During the Covid-19 pandemic, research indicates that after fuel, gas station customers have bought more food and beverages than anything else. These products are understandably popular with convenience store customers, who are doing everything they can to bring more customers in through the door.
As a result, we’re seeing more and more premises cater to an ever-evolving range of consumer habits and trends. This covers every food and beverage category they serve, including coffee.
I spoke to three individuals that work in the beverage segment of convenience stores – both at the operator and vendor level – to discover how convenience store coffee is evolving. Read on to find out what they said.
You might also like our article exploring RTD milk-based coffee.
Who buys coffee from convenience stores?
The old mentality that convenience store coffee is meant for travellers on the road – offering only traditional “diner-style” drip coffee – is no longer universally true.
In the past, the main target market for these convenience stores was older consumers that were accustomed to these flavours, as well as anyone else who was grabbing a cup on the go. Today, however, that’s not always the case.
While this is a relevant target market, convenience stores are increasingly scaling their coffee portfolio to target a wider range of consumers, with a heavy focus on younger people.
Jawad Bisbis is the former Vice President of Proprietary Beverages at 7-Eleven. He says that the reason for this shift is the need to attract the next generation of customers – namely millennials and Generation Z.
He explains: “For the last 20 years, people have moved to specialty coffee, espresso, iced coffee, cold brew, and that’s what we are going after: getting new customers, not just getting existing customers to come back.”
Leigh Priecko is the Director of Channel Marketing at Royal Cup Coffee Roasters. She agrees, and says that as a vendor partner, Royal Cup always tries to stay on top of trending flavours and drinks.
According to the National Coffee Association, during the pandemic, more than 40% of Americans bought types of coffee that they had never tried before. This included things like new brands, different roast profiles, and different brewing methods.
Harry King is National Account Manager at Jimmy’s Iced Coffee. He agrees that there has been a significant change in consumer shopping habits over the past 18 months or so.
He explains: “It’s important to always take note of the trends, and what each target demographic likes and purchases. There has been a shift, largely as a result of the pandemic.”
However, for convenience stores in today’s market, the key is simple: offering a variety of products which capitalise on customer trends. These include those drinks which existing customers know and love (like diner-style drip coffee) as well as beverages that appeal to younger demographics (like cold coffee and RTD products).
How have convenience store coffee bars evolved?
Over the past few years, consumer demands for coffee have undoubtedly broadened. This demand is relevant to the convenience store coffee market, just as it is to third wave coffee shops.
These demands have driven convenience stores to offer a broader range of products in kind, recognising that while some customers are happy to pay more for quality, some just want something quick, and others still will want something cold or iced.
Convenience store coffee bars have subsequently come to offer a range of options, from bean to cup hot beverages to iced coffee options and cold brew. Within this umbrella, customers can get the staples such as cappuccinos, lattes, and mochas – which are also increasingly made using fresh milk rather than powdered alternatives.
Leigh says: “Convenience stores continue to see a shift in managing multiple customer markets. In order to do this we have seen two consistent changes: the adoption of bean to cup brewing machines and the incorporation of cold brew into the dispensed beverage set.”
Jawad agrees with Leigh, adding that a lot of convenience store players missed the third wave of coffee, and ended up sticking with diner-style drip coffee.
“More have started to offer bean to cup and freshly brewed coffee in recent years,” he says. “7-Eleven started a few years ago and did it in a big way. Not just bean to cup, but also hot and iced [coffee]. [These are] all self-serve.”
And beyond that, more and more options are now available in convenience store fridges, too, thanks to the growth of RTD.
Harry says that for their convenience and on-trade customers, Jimmy’s Iced Coffee has actually started offering a new business subscription service.
“Our subscription service provides a more tailored approach for small store formats, allowing them to create a bespoke order as well as pause or move up their order through an online account,” he says. “This means they’ve always got the product on-shelf when they need it.”
How have consumer habits changed?
Perhaps the biggest driver for change in convenience store coffee is consumer habit. Naturally, the market needs to challenge itself as the coffee industry evolves around it.
This means asking questions about who’s buying the coffee and why they’re coming into the store. Do people come into the store from the gas pump? How do we advertise our coffee programme? What type of coffee products do consumers want to see? What types of coffee have been selling best?
However, beyond these simple questions about demand, Leigh notes that wellbeing is increasingly becoming a priority in the wake of the pandemic.
“Customers are focused on cleanliness,” she says. “They are more comfortable visiting places where the store is clean and tidy, and want to see visible communication on how this is being upheld.
“They are still looking for quality in an environment that they feel comfortable in. Comfort can mean multiple things – close to home, cleanliness, or ease of remote order. We have also seen a dramatic increase in mobile ordering and do not anticipate that going away.”
Jawad says that one of the biggest changes in convenience store consumer habits has been “frictionless” service. Essentially, people want their coffee made fast, and by as few hands as possible.
Another trend of growing importance is the focus on healthy products. Many customers, even those at gas station convenience stores, are increasingly looking for healthy alternatives to many of their favourites, which might traditionally be high in calories or sugar.
Harry says: “As health becomes a greater consideration in the shopper’s journey, retailers need to be offering products that satisfy that desire for indulgence but also meet HFSS guidelines. You want to strike a balance between something that tastes great and something that isn’t too bad for you.”
How can stores compete in a saturated marketplace?
In today’s market, there are an almost endless number of choices for buying a cup of coffee, and convenience stores face increasing competition against drive thru coffee stores. With all these options, convenience stores face a big challenge to stand out from the crowd.
“Convenience stores need to disrupt the industry and play to their strengths,” Jawad says. “More and more customers are looking for convenience. Convenience stores are the ones that invented it! This means self-serve: a quick in and out [process].”
He adds that convenience store consumers don’t have to wait in line or for a barista. Most also want to personalise their coffee to enjoy it the way they want it; this might be with syrups, sweetener, or other additives, for instance.
Leigh also says: “Offer an online ordering or app platform and communicate it throughout the store and on social media. Make sure your coffee service stays fresh. With customers coming in later, this may mean adjusting brew schedules, so the service continues to be the high-quality experience guests are expecting.”
Ultimately, both convenience store operators and their vendors can differentiate themselves by providing top quality, unique offerings, and making it easy for consumers to quickly enjoy their coffee.
What does the future hold for convenience store coffee?
With the pandemic meaning that more people work from home than ever, it’s no longer clear which time of day is busiest for convenience store coffee bars.
Jawad adds that this means less traffic on the roads, and subsequently that convenience stores have to reassess their marketing as a result.
He explains: “Companies have seen people can be as productive working remote or hybrid. The younger generation also wants that flexibility. The morning traffic driver for convenience stores is probably over, and that opens up the market for disruption.
“Whoever can attract that afternoon traffic with the right blend of beverages is going to win market share. If you’re only relying on the morning commute, you’re going to miss customers.”
RTD coffee beverages have also benefited from this time shift, as people tend to order colder beverages later in the day. Additionally, Harry says customers are buying more RTD coffee in individual sittings, to stock up for later.
He says: “Multi-pack and take home products are in high demand and will likely continue to grow in line with these adapted shopping habits.”
Convenience stores have become a destination where people can buy coffee that is served quickly and of increasing quality. As such, we’re seeing stores target new demographics, evolving and refining their coffee range over time to cater to emerging consumer trends.
While the pandemic has certainly influenced many of these consumer habits, this market continues to adapt and gain market share in the coffee space. How it will develop in the future, however, remains to be seen.
Enjoyed this? Then read this article on how supermarket coffee is changing.
Photo credits: Pexels, Unsplash, Jimmy’s Iced Coffee, Royal Cup Coffee Roasters
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