RFDC Speaker Tells How to Survive 'Sugar Water Revolution'
Probiotic-infused drinking vinegars are a thing now, like this line called Kevita
Goodbye, Diet Dr. Pepper Cherry Vanilla. Hello, probiotic-infused drinking vinegars. That’s the gist of the beverage forecast from George Hiller, Hiller & Associates, who presented on “The Sugar Water Revolution” at the Restaurant Finance & Development Conference today.
“The consumer has really spoken. What was five years ago is not the same as today,” Hiller said. Although the decline of carbonated sugar drinks may have bottomed out, he notes in 2017 sales of bottled water will exceed for the first time sales of carbonated soda. “It creates a significant dilemma for Coke, Pepsi and Pepper,” because although people are loyal to their soft drink, “consumers are not loyal to their water brand.”
The craft soda surge is official, he said. “If you would have told me to describe the craft soda phenomenon” even a year ago, “I would have said it’s a light snowfall on top of the mountain. Now it’s not a full-blown avalanche” but he expects it soon will be. Organic aloe water is a thing now, as are “probiotic-infused drinking vinegars.”
Declining beverage sales are a problem for restaurant operators, as Hiller explained with a quick illustration: If a family of four goes out to eat but just drinks water, that’s $2.50 each off the tab, plus tip, or a $12 hit on the check. Hiller’s advice to keep lucrative beverage revenue:
1. Shorter may be better for beverage contracts, so five years rather than the typical seven years as consumer tastes become more clear.
2. Embrace the trends, such as lemonade, iced tea and juices are hot. Do a limited-time offer for beverages, he advised, and charge a premium price with no free refills.
3. Think outside the box in beverages. There’s a fast-casual brand, which he didn’t name, that sells four mainstream beverages and then four craft sodas.
4. Think about how well you buy, yes—meaning, pay attention to your contracts with distributors. “But it’s how well you sell” too that will make a difference in margins.
The Restaurant Finance & Development Conference, drawing restaurant operators and financiers throughout the United States, continues through Wednesday noon at the Bellagio in Las Vegas. The Restaurant Finance Monitor, FT’s sister publication, is the presenter.