QUENCHING A THIRST

T.J. TARATETA and MAJA WOLFF

NEW YORK -- A growing number of retailers have found that offering a dynamic variety of beverage options can serve as a motivating factor when consumers arrive at the supermarket counter to decide between panini and pizza, roasted chicken and manicotti. Creatively cross marketing drinks and meals can not only liven up a store's fresh meals menu, it can also spice up sales.

"Simplifying beverage choices through suggestive marketing and product placement is an additional way for the retailer to anticipate and exceed customer need," said Dennis Hedegard, a supermarket-industry veteran who now consults as president of Solutions of North America in Saco, Maine.

For many retailers, this at least means incorporating beverages into, or nearby, their fresh meals sections. At Dan's Supermarkets, based in Bismarck, N.D., they sell soft drinks, bottled water and coffee in conjunction with their program, but don't do much in the way of cross merchandising or bundling the two categories.

"Most merchants have placed beverages near home-meal replacement as a convenience but not as part of a meal. It's really an afterthought," said Ralph Dockter, director of retail operations of the 10-store chain. "However, if the need for convenience plays out, it will serve a profit need as well."

Other retailers echoed Dockter. At Thriftway market in Seattle, one of 32 individually owned stores in the Associated Grocer's group, Bob Broderick, wine, beer and cigar merchandiser, recently attempted to cross merchandise wine with fresh meals, but without much success.

"When we put a high-volume product in a high-traffic area, we pick up sales," he said. "It's difficult to determine the amount that's attributable to a cross-merchandising program."

While industry insiders reveal that beverage margins for supermarkets hover near 85%, Hedegard says that oftentimes "beverage programs are overlooked or undervalued by the retailer." To him, operators are missing a chance to add further value and profits to customers who thirst for quick, convenient and complete meals when they rush into the supermarket.

Some progressive retailers are working towards making beverages a permanent part of their fresh meals menu, and taking advantage of the high margins that beverage sales afford. Using both direct and suggestive marketing, innovative stores have found ways to boost sales in the often-neglected area of home-beverage replacement.

For example, an A&P supermarket in Saddle Brook, N.J., has certainly found its niche in the fresh meals arena by tying a beverage program to its in-house dining operation. Here, the outgoing hot-food section sits astride a full-service cafe concept that draws in customers to partake of creamy cappuccinos and steaming lattes while feasting on croissants, sandwiches and panini.

"The cafe allows our customers to relax and enjoy the time they spend in our store," said Mary Taggert, the store's deli manager. As part of the ambience, the store employs two full-time chefs to create the menu, which includes hot dishes such as roast chicken, lasagna and veal Francese.

To many retailers, the production of exquisite espresso may add confusion and complexity to the fresh meals program, but as exemplified by this progressive locale, technology has overcome these concerns. By adding a highly automated espresso machine, A&P solved the problems that often hinder a store in its desire to include specialty coffee.

"So far we haven't proven that pairing these beverages with our home-meal replacement is very profitable, but we'll keep trying to give our customers what they want," said Taggert.

Perhaps one of the most successful programs of satisfying customers by cross merchandising beverages with fresh meals can be found at Manhattan's Gourmet Garage chain of four upscale grocery stores. The West Side unit recently offered a variety of food-and-beverage pairings to create complete meals at special prices. The beverages were bundled with the meal items "to build sales, not grow a new item,"said Daniel Horan, general manager.

"The focus was not to try to sell anything the customers didn't want, but to give them what they do want," he added. For instance, one featured dinner meal gave customers who purchased the popular rotisserie chicken with two side dishes a free bottle of Italian sparkling water.

At lunch, a sandwich paired with a Nantucket Nectar soda on special sold for less than $5. And all day in the baked-goods area, customers could buy a croissant and a large coffee for $2.50, or a bagel and cream cheese with a large coffee for $2.

Horan said he also noticed that many times, customers simply purchased whatever was specially priced that day. So, to highlight his offerings, he hung flyers at the store entrance to reinforce this shopper habit. Once customers reached the fresh meals section, a chalkboard menu and other signage further pointed them in the direction of the quick-and-simple food-and-beverage pairings.

"To build up good will with customers: that was the underlying theme of the promotions," said Horan. And, he added, "good will is a bottom-line idea."

Hedegard suggested that retailers strive to create a captivating beverage program, since it will keep customers coming back while adding to the bottom line. One way to accomplish this is to pair food and beverage items that share a certain aesthetic appeal, and increase the overall performance of both.

As far as tying in high-quality to-go meals with specialty beverages, "it would be helpful to see a leader in the beverage industry come up with something that may work in supermarkets," said Dan's Dockter. "I haven't seen anything overly creative."

Fixtures manufacturers like Southern Store Fixtures believe they may have solved this dilemma. The company, in Birmingham, Ala., devised a wine-and-floral display to effectively anticipate the customer's desires and suggest a convenient solution, much in keeping with the theme of home-meal replacement.

The small, mobile, prototype display merchandises 11 bottles of wine in the French manner (meaning wine bottles are kept on their sides in accordance with proper wine-cellar storage) and showcases one bottle atop the display to highlight the label of the featured offering. Merchants may arrange fresh flowers in water-filled vases on the sides of the display. The company designed this merchandiser for placement right next to the fresh meals counter.