let the good times flow

New product trends come and goalmost weekly in the conveniencestore industry, but few trends in the last two decades have had the stayingpower of bottled water.

Thanks to new twists on the bottledwater segment, such as the introduction offruit flavors and innovative packaging, bottled water sales continue to post some ofthe strongest sales numbers in the store,and they are only expected to keep increasing. To help retailers develop an effectivepackage beverage merchandising strategy,Steve Seager, senior retail marketing manager for Nestle Waters North America, satdown with Convenience Store Decisions todiscern fact from fiction in the cold vault.

1. Bottled water remains one of thehottest categories in conveniencestores. What is your short- and long-termassessment of the category?
Seager:

Americans are drinking close to 27gallons of bottled water per person, peryear, according to a Beverage MarketingIndustry Report, and it is estimated thatconsumption will reach 32 gallons by 2008.Bottled Water is poised to overtake carbonated soda drinks as the No. 1 category itemin the next five years.

2. What trends are driving growth in thebottled water segment?
Seager: Bottled water is an ideal choice forconsumers seeking a path to a healthylifestyle. According to ACNielsen, gallonsales grew 24 million gallons (+13%), drivenby PET and sweetened and enhanced segments. Multi-pack is increasing share of PETsales and is up 33%. This multi-pack growthhas not come at the expense of single-servePET, which makes up the largest portion ofsales, and is up 7%.

More consumers see value and convenience in purchasing multi-packs at c-storesversus buying from another retail channel.The multi-pack segment now makes up 11%of total bottled water sales in the c-stores.

3. Describe an effective product mix ofbottled water. What sizes shouldretailers carry, what PET types (regular,sports bottle, etc.) should be carried andhow many different flavors should be on theshelves?
Seager: To meet the primary consumerusage occasions the Still Water(spring/drinking) section should include 20-ounce, sport top 24-oz., 1-liter, 3-liter and 1-gallon sizes. The Sweetened/Enhanced section should include .5-liter and 20-oz. and 23.7-oz. sizes. Regarding flavors, there areso many offerings out there today, but retailers should carry three or four. Lemon,Berries (strawberry and raspberry),Tropical/Fruit Punch and Grape are popular.

4. Are energy drinks and Isotonics athreat to the bottled water sales ordo the segments compliment each other inthe cooler?
Seager: Both energy drinks and Isotonicscategories are showing healthy growth in c-stores along with bottled water. All three aredifferent usage occasions for the consumer.Consumers will purchase energy drinks andbottled water at the same time.

5. Many retailers only market bottled water in cold vault at the back of the store, but Chevron is reporting very sharp increases in bottled water sales as a result of its introduction of HydraZone, which markets bottled water, Isotonics and energy drinks in an open air cooler just inside the front door. Are retailers that are not trying to sell beverages in high-impulse areas missing out on selling opportunities?
Seager: Chevron’s marketing approach iscertainly innovative. Consumers want choices and convenience and the HydraZone program is a way to gain incremental purchasesaway from traditional cooler doors. NestleWaters North America has recommended forseveral years to position bottled water awayfrom the cold vault. Multi-pack options displayed in the warm shelf section and outside the store for consumers to take homeare driving bottled water category growth todate. It is becoming more vital for c-storeretailers to dedicate warm shelf space tobottled water.

CSD vs. The Hulk
Hulk Hogan was among the celebrity guests at the 2006 NACS Show in Las Vegas in October. “The Hulk” was on hand to promote his new energy drink powered by Socko, aptly named “Hulk Energy.” At aprivate beverage screening at The Palms hotel, CSDEditor John Lofstock challenged Hulk Hogan to a steel cage death match, but Hogan politely declined. Instead, Lofstock angled for the front sleeper hold sending Hogan and his crew in a state of panic. Notice the fear in Hogan’s eyes.

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