Poppi’s C-store push: A test for functional beverages?

As U.S. convenience stores seek new ways to drive sales beyond fuel and tobacco, functional beverages like Poppi are entering the mix. In early 2024, 7-Eleven began stocking the trendy prebiotic soda — soon to see a further brand boost with PepsiCo’s recent acquisition announcement.

The functional beverage’s push could signal a potential shift in how C-stores approach health-conscious consumers, says one analyst.

But can a brand like Poppi thrive in retail spaces like C-stores and vending, which are often associated with unhealthy snacks? And with low-cost retailers investing in private-label alternatives, will new functional beverages even stand a chance?

Leah Boston, senior research analyst at Euromonitor International, unpacks the challenges ahead:

From a channel perspective, convenience stores in the U.S. are looking for new ways to boost merchandise sales and bring consumers in the door: Fuel is a volatile commodity, so margins fluctuate, and nicotine and tobacco sales continue to decline. To do this, many are turning to novel food and beverage offerings.

Some of the biggest operators, including 7-Eleven, Wawa and Circle K, all discussed ideas related to food service in their corporate reporting this past year. Wawa, a C-store brand much loved for its food and local offerings, held an innovation summit this past year in the interest of finding new product brands — food and beverage-related or otherwise — to feature in their stores.

However, there are challenges. A big one moving forward, in terms of expanding their audience for functional beverages, is reversing U.S. consumers’ perceptions of the C-store and vending channel's focus on unhealthy food offerings.

For vending and C-store operators interested in engaging greater loyalty and a higher purchase from the Poppi-like consumer, they could try merchandising functional beverages alongside a case or menu of locally made, nutritional food offerings. This strategy also would help with discovery, as consumers tend to visit unattended retail and C-stores on the go and do not usually walk in looking for new brands. This last point touches on another challenge for newer-to-market functional beverages trying to sell in the vending and c-store channel, especially if the ingredients are unfamiliar to the consumer.

In the U.S., the discounter channel is really dominated by Aldi, whose business model relies very strongly on private label. A quick look at Aldi’s website shows they not only have Poppi in their inventory, but also their own private-label prebiotic soda, which they call “Popz.” It’s another example of how hard it is for newer labels to gain traction. A beverage with the latest functional ingredients in the U.S. market risks cannibalization by private label.

Read more about functional beverages on VendingMarketWatch.com

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