In beverages, the New Age trend just keeps on rising -- and raising new questions about merchandising right along with it.
Supermarket operators are looking harder for the best places to merchandise the New Age categories -- ready-to-drink iced teas, fruit drinks and juices, sports drinks, flavored waters and seltzers -- to maximize sales and manage the flow of new products into the store.
Retailers are asking: Should we devote a separate section to the various New Age items, or integrate them into existing beverage category planograms? Do they merit prominent displays? Should we cross-merchandise them, warm or cold, in other departments and, if so, which ones?
These questions will become even more crucial as the warm weather selling season approaches. The New Age beverage business is changing fast -- and for retailers the merchandising options are many and pat answers are few.
Executives at some chains think New Age beverages sell best when merchandised in the soft drink aisle, next to Coke and Pepsi. Others find success selling New Age beverages in the shelf-stable juice aisle. Still others say sales pick up substantially when they are merchandised cold, whether in-aisle or in the dairy, the deli or up front in the checkout lane.
One retailer has even found success merchandising New Age beverages out of his liquor department.
The prospects are a bit dizzying. Some industry watchers, however, say the more options retailers can act on the better off they'll be.
"The key to New Age beverage is what I would call ubiquity marketing," said Brian E. Kardon, a director at Braxton Associates, a Boston-based international consulting firm. "You want to have product in as many places in the store as you can."
Kardon said the push for "ubiquity marketing" is being led by manufacturers. "They pay a lot of money to retailers to put it in the deli area, up front in single-serve coolers, throughout the beverage category. Some people are even trying to put them in the health area, with whole grain products and whole foods," he said.
That is giving some retailers headaches over problems with logistics and merchandising.
"The manufacturers have come in and flooded us with New Age products. We had to find a place for this stuff, without completely resetting 80 stores," said John Caperton, direct-store-delivery manager at Minyard Food Stores, Coppell, Texas, summing up the challenge faced by many retailers contacted for this article. "Not only did the manufacturers flood us on DSD items, but they also flooded us on warehouse-delivered items."
Minyard's answer? "The stuff went here, there and yonder. There wasn't any space big enough to hold all of them, and some of them have already bitten the dust," Caperton said. "We finally had to call a moratorium on [new] water products."
Space limitations in the store eventually led the chain to segregate the business somewhat along traditional lines. Minyard now merchandises flavored waters in the water section, teas in the tea section, and fruit juice products, like Fruitopia, in the glass juice aisle.
Other chains choose different solutions.
"We've just had to reset all of the beverage aisles last summer, because it was getting out of control with all of the new teas, specialty teas and sports drinks. We decided to give them their own section in the juice aisle," said David DiGeronimo, head grocery buyer at Victory Super Markets, Leominster, Mass.
"We're not planning on making changes this summer, but I'm sure there are going to be more teas coming out, like Twinings, which is coming out with a line," he added.
Other retailers have countered the proliferation of new products by regularly discontinuing the slow-movers. A&P, Montvale, N.J., for example, regularly trims from the bottom.
"At A&P, we only have 'X' number of linear feet, so we have to discontinue those at the bottom of the list and bring in those with the greatest potential," explained William Vitulli, vice president of government and community relations for the chain.
It sounds like a logical approach to a business that has an aspect of novelty to it. "People are really going for the New Age beverage items. Whether it is a fad or not we don't know," Vitulli added.
Fad or not, the New Age products are jazzing up the soft drink business in supermarkets as well as other trade classes.
The fastest growing segment of the New Age category in supermarkets was ready-to-drink teas, with sales of $329 million, an increase of 73.8% for the 52-week period ended Nov. 6, 1994, over the same period a year before, according to Information Resources Inc., Chicago.
By comparison, sales of carbonated beverages in supermarkets climbed 5.7%, to a total of $10.2 billion. Bottled water sales increased 3.9% to $1.4 billion and shelf-stable juices (encompassing sports drinks and fruit punches) had sales of $4.4 billion, up 5.7%, the IRI data showed.
John Clevenger, senior consultant at Meridian Consulting Group, Westport, Conn., said retailers can spike New Age beverage sales more by merchandising them cold at the checkout lanes.
"Research shows that merchandising the beverages in the front of the store attracts a different customer. Not every customer goes down every aisle of the store to even see the products displayed on the shelf. But when they are standing on line at the checkout counter it is a great opportunity, especially when the product there is cold," Clevenger said.
Retailers agreed that merchandising the New Age beverages chilled for immediate consumption is a definite boon to their sales.
"We find the New Age beverages sell best cold, and we're using front-end merchandisers to sell them," said Mark Polsky, senior vice president of Magruder Inc., Rockville, Md.
Polsky said he has some of the merchandisers in the stores now, and he will take a look at expanding the program in the spring.
Dick Salmon, senior vice president at Melmarkets/Foodtown, Garden City, N.Y., said he is also contemplating expanding checkout coolers in his Long Island chain.
"We're coming up to the checkout counter with some of this merchandise in early May. But we're also going to continue our New Age section in the beverage aisle because it has been very productive for us; we had an 11% increase in ready-to-drink tea sales alone," he said.
Larchmont, N.Y.-based D'Agostino Supermarkets increased the sale of New Age beverages in a recently remodeled and expanded East Side Manhattan location by creating a beverage center.
"When you walk into the store, at one end there are refrigerated beers, then there are the traditional warm sodas, and at the other end of the aisle is another refrigerated case filled with Snapple and other New Age products," said Mary Moore, director of public affairs. "We have been very happy with this, we will try to incorporate it into our new stores."
A&P's Vitulli said cold beverages have proven to be especially popular at his chain's city stores.
"In the city, where people like their beverages cold, we allocate a certain amount of space for beverages. In many of our stores we have refrigerated space specifically designated for beverages, and in some stores we have 24 feet of refrigerated beverages. Even people buying a six-pack on the way home from work like it cold," he said.
DiGeronimo of New England's Victory
Super Markets said he has met with some resistance from soft drink manufacturers when he starts to put New Age brands in the front-end coolers already in the chain's stores.
"We have installed front-end coolers and have started to place some of the New Age beverage items in them, but it is a little bit of touchy ground because we're getting those coolers from Coke and Pepsi. They only want their products in, but they don't have much choice, because we'll say, 'Hey, listen, if you want them up there, you're going to have to give us a couple of shelves,' " he said.
Caperton of Minyard said that in his chain's units, some of the New Age items are sold chilled through the deli department.
Long Beach, Calif.-based K.V. Mart has been successfully merchandising New Age beverages out of coolers placed in the liquor departments of its 13 stores. A drop in liquor sales prompted the chain to try it.
"I've lost some sales in the hard spirits category because of changes in the drinking laws in southern California, and I was looking to pick up some added sales in a department that needed a little boost. What I did was to take Snapple, Arizona iced tea, Mistic and West End soda brew and key them into liquor," explained Terry Fowler, director of liquor and deli for Top Valu Markets division of K.V. Mart.
Fowler said he installed independent coolers provided by manufacturers for the New Age products. He also cross-merchandises them warm in the grocery aisle, to keep them accessible to minors and people who do not like to shop the liquor department. But placing the coolers in liquor was a smart move.
"I'm down in sales less than most of the major chains out here, and I attribute that to picking up most of the lost sales from liquor in New Age beverages. The manufacturers like the New Age beverages refrigerated because they sell better, especially during the summer months, and in southern California we have pretty good weather around the calendar so it sells well year-round," he said.
A&P stimulates New Age sales by frequently using displays on the floor and endcaps, coupled with input from space management technicians and store managers, Vitulli told SN.
"Because there is such tremendous volume in beverages, a good part of our endcap and floor displays are volume displays of beverages, because we just can't keep them on the shelf. As the weather gets warmer, we can take a section along a perimeter wall and build up a can or bottle display with a very attractive retail.
"We can also expand out of the category section if another category is slowing down. For example, in some areas where we may not sell a lot of cereal because there aren't many children, we may pull back and devote more space to something else that sells well in that area, like snacks and beverages," he said.
"At A&P we have specialists in our company whose only assignment is space management, and they cover beverage as part of their duties. You have to be very wise in space management. You can't afford to give a slow mover a big section," he said. Vitulli also noted that the store and district managers have a lot of responsibility in merchandising beverages and other items at the store level.
Nick Wedberg, vice president of sales at Plumb's, Muskegon, Mich., said his chain remerchandised its beverage aisles last year to capitalize on the New Age beverages, and has now incorporated New Age sections ranging from 4 to 12 feet, depending on the size of the store. In smaller stores New Age beverages are merchandised in the juice aisle, while in larger stores space was carved out of the pop aisle by winnowing down some soda facings.
"Sales have definitely improved since we rearranged the aisles. They seem to sell better tied into Coke, Pepsi and 7-Up, but the results from the juice aisle aren't too bad, either," he said.
He added that this summer he expects to step up advertising, and forecast that Ocean Spray products and sports drinks will increase in popularity this year.
Peter Dudis, a category manager at Big Y Foods, Springfield, Mass., said Big Y remerchandised its beverage aisles last spring to create more room for new products. Juice drinks are merchandised in the juice aisle, while other products are arranged in the beverage aisle by category.
"We were careful to merchandise new products within the specific category, which had a positive impact on sales," he said.
Dudis added, "We feel that there is still room for growth in the larger sizes of ready-to-drink iced teas. As a result, we plan to promote larger, single-serve sizes of iced tea more often during the peak summer season."
Salmon of Melmarkets said he is building his New Age beverage sales by adding to the stable of brands that he carries.
"There is a Red Rose line of teas that is in an excellent, excellent 20-ounce package. We're also seeking to be carrying Hansen's Natural from Anaheim, Calif., by April. I've seen Hansen's in Ralphs and Vons in California, and they are doing terrific with the product. We would be the first chain on the East Coast to carry Hansen's. We're currently negotiating with the principals direct, and we're looking at a perhaps 15% cheaper product [than Snapple]," he said.
Polsky of Magruder said in addition to merchandising the New Age beverages cold, they are also merchandised on the soft drink shelves and on satellite racks, primarily because they are direct store delivered.
"Merchandising can be a little bit difficult at times, but if we let the soft drink delivery guys take care of it for us they are not going to leave items in that don't sell because they operate on commission. We're going to let them police it for a while," he said.
