Whether they are coming from out of a bottle or a fountain tap, beverages are feeling the shift in consumer trends towards better-for-you options.
While that transition may be happening faster in the former than in the latter, brands are beginning to look at refreshing their fountain drink offerings to reflect the broader changes in the beverage landscape. This includes not only putting different kinds of drinks into fountains, but also integrating fountains into different retail channels and using new technology to change the way users interact with and think about their selections at the point-of-sale.
A Changing Marketplace
As president of Al’s Beverage, Gerry Martin is focused on fountains. The Windsor, Connecticut-based company sells a variety of dispensed drink products, including frozen beverages, and is an authorized manufacturer of a selection of legacy Keurig Dr Pepper (KDP) products, including Royal Crown Cola, Canada Dry, Sunkist and Stewart’s. The company is also affiliated with Gosling’s Ginger Beer and B.W. Cooper’s Iced Tea for fountain service.
While noting that “cola is still king,” Martin said that a combination of changing consumer preferences and technological developments have created an opening for healthier, more craft-oriented options to enter the fountain space.
“It’s really about staying with the trends and educating our segment of the business that the trends are what they are,” he said. “Fountain is such a huge opportunity to sample and market your drink. A brand is not complete until it has made it on fountain.”
While the opportunities for broadening fountain drink service may exist, it’s up to individual customers to take advantage of them. Martin said that independent restaurants still tend to be slightly less savvy than chains and convenience stores when it comes to understanding what’s going on in the larger marketplace.
“If you think of a C-store chain, they’ve already made adjustments in the cold vault by cutting back on colas and adding more water, sparkling water, iced teas and things like that,” he said. Fountains, in contrast, offer a finite number of slots for retailers to work with, and are typically governed by exclusivity contracts.
Another issue, Martin said, was that larger companies, such as DPS, look to independent beverage makers for new ideas and concepts, which are usually introduced in bottles or cans before determining if they can be integrated into fountain service. Martin noted for example that Bai, DPS’s biggest acquisition in the better-for-you beverage space and a strong performer at retail (27.3 percent unit sales increase in May), has yet to be introduced as a fountain offering, which he called the low-calorie, antioxidant-infused beverage line “a huge opportunity” for the brand.
“Our goal is to constantly innovate and offer up those different options, but never turning a blind eye to the fact that cola is still king,” Martin said.
Coke Freestyle Evolves
For The Coca-Cola Company, fountain beverage service — a cornerstone of its business model since its inception — continues to evolve. The Coke Freestyle machine, introduced in 2009, has been a major part of that growth, incorporating technology and personalization to offer users nearly 200 beverage options from a single dispenser, including over 100 reduced and zero sugar drinks.
At the National Restaurants Association (NRA) show held in Chicago in May, Coke shared its newest version of the machine, the Coca-Cola Freestyle 9100, which will begin rolling out nationally next year. The new model boasts a slew of technological upgrades; for example, the fountain system now features Bluetooth connectivity that allows users to to select beverages or create new mixes from the Freestyle app on their smartphones. For a more interactive user experience, the 9100 model also is equipped with built-in microphones, optical sensors and speakers.
Coca-Cola is also refreshing its 50,000 existing Freestyle dispensers with new brands and categories, as well as an on-screen calorie display feature. According to a spokesperson for the company, FUZE iced teas and Dasani Sparkling waters are now available in existing machines, while the 9100 includes a new equipment option that will eventually support the addition of drink categories that are not currently available. Among those could be coffee, juices and kombucha.
On a broader level, developments in technology and Internet connected home electronics have opened the door for new players to get involved in the segment. Boston-based Bevi sells a “smart” beverage dispensing system designed for commercial use for still or sparkling flavored water. However, last September, the company introduced drinks from Sound Sparkling Tea as its first affiliation with an independent beverage brand. Meanwhile, Pepsi’s own next-gen digital fountain system, Spire, which debuted in 2014, has a growing U.S. presence in restaurants and select college campuses.
Building a Fountain Platform
While consumer interest in better-for-you beverages continues to increase, the places in which people can find fountain dispensers is also changing.
Through her startup Tapaz, Alexandra Tenney is aiming to connect the two and provide a one-stop platform for beverage manufacturers to integrate their offerings into fountain dispensers at places like better-for-you fast-casual restaurant chains and upscale movie theatres. The company, which is still in preliminary talks with potential partners, will work with existing beverage manufacturers to optimize formulation, manufacturing and placement in on-premise locations that match the drink’s ethos and positioning.
“I think the reason these upscale fast casual restaurants have elected not to have fountains is because the beverages have been made available through fountains are not healthy and they don’t align with those brands,” Tenney said in a call with BevNET. “I can’t imagine going to Sweetgreen and then seeing a Coke machine. It’s very contradictory.”
The idea, Tenney said, is to support beverage companies’ fountain operations, which will in turn allow them to focus their efforts on traditional retail. Tapaz will represent partner brands in negotiations with restaurants, but will also help on the back end with formulation and logistics. Tenney said Tapaz will initially focus on low calorie flavored waters before expanding into other categories, with a broad focus on low sugar and sugar-free drinks. The company does not plan to develop any fountain technology or innovations, but rather to redesign the exterior of dispensers with “modern” imagery that will distance the included offerings from the traditional carbonated soft drink segment.