C-stores Freestylin' at the Fountain
NATIONAL REPORT -- Over the last few years, the Coca-Cola Freestyle fountain has been making a splash in restaurants, offering more than 120 of The Coca-Cola Co.'s sparkling and still beverages from a single unit. At the same time, the idea of bringing this technology into the convenience channel has been met with a bubbling of questions: How would c-store customers respond to such a different fountain experience? Would it be additive to fountain sales? What impact, if any, would it have on packaged beverages?
At last, the beverage giant believes it has the answers -- and some convenience retailers are seeing for themselves whether Freestyle is the right fit for their stores and their customers.
"It's about giving the consumer choice and variety in a fun and engaging experience," said Gene Farrell, vice president and general manager of Coca-Cola Freestyle Global, The Coca-Cola Co. "Our early learning in c-stores is that consumer excitement is just as great as it is in the restaurant channel. We're seeing significant lifts in dispensed, and it doesn't appear to be cannibalizing packaged product."
The Freestyle unit requires roughly the same amount of space as a typical six- or eight-valve fountain, but because of its microdosing technology, it's able to offer far more options than a traditional fountain. Using the interactive touch-screen on the front of the freestanding machine, customers can choose from a variety of waters, sports drinks, lemonades and sparkling beverages. Some brands, such as Caffeine-Free Diet Coke with Lime, Fanta Peach and Minute Maid Light Orange Lemonade, have never before been offered in the United States.
Farrell said the company targeted restaurants first because that's where fountain choice was most limited. Then about a year ago, Coca-Cola began testing Freestyle in convenience stores, starting with a very small number of locations in Salt Lake City and its hometown of Atlanta, Ga.
"The goal of the initial testing was just to get a non-quantitative idea of whether it would fit in c-stores, just a see-how-it-works sort of thing," Farrell explained.
Given the positive results, testing has since expanded to more c-stores. Wawa, 7-Eleven and Rotten Robbie — as well as drugstore chains Walgreens and Duane Reade — are currently testing Coca-Coca Freestyle in select stores. By the end of this quarter, Rhodes 101 Stops, Daily's, Hess Express, Terrible Herbst and a few additional 7-Eleven locations will have tests underway as well — bringing the number of c-stores testing the dispenser to between 40 and 50.
Across all U.S. outlets, consumers can find Freestyle at more than 2,100 locations in 43 states and the District of Columbia. That count is growing every week, according to Farrell.
"We've proven the concept to ourselves. Now, it's really about our customers [the retailers] evaluating Freestyle and whether it's right for their business," he said, noting that c-store operators must commit exclusively to Coca-Cola if they want to offer Freestyle. "The thing about Freestyle in the convenience channel is that it requires the retailer to rethink how they define choice and variety in the fountain space. Choice isn't about having four different colas."
Farrell believes it's only a matter of time before the first c-store chain signs on to permanently place Freestyle in its stores. To date, he said 97 percent of the outlets that tested it have kept it.
Like the iPod is to music, he hopes Freestyle will become the new standard for fountain.
"At the end of the day, the person I'm most concerned about is the consumer. Over time, the consumer will determine if this is the standard," he said. "If it's creating value for consumers, then I would think you would see more and more retailers deciding the value is higher with Freestyle than it is without."