Valero performed a complete reset

August 19, 2009



Fine-tuning the Fountain

By Linda Lisanti

August 10, 2009 - The summer season is a prime time for fountain drink sales, and smart convenience retailers know they must put their best set forward to make the most of this time of year.

For Valero Retail Holdings, the retail division of San Antonio-based Valero Energy Corp., operating c-stores in primarily hot climates means it is prime fountain time all the time. I recently had the opportunity to speak with Valero Retail executives about their fountain sets and how they ensure each store delivers a quality fountain offering through the right combination of brands, flavors, cup sizes and promotional activity.

To fine-tune this year's summer selling season, Valero performed a complete reset of its "Flavors 2 go" fountain program across the company's entire chain of 1,000 Corner Stores. Valero's Corner Stores have between 12 and 16 fountain heads, depending on volume, while the chain's new large-format stores have 30 fountain heads.

As part of the reset, which was completed in June, each store was individually evaluated and then brands and flavors were allocated based on current sales and market share data. All fountain machines were inspected for quality control and brixed to guarantee a quality product, explained Hal Adams, Valero's vice president of merchandising.

The retailer did a similar fountain reset roughly three years ago, and had great success in lifting sales. At that time, Valero analyzed its c-stores on a regional basis and aligned the valves and flavors for each store according to market share data, Adams said.

Unlike three years ago, however, this year's reset also ushered in Valero's first foray into private label at the fountain. Its "Flavors 2 go" offering now includes three proprietary beverages -- root beer, cherry limeade and cream tangerine. All of the company's c-stores offer at least two of the new "Flavors 2 go" varieties.

Valero's own fountain drinks are made with pure cane sugar in place of high fructose corn syrup -- a decision driven by the fact that its Hispanic customers prefer the taste of cane sugar, which is used in the Coca-Cola found in Mexico. The private label dispensed beverages are being targeted particularly at Hispanic consumers and youths.

The fountain is just one of many new additions Valero is making to its private label lines. Along with "Flavors 2 go" and its Cibolo Mountain coffee brand on the foodservice side, Valero is expanding its "Fresh Choices" brand of packaged goods. A sports drink launched in June in five flavors -- fruit punch, orange, lemon-lime, grape and blue raspberry -- and a private label energy drink called "U Power" is expected to roll out in September.

In addition to new product development, Valero is completely redesigning and launching new packaging for its Fresh Choices products. The new packaging, which will be coming in the next few months, is bright, colorful and has a lot more energy, keeping with the new image of the retailer's Corner Stores, company executives noted.

Valero has the right idea. Consumers love variety in their beverages, so the more options, the better. Plus, putting private label on the fountain contributes to strengthening the Valero brand, and in these challenging economic times, shoppers are turning to brands they know and trust.