McDonald's is testing sale of bottle/can beverages in 15 stores in and around Bryan and College Station, Texas. Most of the McDonald's units in test are company-owned, not franchised. This test is orchestrated with Coke and mainly involves Coca-Cola Co products. Source says McDonald's and Coke "are working together" on this. Test entails using coolers in stores, installed at one of several locations, in front of or behind the counter. In addition to the Coke products, test includes Dr Pepper, Diet Dr Pepper and Arizona teas. In the coolers are bottled versions of Coke core brands like Coke Classic and Diet Coke which are also sold in fountain. The coolers additionally offer bottles and/or cans of: Dr Pepper/Diet Dr Pepper; Vault; Full Throttle; Tab Energy; and Arizona teas. CSDs will be in half-liter PET and be sold at retail price of "about $1.29," says source. Delivery. CCE is delivering the Coca-Cola Co and Dr Pepper products. Coke fountain employees are buying the Arizona "on the open market," says source -- "probably from a club store" -- and delivering it to the McDonald's stores. Test was started recently and is due to run for several months.
Details. Source says aim of this test is to show there's "lots of beverage growth potential" for foodservice customers. Adds two issues in recent past holding back beverage growth in this channel have been "variety and portability." Arizona. Source says fast-growing Arizona products are part of the test, but Arizona brand owner Ferolito-Vultaggio is not, as Coke is buying those products on the open market. In most of Texas, Arizona is distributed by Dr Pepper/Seven Up Bottling Group. Arizona products "may not stay in the test," says source, adding that Coke's soon-to-be-launched premium tea, Gold Peak, may replace Arizona in the future.
Perspective. Sources say one aim of this initiative is to help Coke's fountain customers better compete with C-stores. Plus, with consumers broadening their taste in beverages, fountain is a limitation, as only a limited number and types of beverages can be poured through one set of fountain taps. So, this test is about helping McDonald's both broaden its beverage offerings and add premium products, such as energy drinks and Arizona. Competitive products. Arizona is unlikely to be the only competitive product that goes into this McDonald's test. Sources suggest that other products -- even Snapple or SoBe -- could end up in McDonald's cooler test.
Teas; change in Coke's lineup. Arizona has posted strong growth in recent years. In take-home, it is now the leading tea (BD 5/25/06), ahead of Pepsi' Lipton, Coke's Nestea and Snapple. Coke -- via NestlE9 partnership Beverage Partners Worldwide -- will soon be launching line of "Gold Peak" premium teas in U.S. in glass bottles. Gold Peak, according to Coke, will slowly replace Nestea hot-fill in 16-oz PET. Cold-fill product -- formerly Nestea Cool -- will now be called "Nestea" and include a green tea.
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