Wondering what’s the buzz on CBD?
As convenience retail takes the CBD craze to an all-time high, CEO of Bodlt Runners Corporation-Cannadips CBD Pete Diatelevi joins Gregg Augustine to share actionable category insights for brands and retailers. From profiling the broad spectrum of CBD consumers to dissecting the state and federal regulatory environments, this week’s episode breaks down all the buzz on this emerging age-restricted category.
Listen and subscribe to the full episodes at one of the following links. Below is the episode’s transcript which has been edited for readability. If you have any comments, questions or would like to learn more, contact us below.
Listen on Apple Podcast here.
Listen on Spotify here.
Listen on Amazon here.
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Transcript:
[Music]
Allison Berti: In this episode, we explore the emerging better-for-you trend and how it has influenced the purchase behavior of consumers of a major C-store category. Welcome to How Convenient a podcast about the essential role convenience stores play in the busy lives of consumers. Our hope is to equip innovative C-store leaders as they seek to earn lasting shopper loyalty. In each weekly episode, we will briefly share an update on C-store sales trends and what we are learning from billions of in-store purchase transactions. Today's episode was recorded on September 1st. I'm Allison Berti with Koupon and with me today is Jason Lipsitz from Label Insight. Welcome Jason, tell us a little about yourself.
Jason Lipsitz: Thank you, Allison for having me. Very excited to be here. I'm director of sales and strategic partnerships at Label Insight, coming up on a decade of helping CPGs and retailers unlock the value of product attributes. To make sure your listeners know that I don't just talk the talk, but I also walk the walk, I've been foregoing my morning Starbucks coffee for the past month in favor of pit stops at my C-stores here in my hometown of St. Louis for my morning pick me up. We're going be discussing beverage trends, doing a deep dive into energy drinks and this allowed me to do some firsthand research. This morning's selection is supposed to provide me with mental clarity and focus so if I'm talking too fast, please slow me down. In terms of the C-store snack aisle, my family loves to do road trips to the lake of the Ozarks and this summer we've been stopping and loading up on portable protein at Kingdom City, whether that's beef jerky or ready to drink shakes or bars. So, if this episode goes viral and your listeners enjoy what we're talking about, bring me back for round two on snack trends, I'm ready.
Allison Berti: Absolutely. Well, when you're done digging into those snacks, we'll have you back into the podcast and we can talk about some snack trends. And thank you for joining us today on the podcast, Koupon recently partnered with Label Insight, the leader in powering product attribute, driven growth across the CPG and retail ecosystem. Jason, let's start out by addressing the elephant in the room. Does health and wellness matter for C-stores?
Jason Lipsitz: I'm here to argue that not only does it matter, but that your current customer demographic already includes health and wellness shoppers, but you just simply aren't maximizing their spend in your stores and that you already carry health and wellness products in your current assortment, but you aren't effectively merchandising them as such. As some evidence for this, health and wellness is not just a channel anymore, it's now become mainstream. It's actually a $200 billion category across all channels, including C-store both in-store and online.
So, when you think about the C-store shopper, know that the majority of natural product sales are actually coming through conventional retailers. So, it's not just your whole foods of the world or your sprouts, its actually conventional retailers, including C-stores where shoppers are doing the majority of their health of wellness product buying. And when we look specifically at the natural shopper, when we do demographic segmentation, the majority of their spend is also occurring within these conventional retailers. So, you have this shopper and we're going be talking about how to capitalize on this shopper.
In addition, the definition of health and wellness is expanding. We've been reading a lot of recent articles lately, relevant to CPG brands that are big within the C-store space, placing big bets on health and wellness, but doing so in a way that has their own unique take on wellness, that stays true to their brand identity. Couple articles that I think are really worth mentioning. Hershey's big bet on better infections. Top executives said that producing more lower, no sugar, organic and bite size offerings could generate up to a billion dollars in new revenue for the iconic makers of Kress and Reese's. Nestle, they're launching a vegan KitKat. Not only is it made without using any animal ingredients, such as dairy, but the cocoa is coming from 100% sustainable sources. Mondelez released an update for 2021 on its snacking made right report and it wants 16% of its sales to come from products that have 200 calories or less. They call this portion control. In the bev aisle space, Drizzly, one of the leading e-commerce websites cites that low and no alcohol is the fastest growing trend right now in bev aisle. And we're going go much deeper into this later in the segment, but energy drinks are shedding their unhealthy halo, and we're going talk about that and how retailers can capitalize on this.
Allison Berti: Yeah, it's been interesting to see how brands are their product lines to support the growing health and wellness trend. I'm looking forward to seeing which products are ultimately fads and which ones are here to stay. Your product certainly helps businesses and consumers alike. How did Label Insights come to be? Can you give us some insights into the origin of the company?
Jason Lipsitz: Absolutely. Since I'm one of the original employees, I can attest test that this is a true origin story, having worked side by side with the people I'm about to mention. So, Label Insight was founded by two brothers Dagan and Anton Xavier. Dagan will get a crack out of the fact that we included his origin story in this podcast. He's still actively involved today serving as our chief product officer. Years ago, his father Eddie was diagnosed with a heart condition, requiring him to drastically change his eating habits. Dagan, fresh out of dietetic school said, “dad, I'm going to help you get you well.” What was funny when I heard this story firsthand from Eddie was that it was actually finding an instant ramen noodle was his big as concern. It was his favorite food, and this is an item that's commonly sold across C-stores across the globe.
So, Dagan goes into stores, picks up every package container of ramen noodle turns the item around and starts jotting down all the ingredients and nutrition facts in these ramen noodles. He repeatedly gets thrown out of stores by managers skeptical of what he was doing. Finally, one took the time to ask him, why are you writing down all this information? And when he described it, the manager said, “wow, that would be really useful for the rest of my shoppers.” That was the light bulb moment when he realized that he was solving a need much greater than just his families and the business idea for Label Insight was formed.
Allison Berti: That is a really awesome origin story and his persistence certainly paid off. It sounds like your founder's father is an alone in seeking products that meet a specified diet or lifestyle. What else are you seeing in terms of how consumers have changed how they shop, that's driving the demand for these relevant health and wellness experiences?
Jason Lipsitz: We did some research with the Food Marketing Institute and what we identified is there's actually 200 million shoppers in the US right now that adhere to a particular diet or health related eating program. And addition, there's another 180 million consumers that are actively trying to avoid certain ingredients. Maybe they have a food allergy, or they have a certain intolerance. To put those numbers in perspective, that's more people than have driver's licenses in the us right now and of course, for C-stores, we're trying to target those people with driver's licenses that can stop in your store. So, this is a big segment of consumers. They're changing how they shop and they're thinking more about their particular need states. On top of this, more than 70% of shoppers are looking for specific attributes when they're choosing a brand. So, people are not just shopping by category or loyal to particular brand anymore.
When we did some analysis of Amazon searches, we found that 78% of searches on Amazon are actually unbranded. So, what does this mean? People are looking for need states, they're searching by need states, they're not simply searching by brand. Forester, who we also did some research with, surveyed the top consumers about what is the top challenge for grocery shopping in 2021? And the number one response was the top challenge is finding the exact product that they're looking for. So, what this tells me is that there's still an opportunity, the desire from shoppers is there to find products that meet a specific need and the retailers and brands who can provide a best-in-class discovery experience for shoppers are going win in this regard.
Allison Berti: Yeah, we're seeing a similar better-for-you and health and wellness trend in C-stores, too. Americans are clearly being more intentional about what they eat and drink and that's one reason why we're thrilled here at Koupon to be partnering with you at Label Insight. We see a powerful opportunity to bring incremental value to consumers in the convenient store channel, by connecting brands and retailers. This value will take a few different forms from insights around better-for-you consumer behavior, to targeting offers to consumers who prioritize better-for-you products, and tracking consumer level outcomes for promotion spend. We've already worked with a number of clients to bring a clearer understanding of the better-for-you consumers in their base, as well as the potential consumers they can reach to broaden their share. We'll only be ramping that up in the remainder of 2021. To illustrate this partnership a little more, we're going to explore consumer purchase patterns and how the better-for-you trend is influencing the energy drink category. Thanks to the listeners who stuck around in this final segment, I'll be sharing insights around where the growth is happening and the most important factors influencing purchase behavior and product attributes are the key to understanding this. Jason, have you seen any product attribute trends emerging in energy drinks?
Jason Lipsitz: Absolutely have. Let's take a step back and define what attributes in need states are attributes in the way that we are going to describe it is going far deeper than you may have ever done before, to really define a product's DNA. And once you get to that granular level, that is when you as a CPG or retailer are able to really activate against these trends.
So, in my own shopper journey the past few months, I walk into the store and since I did not have my Starbucks coffee, my need state is that I'm looking for energy. In a traditional consumer decision tree, I walk to the energy drink aisle. I look at price size, maybe flavor, and I make my decision. In a modern consumer decision tree that includes product attributes, the first branch is my need state. It is actually not category driven, it's attribute driven. Sure, I could reach for an energy drink, but I could also grab a coffee. I could get tea, I could get a soda, I could have an energy shot, I could leave the beverage aisle altogether, grab an energy bar or an energy gum or an energy supplement. You get the idea. The options are really endless.
Since I focused on beverages, my next branch in my decision tree is sugar content. I admittedly am that millennial shopper who drinks my own cool aid when it comes to health and wellness. So, I am only considering sugar free beverages, any beverage that has added sugar content is off the table for me. Lastly, I prefer a drink that is clean label. And my biggest as concerns in regard to clean label are I want something that's free of artificial sweeteners, flavors and preservatives. Once I have those in place, then I look at brands and I look at flavors and I look at price points and I look at size of the products left in my consideration set.
So, I'm not the only shopper shopping this way. 29% of energy drink sales are actually now coming from the sugar free variety and the growth of those items is outpacing the category as a whole. To go a level deeper zero sugar drinks, sweeten without artificial sweetener, meaning using a natural sweetener like Stevia are actually far faring, even better in terms of latest 52-week sales growth.
All right, Allison, we're going to flip the script a little bit. I'm not going give away any more stats. It's time for a pop quiz, C-store edition. These are going to get progressively harder so buckle up.
Allison Berti: Oh, okay. I'm ready.
Jason Lipsitz: Which celebrity action hero launched their own energy drink? Chris Hemsworth, Scarlett Johansson, Dwayne "The Rock" Johnson or Michael B. Jordan.
Allison Berti: That's a tough one. But from what I've heard about Dwayne "The Rock" Johnson and his workout schedule, and also just by looking at the guy, I'm going to say he’s the one who launched his own energy drink this year. I have to imagine he's just throwing back caffeine right and left.
Jason Lipsitz: You're absolutely right. The Rock had his second successful foray into the beverage industry. First with his Teremana Tequila and now Zoa, an energy to drink with a tagline healthy, natural energy through his distribution partnership with Molson Coors. It's one of the fastest growing new energy drinks on the market. So, what's the takeaway here for your listeners? On the retail side, it's to give emerging a chance because they often offer something unique that shoppers may be looking for, and that will differentiate your assortment and make you a destination that shoppers will go to buy these items.
I also love that the smaller sizes sold in C-stores make it less risky for consumers to try something new. Someone will try a new 12-ounce beverage, but they're not going to go to a Costco or Sam's Club and buy two cases of it. So, the C-store format in general is the best place to drive trial for new and innovative products.
On the other side of the table for the CPGs that are these emerging brands, use attributes tell a story about how your products are different from legacy incumbents and will not just shift dollars, but really tell a story of incrementality. How you can grow the category by bringing new shoppers to it. For example, The Rock has 266 million Instagram followers and if you were to carry hit a new product, I'm sure you can convert some of those to shoppers or appeal to those who are looking for healthy, natural energy.
The next question I'm going ask you is which of the following is a source of caffeine found in energy drinks? Guarana, maca, green tea, yerba mate, or all of the above?
Allison Berti: I've only actually ever heard of two of those things, but I know they both have caffeine and since two is more than one, I'm going go with all of the above.
Jason Lipsitz: That was a tricky one, but you're right. Again, what's something actionable that your listeners can do with this information? First, it's to understand that consumers are more educated than ever and, in their eyes, not all sources of caffeine are created equal. We're seeing the words natural caffeine actually show up on labels in the ingredient declaration. Meaning the caffeine is sourced from the botanical sources we listed above and not a manufactured molecule. So, think about caffeine content if you're the category manager for a C-store similar to the way that you would think about alcohol by volume for your bev aisle. Just as you should now be stocking low or no ABV options as this is the fastest growing segment in bev aisle, you would have light beers. You would have your stronger IPAs all the way up to malt beverages to get a variety of ABV content across a lot of different segments of bev aisle.
You should be taking a similar approach to energy drinks. The caffeine content ranges very widely. You need low end options all the way up to your full octane options, which can be a 300, 400 even sometimes more milligrams of caffeine. And don't just think about the milligrams of caffeine, but also think about the ingredient source of it. If you don't have any energy drinks in your aisle, that include thing is like guarana green tea or some of these natural sources of caffeine consider adding some items that do, because it's a fast-growing segment.
The last question for you Allison is which of the following is not a functional health benefit promoted by energy drinks? We have immune health, brain health, muscle health, pregnancy health, digestive health, liver health, hydration health, recovery health, mood health, and bone health.
Allison Berti: So, a lot of those are a surprise to me as a potential functional health benefit by energy drinks. But the clearest no for me is going be pregnancy health.
Jason Lipsitz: You got it. And that was the list of 10. I could have gone on and on and on. There's many, many more health benefits that are popping up in energy drinks, but certainly pregnancy health is not one of them. There's actually a warning on most energy drinks that you should read and should not be consumed if you're pregnant or nursing. The beverage market is absolutely flush with functional drinks. Consumers can find a product for almost any complaint or need. One that we'll talk about in particular is immune health. No surprise that shoppers have been looking for ways to boost their immunity during COVID. We ran a long [inaudible 17:52] analysis that benchmarked immune health beverages over the course of the pandemic and we used citrus beverages like orange juice, the classic source of antioxidant, vitamin C as our control group. So, while both citrus beverages and any beverages overall grew during those times, the beverage categories with immune health claims outside of citrus actually outpaced it in terms of growth.
So immune health is one of these functional health benefits that shoppers are definitely looking for within the beverage aisle. You know what's exhibiting even stronger growth? Muscle health claims—up 400% in energy drinks. Terrible pun, muscle health with strong growth, but it's real so look at your assortment and see if you're stocking any energy drinks that make that type of claim.
But I think from a C-store perspective, understanding of claims in the beverage aisle can do two things for you. You want to make sure that you have these items in your stock to cater to these shoppers and as you start to build a shopper profile, if you see shoppers returning time and time again for energy drinks that contain a certain health benefit, you can start to build a profile of who is this shopper and what are they looking for in a beverage, which can be really useful for follow up campaigns. Also, as we enter a more inflationary environment, items that offer a specific health benefit tend to be more priced in elastic and could be a way to preserve margins as people become more price sensitive down the road.
Now I'm going to kick it over to you Allison. Are you seeing any interesting health trends in Koupon’s C-store data?
Allison Berti: Yes, we definitely are. And in C-store it's no surprise that Monster and Red Bull are the energy drink market leaders, but what we'll really need to watch is the race for who will be number three and number four. Monster and Red Bull have a relatively low trial rate compared to some smaller brands in the category where consumers are not only trialing at higher rates, but converting to loyal consumers as well. This was surprising to us at first, but taking advantage of the better-for-you opportunity is one way a brand can differentiate itself and grow in C-store. While Monster and Red Bull have plenty of loyal customers, those consumers rarely purchase better-for-you product. On the other hand, we have brands like Rain Total Body Fuel. Rain Total Body Fuel is an energy and performance brand which boast zero sugar and zero calories while also containing electrolytes, amino acids, and other better-for-you attributes.
We found that Rain over indexes on both trial and conversion rates compared to its larger competitors. Not only that, but consumers loyal to Rain purchase better-for-you products majority of the time, even when they purchase products outside of the energy category so we're really seeing a shopper that prioritizes better-for-you. We see similar trends in the juice category too, where loyal buyers of brands with better free messaging on the pack, like Good to Grow, purchase better-for-you products across all categories the majority of the time. Similarly, 60% of mega juice consumers buy mostly better-for-you products, which is actually three times higher than the category average. The insights we're seeing indicate that there are segments of consumers in the convenience channel that consistently seek out better-for-you products across all categories. And as consumers who consistently purchase better-for-you options than an average 44% more per basket this is a segment brands and retailers should really pay attention to.
Koupon will continue to monitor the better-for-you trend in C-store and we look forward to leveraging our partnership with Label insight to bring incremental value to consumers. If you are a retailer or brand wanting to learn more about your consumers, let us know. Jason, thank you so much again for joining us today and sharing your expertise.
Jason Lipsitz: Thank you for having me.
Allison Berti: Thank you for listening to How Convenient. We want to hear from you. You can reach us at koupon.com and find more insights at blog.koupon.com. Don't forget to subscribe, rate us and give us a review. We'll also be at the NACS show at booth #4258 so make sure to stop by and meet the Koupon and Label Insight teams. Thanks everyone.
Jason Lipsitz: Thank you, Allison for having me. Very excited to be here. I'm director of sales and strategic partnerships at Label Insight, coming up on a decade of helping CPGs and retailers unlock the value of product attributes. To make sure your listeners know that I don't just talk the talk, but I also walk the walk, I've been foregoing my morning Starbucks coffee for the past month in favor of pit stops at my C-stores here in my hometown of St. Louis for my morning pick me up. We're going be discussing beverage trends, doing a deep dive into energy drinks and this allowed me to do some firsthand research. This morning's selection is supposed to provide me with mental clarity and focus so if I'm talking too fast, please slow me down. In terms of the C-store snack aisle, my family loves to do road trips to the lake of the Ozarks and this summer we've been stopping and loading up on portable protein at Kingdom City, whether that's beef jerky or ready to drink shakes or bars. So, if this episode goes viral and your listeners enjoy what we're talking about, bring me back for round two on snack trends, I'm ready.
Allison Berti: Absolutely. Well, when you're done digging into those snacks, we'll have you back into the podcast and we can talk about some snack trends. And thank you for joining us today on the podcast, Koupon recently partnered with Label Insight, the leader in powering product attribute, driven growth across the CPG and retail ecosystem. Jason, let's start out by addressing the elephant in the room. Does health and wellness matter for C-stores?
Jason Lipsitz: I'm here to argue that not only does it matter, but that your current customer demographic already includes health and wellness shoppers, but you just simply aren't maximizing their spend in your stores and that you already carry health and wellness products in your current assortment, but you aren't effectively merchandising them as such. As some evidence for this, health and wellness is not just a channel anymore, it's now become mainstream. It's actually a $200 billion category across all channels, including C-store both in-store and online.
So, when you think about the C-store shopper, know that the majority of natural product sales are actually coming through conventional retailers. So, it's not just your whole foods of the world or your sprouts, its actually conventional retailers, including C-stores where shoppers are doing the majority of their health of wellness product buying. And when we look specifically at the natural shopper, when we do demographic segmentation, the majority of their spend is also occurring within these conventional retailers. So, you have this shopper and we're going be talking about how to capitalize on this shopper.
In addition, the definition of health and wellness is expanding. We've been reading a lot of recent articles lately, relevant to CPG brands that are big within the C-store space, placing big bets on health and wellness, but doing so in a way that has their own unique take on wellness, that stays true to their brand identity. Couple articles that I think are really worth mentioning. Hershey's big bet on better infections. Top executives said that producing more lower, no sugar, organic and bite size offerings could generate up to a billion dollars in new revenue for the iconic makers of Kress and Reese's. Nestle, they're launching a vegan KitKat. Not only is it made without using any animal ingredients, such as dairy, but the cocoa is coming from 100% sustainable sources. Mondelez released an update for 2021 on its snacking made right report and it wants 16% of its sales to come from products that have 200 calories or less. They call this portion control. In the bev aisle space, Drizzly, one of the leading e-commerce websites cites that low and no alcohol is the fastest growing trend right now in bev aisle. And we're going go much deeper into this later in the segment, but energy drinks are shedding their unhealthy halo, and we're going talk about that and how retailers can capitalize on this.
Allison Berti: Yeah, it's been interesting to see how brands are their product lines to support the growing health and wellness trend. I'm looking forward to seeing which products are ultimately fads and which ones are here to stay. Your product certainly helps businesses and consumers alike. How did Label Insights come to be? Can you give us some insights into the origin of the company?
Jason Lipsitz: Absolutely. Since I'm one of the original employees, I can attest test that this is a true origin story, having worked side by side with the people I'm about to mention. So, Label Insight was founded by two brothers Dagan and Anton Xavier. Dagan will get a crack out of the fact that we included his origin story in this podcast. He's still actively involved today serving as our chief product officer. Years ago, his father Eddie was diagnosed with a heart condition, requiring him to drastically change his eating habits. Dagan, fresh out of dietetic school said, “dad, I'm going to help you get you well.” What was funny when I heard this story firsthand from Eddie was that it was actually finding an instant ramen noodle was his big as concern. It was his favorite food, and this is an item that's commonly sold across C-stores across the globe.
So, Dagan goes into stores, picks up every package container of ramen noodle turns the item around and starts jotting down all the ingredients and nutrition facts in these ramen noodles. He repeatedly gets thrown out of stores by managers skeptical of what he was doing. Finally, one took the time to ask him, why are you writing down all this information? And when he described it, the manager said, “wow, that would be really useful for the rest of my shoppers.” That was the light bulb moment when he realized that he was solving a need much greater than just his families and the business idea for Label Insight was formed.
Allison Berti: That is a really awesome origin story and his persistence certainly paid off. It sounds like your founder's father is an alone in seeking products that meet a specified diet or lifestyle. What else are you seeing in terms of how consumers have changed how they shop, that's driving the demand for these relevant health and wellness experiences?
Jason Lipsitz: We did some research with the Food Marketing Institute and what we identified is there's actually 200 million shoppers in the US right now that adhere to a particular diet or health related eating program. And addition, there's another 180 million consumers that are actively trying to avoid certain ingredients. Maybe they have a food allergy, or they have a certain intolerance. To put those numbers in perspective, that's more people than have driver's licenses in the us right now and of course, for C-stores, we're trying to target those people with driver's licenses that can stop in your store. So, this is a big segment of consumers. They're changing how they shop and they're thinking more about their particular need states. On top of this, more than 70% of shoppers are looking for specific attributes when they're choosing a brand. So, people are not just shopping by category or loyal to particular brand anymore.
When we did some analysis of Amazon searches, we found that 78% of searches on Amazon are actually unbranded. So, what does this mean? People are looking for need states, they're searching by need states, they're not simply searching by brand. Forester, who we also did some research with, surveyed the top consumers about what is the top challenge for grocery shopping in 2021? And the number one response was the top challenge is finding the exact product that they're looking for. So, what this tells me is that there's still an opportunity, the desire from shoppers is there to find products that meet a specific need and the retailers and brands who can provide a best-in-class discovery experience for shoppers are going win in this regard.
Allison Berti: Yeah, we're seeing a similar better-for-you and health and wellness trend in C-stores, too. Americans are clearly being more intentional about what they eat and drink and that's one reason why we're thrilled here at Koupon to be partnering with you at Label Insight. We see a powerful opportunity to bring incremental value to consumers in the convenient store channel, by connecting brands and retailers. This value will take a few different forms from insights around better-for-you consumer behavior, to targeting offers to consumers who prioritize better-for-you products, and tracking consumer level outcomes for promotion spend. We've already worked with a number of clients to bring a clearer understanding of the better-for-you consumers in their base, as well as the potential consumers they can reach to broaden their share. We'll only be ramping that up in the remainder of 2021. To illustrate this partnership a little more, we're going to explore consumer purchase patterns and how the better-for-you trend is influencing the energy drink category. Thanks to the listeners who stuck around in this final segment, I'll be sharing insights around where the growth is happening and the most important factors influencing purchase behavior and product attributes are the key to understanding this. Jason, have you seen any product attribute trends emerging in energy drinks?
Jason Lipsitz: Absolutely have. Let's take a step back and define what attributes in need states are attributes in the way that we are going to describe it is going far deeper than you may have ever done before, to really define a product's DNA. And once you get to that granular level, that is when you as a CPG or retailer are able to really activate against these trends.
So, in my own shopper journey the past few months, I walk into the store and since I did not have my Starbucks coffee, my need state is that I'm looking for energy. In a traditional consumer decision tree, I walk to the energy drink aisle. I look at price size, maybe flavor, and I make my decision. In a modern consumer decision tree that includes product attributes, the first branch is my need state. It is actually not category driven, it's attribute driven. Sure, I could reach for an energy drink, but I could also grab a coffee. I could get tea, I could get a soda, I could have an energy shot, I could leave the beverage aisle altogether, grab an energy bar or an energy gum or an energy supplement. You get the idea. The options are really endless.
Since I focused on beverages, my next branch in my decision tree is sugar content. I admittedly am that millennial shopper who drinks my own cool aid when it comes to health and wellness. So, I am only considering sugar free beverages, any beverage that has added sugar content is off the table for me. Lastly, I prefer a drink that is clean label. And my biggest as concerns in regard to clean label are I want something that's free of artificial sweeteners, flavors and preservatives. Once I have those in place, then I look at brands and I look at flavors and I look at price points and I look at size of the products left in my consideration set.
So, I'm not the only shopper shopping this way. 29% of energy drink sales are actually now coming from the sugar free variety and the growth of those items is outpacing the category as a whole. To go a level deeper zero sugar drinks, sweeten without artificial sweetener, meaning using a natural sweetener like Stevia are actually far faring, even better in terms of latest 52-week sales growth.
All right, Allison, we're going to flip the script a little bit. I'm not going give away any more stats. It's time for a pop quiz, C-store edition. These are going to get progressively harder so buckle up.
Allison Berti: Oh, okay. I'm ready.
Jason Lipsitz: Which celebrity action hero launched their own energy drink? Chris Hemsworth, Scarlett Johansson, Dwayne "The Rock" Johnson or Michael B. Jordan.
Allison Berti: That's a tough one. But from what I've heard about Dwayne "The Rock" Johnson and his workout schedule, and also just by looking at the guy, I'm going to say he’s the one who launched his own energy drink this year. I have to imagine he's just throwing back caffeine right and left.
Jason Lipsitz: You're absolutely right. The Rock had his second successful foray into the beverage industry. First with his Teremana Tequila and now Zoa, an energy to drink with a tagline healthy, natural energy through his distribution partnership with Molson Coors. It's one of the fastest growing new energy drinks on the market. So, what's the takeaway here for your listeners? On the retail side, it's to give emerging a chance because they often offer something unique that shoppers may be looking for, and that will differentiate your assortment and make you a destination that shoppers will go to buy these items.
I also love that the smaller sizes sold in C-stores make it less risky for consumers to try something new. Someone will try a new 12-ounce beverage, but they're not going to go to a Costco or Sam's Club and buy two cases of it. So, the C-store format in general is the best place to drive trial for new and innovative products.
On the other side of the table for the CPGs that are these emerging brands, use attributes tell a story about how your products are different from legacy incumbents and will not just shift dollars, but really tell a story of incrementality. How you can grow the category by bringing new shoppers to it. For example, The Rock has 266 million Instagram followers and if you were to carry hit a new product, I'm sure you can convert some of those to shoppers or appeal to those who are looking for healthy, natural energy.
The next question I'm going ask you is which of the following is a source of caffeine found in energy drinks? Guarana, maca, green tea, yerba mate, or all of the above?
Allison Berti: I've only actually ever heard of two of those things, but I know they both have caffeine and since two is more than one, I'm going go with all of the above.
Jason Lipsitz: That was a tricky one, but you're right. Again, what's something actionable that your listeners can do with this information? First, it's to understand that consumers are more educated than ever and, in their eyes, not all sources of caffeine are created equal. We're seeing the words natural caffeine actually show up on labels in the ingredient declaration. Meaning the caffeine is sourced from the botanical sources we listed above and not a manufactured molecule. So, think about caffeine content if you're the category manager for a C-store similar to the way that you would think about alcohol by volume for your bev aisle. Just as you should now be stocking low or no ABV options as this is the fastest growing segment in bev aisle, you would have light beers. You would have your stronger IPAs all the way up to malt beverages to get a variety of ABV content across a lot of different segments of bev aisle.
You should be taking a similar approach to energy drinks. The caffeine content ranges very widely. You need low end options all the way up to your full octane options, which can be a 300, 400 even sometimes more milligrams of caffeine. And don't just think about the milligrams of caffeine, but also think about the ingredient source of it. If you don't have any energy drinks in your aisle, that include thing is like guarana green tea or some of these natural sources of caffeine consider adding some items that do, because it's a fast-growing segment.
The last question for you Allison is which of the following is not a functional health benefit promoted by energy drinks? We have immune health, brain health, muscle health, pregnancy health, digestive health, liver health, hydration health, recovery health, mood health, and bone health.
Allison Berti: So, a lot of those are a surprise to me as a potential functional health benefit by energy drinks. But the clearest no for me is going be pregnancy health.
Jason Lipsitz: You got it. And that was the list of 10. I could have gone on and on and on. There's many, many more health benefits that are popping up in energy drinks, but certainly pregnancy health is not one of them. There's actually a warning on most energy drinks that you should read and should not be consumed if you're pregnant or nursing. The beverage market is absolutely flush with functional drinks. Consumers can find a product for almost any complaint or need. One that we'll talk about in particular is immune health. No surprise that shoppers have been looking for ways to boost their immunity during COVID. We ran a long [inaudible 17:52] analysis that benchmarked immune health beverages over the course of the pandemic and we used citrus beverages like orange juice, the classic source of antioxidant, vitamin C as our control group. So, while both citrus beverages and any beverages overall grew during those times, the beverage categories with immune health claims outside of citrus actually outpaced it in terms of growth.
So immune health is one of these functional health benefits that shoppers are definitely looking for within the beverage aisle. You know what's exhibiting even stronger growth? Muscle health claims—up 400% in energy drinks. Terrible pun, muscle health with strong growth, but it's real so look at your assortment and see if you're stocking any energy drinks that make that type of claim.
But I think from a C-store perspective, understanding of claims in the beverage aisle can do two things for you. You want to make sure that you have these items in your stock to cater to these shoppers and as you start to build a shopper profile, if you see shoppers returning time and time again for energy drinks that contain a certain health benefit, you can start to build a profile of who is this shopper and what are they looking for in a beverage, which can be really useful for follow up campaigns. Also, as we enter a more inflationary environment, items that offer a specific health benefit tend to be more priced in elastic and could be a way to preserve margins as people become more price sensitive down the road.
Now I'm going to kick it over to you Allison. Are you seeing any interesting health trends in Koupon’s C-store data?
Allison Berti: Yes, we definitely are. And in C-store it's no surprise that Monster and Red Bull are the energy drink market leaders, but what we'll really need to watch is the race for who will be number three and number four. Monster and Red Bull have a relatively low trial rate compared to some smaller brands in the category where consumers are not only trialing at higher rates, but converting to loyal consumers as well. This was surprising to us at first, but taking advantage of the better-for-you opportunity is one way a brand can differentiate itself and grow in C-store. While Monster and Red Bull have plenty of loyal customers, those consumers rarely purchase better-for-you product. On the other hand, we have brands like Rain Total Body Fuel. Rain Total Body Fuel is an energy and performance brand which boast zero sugar and zero calories while also containing electrolytes, amino acids, and other better-for-you attributes.
We found that Rain over indexes on both trial and conversion rates compared to its larger competitors. Not only that, but consumers loyal to Rain purchase better-for-you products majority of the time, even when they purchase products outside of the energy category so we're really seeing a shopper that prioritizes better-for-you. We see similar trends in the juice category too, where loyal buyers of brands with better free messaging on the pack, like Good to Grow, purchase better-for-you products across all categories the majority of the time. Similarly, 60% of mega juice consumers buy mostly better-for-you products, which is actually three times higher than the category average. The insights we're seeing indicate that there are segments of consumers in the convenience channel that consistently seek out better-for-you products across all categories. And as consumers who consistently purchase better-for-you options than an average 44% more per basket this is a segment brands and retailers should really pay attention to.
Koupon will continue to monitor the better-for-you trend in C-store and we look forward to leveraging our partnership with Label insight to bring incremental value to consumers. If you are a retailer or brand wanting to learn more about your consumers, let us know. Jason, thank you so much again for joining us today and sharing your expertise.
Jason Lipsitz: Thank you for having me.
Allison Berti: Thank you for listening to How Convenient. We want to hear from you. You can reach us at koupon.com and find more insights at blog.koupon.com. Don't forget to subscribe, rate us and give us a review. We'll also be at the NACS show at booth #4258 so make sure to stop by and meet the Koupon and Label Insight teams. Thanks everyone.
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