Beverage Cos. Target C-Store Consumers

NEW YORK -- Beverage companies are turning their focus to convenience store shoppers to boost profits in the face of rising commodity costs.

Key companies such as Coca-Cola Co., PepsiCo Inc. and Dr Pepper Snapple Group are dealing with the increased cost for plastic used to make bottles, fuel to ship their products and other ingredients. To ease the pain, the companies are looking toward c-store consumers because drinks are typically priced higher per ounce in these locations than in supermarkets, according to the Wall Street Journal.

However, even that avenue has some obstacles, as high gas prices and frugal shoppers slow convenience store purchases. To that end, beverage makers are trying to entice consumers with smaller, less-expensive sizes, new flavors and package deals.

"The [immediate consumption] channel is critical for generating new profit," Katie Bayne, Coke's president of sparkling beverages in North America, told the newspaper.

Convenience stores are competing with dollar stores, however, when it comes to drink purchases. High gas prices are also a threat to sales, the news outlet reported.

To attract consumers, Pepsi is expanding the availability of 99-cent 16-ounce bottles to sell alongside the traditional 20-ounce bottles, which sell for about $1.50, Tom Greco, Pepsi's chief commercial officer told the WSJ.

Dr Pepper Snapple is also introducing smaller sizes. Notably, the company began selling six packs of cans rather than 12 at many c-stores and gas stations earlier this year at prices between $1.99 and $2.49. The company also replaced two-liter bottles with one liters that cost between 99 cents and $1.19, according to the report.

"There's still that customer who has four quarters in his ash tray that he wants to scrape together and spend on a beverage," said David McMichael, Dr Pepper Snapple's vice president of sales to convenience stores and gasoline stations.

To balance out lower-priced sales, Coke and Pepsi both offer liter sizes priced higher than the smaller 20-ounce drinks. They may also promote a drink as a combo meal with a store's food selection.