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Granitas Brrrring in Profits


Whether The success of the 7-ELEVEN chain elicited a domino effect in the frozen drink industry. Granita frozen beverage dispensers have evolved into mainstream dependable and user friendly machines. In the late ‘90s, the 7-ELEVEN convenience store chain added granita machines to its strategies for pulling in the consumer. This was in addition to the slurpee drinks directed at kids. Enticing visual merchandising through the use of granita machines along with an upscale perception of quality associated with the frozen fruit drinks worked wonders for the 7-ELEVEN stores, according to Lansdale, Pennsylvania-based The Granita Guru, a source for beverages and dispensers.

Now the exciting news for marketers is that the category of specialty frozen coffee drinkers continues to evolve and has caught the attention of younger consumers between the ages of 18 and 24. Consequently, carbonated beverages continue to face stiff competition. Consumer acceptance of iced coffee is now being taken to the next stage. The bottled cold coffee drink can compete head on with soft drinks as a prepared beverage for the home and office markets, according to the National Coffee Association of the USA.

Today, almost every foodservice mart and convenience store is interested in having granita machines installed. At least one coffee flavor and one or more fruit drink will be served by most convenience stores. The increased focus on frozen beverages will result in healthy competition and improve quality of products used, reports The Granita Guru.

Iced coffee beverages have most definitely caught on with American consumers. This market segment now consists of 8 million weekly drinkers and another 2 million daily drinkers. That’s good news for manufacturers such as Caffe D’Amore, Inc. of Monrovia, California, a firm that has been forging innovative products for three decades. The firm is known for creating and introducing such popular trend setting items as Iced Cappuccino, Granita Coffee Mix and the trio of “Crunch Coffees.” Formulating and producing its own products, Caffe D’Amore takes pride in the breadth of choice in its lines - seven flavors in the flavored coffee line, Caffe Chocolat. “The creamy base mix flavors of Chocolate Freeze and Vanilla Freeze marry with any coffee or espresso for a sensational and consistently delicious, traditional mocha or latte,” notes Cheri Hays, director of sales. These two base mixes have been formulated to underscore the qualities of the consumers’ favorite coffee, rather than overwhelm them as is often the case with competitive products,” she says. “We’ve taken the basic frozen coffee concept and moved it up a few notches.”

Blended coffee drink concoctions are a perfect complement to the juice and smoothie business, which has topped $1 billion in sales for the first time. “We have seen steady industry growth over the past several years. 2002 is what we are calling a second wind for the industry,” according to Dan Titus, director of The Juice and Smoothie Association. “The population is more aware of what smoothies are now. They are on menus everywhere”.

Juice and smoothie bars are still in style across the U.S. and are gaining momentum from the nutraceutical movement. Companies such as Granita Guru are on top of the trend with its frozen Ginseng Cafe Latte, which incorporates coffee from Kenya blended with Panax Ginseng. Also parlaying this trend into profits, Caffe D’Amore has a new line of fruit tea smoothies called Botanica which contain 50% fruit in each serving. Hays says she is thrilled about the product and the response it has received since it was launched at CoffeeFest. “It is a true smoothie in a cup for granita machines and blenders.” Hays stresses the fact that Botanica contains no artificial flavorings. “The company has also phased itself into a line of protein powder supplements and boosts so that retailers are able to create frozen concoctions such as “Power Mochas,” she exclaims.

Boosters, phyto foods, nutraceuticals and herbalites are all words used to describe the nutrient supplements that can be added to smoothies to offer customers the health benefits of various herbs, minerals and proteins.

“Food and drinks companies are under pressure from a number of areas to expand sales in a largely stagnant market,” comments Neil Broome, a consumer market analyst for the business information company Datamonitor. “Nutraceuticals is another form of segmentation to be exploited by the food and drinks industry, both to add value to products and to generate additional, rather than cannibalize value sales by making a wide range of ‘ordinary’ items such as milk, bread, cheese and soft drinks high value. With rising awareness of health issues, functional foods and especially beverage nutraceuticals create particularly effective segmentation,” says Broome. Others concur. “I think it’s important for any coffee bar to offer the nutrient supplements added to a smoothie before blending, like gingko or ginseng,” says Lydia Wanders, marketing manager for Dr. Smoothie Enterprises, Cypress, California. “People are more aware of nutrition and are specializing their smoothies to fit their needs,” she notes.

As for consumer habits and demographic purchasing power, Baby Boomers differ from the generation before them in that they are more health issues factor into their purchasing decisions. Many are looking not only at traditional medicine, but also at nutraceuticals to meet their health concerns.

“If you’re not serving them now, you will be,” says Bill Haugh, president of Dr. Smoothie Enterprises. In regard to nutritional supplements for smoothies, “You will quickly recognize you can sell a lot more drinks, from 50 - 100% greater sales, just by offering nutrients, because customers can get involved in their drinks.”

The frozen drink front has been rather far reaching in its market share. Product-wise, Australian’s have also seen the arrival of U.S. producers, including: Cafe D’Amore, Big Train, and MoCafe in addition to their home-market favorite - Australian Freezoccino.

Based in Sydney Australia, Cappuccine Australia was established in 1999 in order to capitalize on the ice blended beverage phenomenon that was blossoming in the U.S. Today, the firm distributes its Cappuccine product range throughout Australia. “Granita has always had a strong presence here, mainly in fruit flavors, not coffee,” says company spokesperson Saul Lakofski. “Australia has a strong European cafe scene with quality espresso and hundreds of boutique roasters. But it was difficult to break into the market with these types of frozen coffee beverages,” he notes.

But according to Lakofski, the Aussies had a few things working in their favor including climate, the cafe scene and a great tasting product. “Plus we had something new and fresh that attracted all age groups,” he notes. “We branded the product and called it a Freezoccino, which helped to describe what the product was as many people did not have a clue.” At present, Cappuccine Australia supplies more than 400 customers and works with five distributors.

“The ice blended drink rage has exploded here as it did in the U.S,” says Lakofski. Today every major coffee chain, donut chain or muffin chain offers either a coffee granita or ice blended drink. Australia also has seen an enormous entry of U.S. style cafes such as Starbucks, Gloria Jeans, MacCafe, Coffee Bean and Tea Leaf. These chains have led the way in marketing ice blended drinks and granitas. According to Lakofski, the independent cafes’ have followed suit and have discovered the benefits of these types of products, namely: high profit, ease of use, consistency, taste, and consumer excitement.

Provided it packs plenty of flavor and is reasonably priced, a strong fountain/frozen category can give retailers the leverage they need to keep customers coming back to their stores, reports CSD data. Frozen cappuccino is an important growth product, for example, because it can help extend, perhaps even perpetuate, the coffee sales that typically drop off after the morning rush. Frozen coffee drinks are also strong sellers in the afternoon. Marketed and merchandised effectively, these products can form the added-value foundation of a thriving retail or foodservice operation.

Tea & Coffee - March/April, 2003
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