle Bennett expected sales to accelerate during the summer. “Overall, the category has held pretty steady, but we’re hoping that the warmer weather will bring in more sales,” she said. While the self-serve milkshake machine continues to do “really well,” the handmade iced coffee and smoothie machines (which fall under the prepared food and cold dispensed beverages categories, respectively) haven’t generated as much traffic as expected. “Sales have been up and down for the behind-the-counter machines,” she said, “We’re trying to figure out if it’s because customers enjoy mixing their own beverages or just haven’t sampled the
iced coffee and smoothies enough.”

The weather also has affected sales of frozen dispensed beverages at Eskimo Hut, a chain of 30 stores headquartered in Amarillo, Texas. “A wet, cold spring hasn’t been good for us,” said Chris Smith, COO.

Fresh for Frozen

Like other foodservice categories, frozen dispensed beverages benefit when customers are given the chance to sample the latest flavor trends. “Keeping your rotation fresh and new is always good for sales,” Gough said. “Having the latest flavor, or allowing customers to mix and match flavors, meets the customer need to try something new in their frozen dispensed beverage.”

Current trends that FBD Partnership, a San Antonio, Texas-based manufacturer of frozen beverage dispensers, has spotted in the category include flavor fusions, such as adding syrups to traditional bestsellers (Orange Vanilla Coke), incorporating real fruit juices and cane sugar and showcasing regional or demographic flavors, such as Mango Chili and Horchata. “In addition, offering customers the freedom to make their own drink and flavor combinations is very popular,” said Nathan Link, director of product marketing.

New flavors also drive the frozen category. “Of course, certain frozen flavors should be offered year-round, but convenience stores should always have at least one rotational barrel,” Raymond said. “For example, during the hot summer months, retailers can fill that rotating barrel with a refreshing, fruit-flavored option, like a fruit punch, lemonade or pina colada flavor. Younger consumers are drawn to exotic flavors, so adding something like a sour apple variety in addition to a more traditional, fruit-flavored option can help appeal to multiple audiences and drive sales.”

Trowbridge rotates the flavors in his four-flavor machines. “We nearly always keep the favorite—blue raspberry—but add new flavors on a regular basis,” he said. “For example, we will be adding an energy flavor back in this summer.”

Limited-time offers (LTOs) provide another way to heat up the category. “LTOs provide a low-risk way to test new flavors and concepts,” Raymond said. “Since many people like trying new beverages, LTOs provide the chance to explore and experiment, while also creating a sense of ‘get it while it’s here’ immediacy.”

The trend toward more healthy options hasn’t impacted the frozen dispensed beverage category too much, although “consumers are expressing more interest in low-sugar options, frozen coffees and teas, smoothies, energy drinks and frozen lemonades,” said Link.

“Frozen dispensed beverages are appealing to young customers who are more drawn to colorful, sweet summer beverages, but they can also trigger a sense of nostalgia for adults,” Gough said.

Raymond agreed. “Shoppers tend to define their frozen beverage cravings by texture. A frozen carbonated beverage offers a lighter, almost fluffy texture, while a noncarbonated one is going to be denser with more slush. There’s a role for both types of beverages for c-stores.”

Summer Promos

The summer months provide retailers with a great opportunity to promote and highlight frozen dispensed beverages. “Tying in frozen beverage promotions to summer holidays like July Fourth can create a buzz in the category,” Gough said.

Some retailers take advantage of the warm weather to create summer discounts or expand loyalty programs to include frozen dispensed beverages, while others experiment with flavors or pairing a frozen dispensed beverage with another discounted item.

Link recommended promotional programs like BOGO, social media contests and out-of-store communications, such as gas pump signage, as key ways to drive summertime sales. “Also, try pairing your frozen dispensed beverages with candy and food to capitalize on foot traffic during the busier summer months,” he said.

Eskimo Hut primarily uses social media to drive category sales. “We promote our specials and have special days, like Triple Shot Tuesdays, that our customers love to take advantage of,” said Smith.

Other retailers prefer to let the category speak for itself. “In my opinion, you can’t push slush drink sales,” said Trowbridge. “We simply put the machine in view and people buy frozen drinks.”

Frozen Future

The future of frozen dispensed beverage at convenience stores looks strong. “The category will continue to be a cornerstone offering for years to come,” Link said. “However, we see it evolving and expanding into coffees, teas, lemonades, sports drinks, infused waters and healthier, low-sugar alternatives that will drive frozen dispensed beverage to the next generation of consumers.”

For Bridge Stop, frozen dispensed beverages will stay a relevant category for the chain, and Trowbridge sees it driving demand for other frosty drinks like milkshakes and iced coffee. “Everyone’s going for iced coffee these days, so we realized we’d better have something to offer, too,” he said.

“With frozen drinks having such a high margin, I’m certain the category will continue to be important not just for our business but for the entire convenience store industry,” added Smith.