Large store and convenience retail outlets have the opportunity to increase profitability and leverage the connections between food purchases and three on-trend beverage categories: sparkling water, ready-to-drink (“RTD”) tea and still water, according to research conducted by Nielsen for The Coca-Cola Company.¹ A recent update to the study shows retailers can increase sales by building on existing trip connections, focusing on the shared consumer and the occasion.²
“This report shows many opportunities for total store growth by leveraging still beverages with key occasions, improved merchandising and co-promotion with like products,” says Joe Davis, director of shopper insights and headquarters initiatives, The Coca-Cola Company. “We hope this study will provide concrete tactics that retailers can use to maximize value with other sparkling and still beverages.”
Here are three beverage categories, which, combined with food, can help to build cross-store connections.
1. Sparkling Water Connections
Consumers are increasingly purchasing sparkling water with items tied to entertaining and snacking, specifically deli dip, specialty cheeses and value-added vegetables.¹
• Deli dip: Sales of deli dip increased 8.9% from the previous year.¹ Trips with both deli dips and sparkling water were up 25% over a year ago, and the average basket with both items was worth almost $114.¹
• Specialty cheeses: Sales were up 7.5% from last year, with trips containing specialty cheese and sparkling water increasing 7% over the previous year.¹ When the two items are purchased together, the basket is worth nearly $121.¹ Utilize sparkling water to connect with premium, entertaining categories to further grow the connection between sparkling water and deli dip, and specialty cheese. Cross promotions can increase sales in both categories.
• Value-added vegetables: Sales increased 10% compared to last year, and trips containing both value-added vegetables and sparkling water increased 23% from the previous year.¹ The health halo of these products provides an opportunity to cross promote with a convenient meal solution.¹ What’s more, value-added vegetables can connect further to the produce department and are a good bridge category to the total store.
2. Ready-to-Drink Tea Connections
The Nielsen study found strong sales and basket connections between RTD tea and every day, fresh ingredients, such as ground turkey, packaged salads, and deli cheese.¹ In fact, 44% of tea buyers also buy deli cheese, and there is an 82% buyer overlap between RTD tea and packaged salad.¹
• Ground turkey: Since RTD tea and ground turkey buyers over-index as African American and Hispanic, leverage both the beverage/food connection as well as the appeal to key demographics.¹ Keep these consumers in mind when deciding on markets for co-promotion or meal deals.
• Packaged salad: Focus on increasing the frequency of trips that include both RTD tea and packaged salads by offering coupons with packaged salads or promoting them in circulars together.
• Deli cheese: Merchandise tea near the deli with an emphasis on drinking tea with lunchtime sandwiches. Focus on cheese flavors that appeal to RTD tea’s key demographics, older families and Hispanic households.¹
3. Still Water Connections
As still (or base) water gains in popularity, the Nielsen study revealed opportunities for retailers to leverage sales and basket connections with traditional staples that are occasion-focused.¹ Consumers in this category are in the mid- to high-income range and have bustling families with children of all ages.¹
• Select meats: Still water has a 75% buyer overlap with fresh chicken breast (year-ago sales are up 5.1%), and a 79% overlap with bacon (year-ago sales increased 2.3%).¹ Leverage this connection while appealing to base water consumers by creating total meal solutions that bring value to the meat case and provide convenient ideas for larger families.
• Deli items: There is a strong sales connection between still water and quick trip and alternative channel options.¹ However, this category had a weak basket connection with still water (as opposed to meat, which had both high sales and high basket connections).¹ The opportunity for retailers is to show the value of your category on different trips and/or in different channels. For example, display base water in the deli department to encourage quick trip purchases together with deli pizza, or cross-promote base water and other deli-prepared items together as a quick, easy family meal deal.
Sarah Schmansky, director of Nielsen’s Perishables Group highlights the importance for the food retail industry to pay close attention to the connections and solutions across the store, stating, “Retailers and manufacturers can leverage existing cross-store connections between products, or build new partnerships via solution-based promotions or merchandising programs to ultimately help increase total store profitability and meet shifting consumer demands.”
To learn more about how you can successfully leverage the connections between beverages and food, talk to your Coca-Cola representative today.
¹ Nielsen Total Store Connectivity Study, 2015
² Nielsen Total Store Connectivity Study, 2016