The various segments of the foodservice beverage category strongly mirror the sales statistics of their retail counterparts. Most notable is the ever-spreading role of coffee-based products. No longer only a staple of the end of dinner, coffees and related products are emerging to take their place as almost a daypart unto themselves, thanks due in no small part to Starbucks (Seattle).

The chain has managed to make coffee, once an inexpensive means of morning invigoration, into a gourmet experience. Granted, one cup of Starbucks costs as much as three or four other cups which normally graced that part of the consumer's daily routine. Starbucks' success has not been lost on other major foodservice players.

McDonald's (Oak Brook, Ill.), for instance, plans to test and roll out “premium coffee” to its 13,000 U.S. locations later this year or in 2006. The company already is experimenting with specialty coffee in its McCafe coffee shops, which feature premium coffee and made-to-order specialty drinks in a cafe-style setting. In fact, that setting may be the true point of differentiation for the McCafe concept. Certainly, the beverage options are a bit more upscale, but these are not the McDonald's diners of old. They have couches, music and wireless Internet access. This is not to say, however, that other foodservice operators are not also turning their attention to improving their coffee selection.

Others, in fact, have quickly followed. Burger King (Miami) has announced plans for BK Joe, a premium coffee also available in a turbo version with extra caffeine. Chick-fil-A (Atlanta) has premium-coffee plans as well, announcing Cafe Blends Coffee, a line available in three specialty blends--Coffeehouse Light, Bistro Dark and Expressly Decaf, all hand-picked Arabica coffees custom-roasted for Chick-fil-A.

Dunkin' Donuts (Canton, Mass.) also is raising its coffee bar, launching new coffee beverages and using equipment to streamline upscale coffee. Its locations have begun to use a Flavorshot machine that adds flavor(s) to regular-brewed Dunkin' Donuts coffee.

What might be next for specialty coffeehouses? Espressos, lattes and iced drinks already are making their way onto menus, though Starbucks remains ahead of the pack in this respect as well. Lattes and cappuccinos--in hot, iced and frozen versions--can be found on menus in restaurants, chains and diners across the country, all influenced by what was once a small coffeehouse in Seattle. Seeking to maintain that leadership role, Starbucks has expanded its portfolio with Chantico drinking chocolate, a decadent, premium-chocolate beverage that the company claims is dramatically different from simple hot chocolate.

Chai One On

Starbucks helped to catapult chai tea into the mainstream. The traditional Indian drink composed of black tea and such spices as cardamom, cinnamon, cloves, ginger, nutmeg and pepper can be found hot or cold in Dunkin' Donuts, Atlanta Bread Co. (Smyrna, Ga.) and Panera Bread (St. Louis), to name only a few. It even has been incorporated into a milkshake--Burgerville's (Vancouver, Wash.) Oregon Chai milkshake--and college and university foodservice personnel report chai is especially popular.

Those college and university students, the mass consumers of tomorrow after all, can teach quite a bit about what to expect of consumers in coming years. Charlie Krause, assistant director of dining services with Unity College (Unity, Maine), finds a number of trends are crossing over into academia. Organic anything, for instance, sells well, he reports, be it coffee or sodas. Soda sales, overall, are being surpassed by waters and juices, while smoothies are almost too popular. Smoothies can be found more and more off-campus as well, Technomic Inc. (Chicago) notes, as they capitalize on interest in the fresh/healthy and meal-replacement segments.

New dietary guidelines may serve smoothie offerings well, considering they provide a quick way to attain the recommended increased consumption of low-fat dairy products, fruits and vegetables. Jamba Juice (San Francisco) is one example of a chain centered around high-quality smoothies with healthful ingredients. Its line of Enlightened Smoothies incorporates sucralose, non-fat milk and whey protein for a beverage promising a third fewer calories, sugars and carbohydrates. Responding to customer demand for smaller-sized options, Jamba Juice also has introduced a 16oz. size.

Thinking Small

Until relatively recently, small-sized options had been almost the only allowances made for young consumers. When it comes to targeting beverages to children, few offerings are tailor-made for them. For the most part, operators now attract youngsters with upgrades or add-ons. Friendly's (Wilbraham, Mass.) allows young patrons to upgrade to a towering mug of soda or juice for an extra $0.79, while Fuddrucker's (Austin, Texas) charges $0.99 to upgrade a kids drink to a shake. Some, however, are experimenting with specialty beverages. Gloria Jean (Irvine, Calif.) has a new line of 12oz. flavored drinks for kids, with such flavors as Smashin Strawberry and Ragin Red Melon.

Operators seem to realize that, when it comes to beverages for children, keep it simple, keep it comforting in at least some respects and, for the sake of the parent, keep it in plastic cups with lids and straws, Technomic says. For that matter, the straw may benefit the bottom line, too. A study by the Milk Processor Education Program (MilkPEP, Washington) found a 776% increase in milk sales at upscale/casual restaurants when flavored straws were offered to children. This foodservice test used flavored straws, individually wrapped clear tubes containing confection beads, so that when milk is sipped through the straw, the milk is flavored with either banana, caramel, chocolate or strawberry.

With the recent controversy surrounding beverages available in schools around the country, it should be little shock that food manufacturers have responded with more-healthful options. For example, repackaging milk varieties in ready-to-drink (RTD), single-serve plastic containers has given a boost to sales in schools and quick-service restaurants, and more schools are adding milk-only vending machines. For that matter, certain elements of the dairy industry have to be pleased that milk plays such an integral role in so many of the coffee drink introductions of recent years.

Clearly, milk consumption in the foodservice arena has room to improve, but MilkPEP found server suggestions would go a long way to meeting that goal. Its study found a 52% increase in sales when milk was promoted to children, as well as a 35% jump when promoted to adults. Interestingly, it found adults often will order milk in addition to other beverages.

When it comes to adult beverages with alcohol, signature drinks would seem to have a distinct place, though only 16% of operators report them among the most effective methods of increasing the number of customers drinking, according to Technomic research. Marketing efforts top the preferred methods, whether it is server suggestion (36%), events (28%), specials/discounts (23%), a designated driver program (23%), happy hours (20%) or in-house promotions (17%). While restaurants generally are not regarded as places for consumer alcohol consumption, Technomic contends it should be part of a facility's growth strategy. Considering occasion-based marketing could target alcohol consumers and increase sales, chains would be well-served by developing an alcohol program throughout the entire system, Technomic asserts.

Back to School

The controversies surrounding beverage options in schools may have benefited milk producers, but it has been at the expense of sodas. In early 2004, the American Academy of Pediatrics (Elk Grove Village, Ill.) recommended eliminating soft drinks from schools, citing the nation's obesity epidemic as the reason. The group said soft drinks are a common source of excess calories, especially among school-age children, 56% to 85% of whom consume at least one soft drink daily. States and community education boards across the country have responded by eliminating or severely limiting the soft drink options available in vending machines.

In August of this year, the American Beverage Association (ABA, Washington) issued a new school vending policy. “Childhood obesity is a serious problem in the U.S., and the responsibility for finding common-sense solutions is shared by everyone, including our industry. We intend to be part of the solution by increasing the availability of lower-calorie and/or nutritious beverages in schools,” explains Susan K. Neely, ABA president and chief executive officer. As such, the new policy dictates the industry provide:

  • Elementary schools with only water and 100% juice;

  • Middle schools with only nutritious and/or lower-calorie beverages, such as water, 100% juice, sports drinks, no-calorie soft drinks and low-calorie juice drinks. No full-calorie soft drinks or full-calorie juice drinks with 5% or less juice until after school; and

  • High schools with a variety of beverage choices, such as bottled water, 100% juice, sports drinks and juice drinks. No more than 50% of the vending selections will be soft drinks.

    School boards around the country have responded by seeking new beverage vending options. In New York City, for instance, Snapple Beverage Corporation (Ryebrook, N.Y.) is now the sole provider or water and juice to the city's 1,200 schools. The five-year deal also made Snapple the exclusive provider of non-carbonated drinks to all city buildings. The city estimates the partnership is worth $166 million to the city, $40 million of which is guaranteed to the Department of Education.

    That is just the latest in a long string of good news for tea companies, which have begun to experiment with new flavors, packaging and added nutrients in their offerings. The positive health news about green, white and black teas has been a boon to the industry, and efforts are being made to add functional elements, offering aid for immunity, insomnia and a variety of ails. Additional positive health news likely will continue to draw consumers to tea-based and -infused beverages with nutritionally oriented benefits, as fortification could boost the image of beverages as a meal replacement even in the foodservice arena. Indeed, as more beverages are upgraded, and consumers embrace these upscale options, there is the possibility that beverages could come to be considered a fourth daypart.

    Sidebar: Margarita Madness

    Margaritas long have been considered as a vacation getaway reminder, bringing the beaches and flavor of Mexico to restaurants nationwide. The classic margarita recipe mixes tequila, triple sec and lime juice in a salt-rimmed glass. Today, the classic margarita is taking a backseat to more modern margarita varieties. Margaritas are labeled as “premium” and “ultimate,” carrying top-shelf tequilas such as Jose Cuervo Gold, Sauza Conmemorativo Tequila, Herradura Reposado (100% blue agave) and 1800 Reposado in generous-sized glasses. Restaurants also serve different flavors, often in sugar-rimmed glasses, to appeal to a sweeter palate. El Tiempo Cantina (Houston) offers margaritas in mango, raspberry, strawberry, melon, peach, sangria, banana and coconut.

    The crisp and fresh flavor of margaritas is a major promotion point for some restaurants. This can be seen in T.G.I. Friday's (Carlson Restaurants, Minneapolis) recently added margarita variation. T.G.I. Friday's offers the Ultimate Margarita--made with a blend of Jose Cuervo Gold with a Triple-Citrus Margarita mix of lemon, lime and orange flavors. It is served fresh with slices of lime and orange.

    More restaurants also are using this popular beverage in signature dishes. On the Border (Brinker International, Dallas) restaurant uses the margarita to marinate shrimp for the “Shaken Margarita Shrimp Cocktail.” McCormick & Schmick's (Portland, Ore.) serves a margarita butter with its “Swordfish,” and Carlos O'Kelly's (Ames, Iowa) serves fajita chicken coated with their legendary margarita mix (featuring Jose Cuervo Especial) in its “Margarita Chicken Fajitas.”

    -- Maria Caranfa, Mintel's Menu Insights