The big squeeze
More businesses coming in to the sector means there is of course greater competition – and IBISWorld analyst and Juice and Smoothie Bars in Australia Report author Disha Kartik Jeswanth points to the extra competition coming from cafes, supermarkets and grocery stores, which is expected to limit growth across the industry.
“Cafes, fast-food chains and restaurants are increasingly offering freshly-prepared juices and smoothies. Industry operators also face competition from supermarket chains Coles and Woolworths. These major supermarkets have increased their stock of premium fruit juice brands over the period to capitalise on rising health consciousness,” she wrote.
Add in the increasing operating costs, including rising prices for domestic fruits and milk, and higher rents, and it’s been a challenge for operators to lift profitability.
Like so many other operators in the hospitality industry located in shopping centres, the juice bar sector has seen revenue declines because of lockdown periods during the 2020–21 pandemic.
However, while there are constraints in the business from rising operating costs that have kept the reins on profit margins, the inclusion of value-added products such as protein shots or immune boosters is boosting sales, and profit margins are consequently expected to rise.
The good news is that Aussies are primed to consume more vitamin-rich fruits and vegetables post-pandemic and this will help the sector recover.
Smoothies are marketed as a healthier alternative to a milkshake, and are increasingly popular and less vulnerable to competition because they are freshly made, whereas premium juices can be manufactured off-site.
Cost of goods: Variable prices on key ingredients such as fruit, vegetables and dairy-free milk alternatives have an impact on operating costs.
Wages and rostering: Increasing staffing costs in this highly labour-intensive sector are countered by scheduling part-time and casual workers.
A growing market?
An increase in the number of outlets takes the sector closer to saturation point, and then international expansion becomes much more appealing for brands. Boost Juice, for instance, already operates in 12 countries.
What customers want
Ethical behaviour and sustainability are important for the 20–34 year-old demographic that takes up 40 per cent of industry revenue.
Menu diversification has helped chains attract variety-seeking consumers whether that is seasonal menu additions or the inclusion of breakfast smoothie options that cater for a time-poor customer.
There’s a seasonality impact for the industry, with fruit juices and smoothies holding more appeal for customers in the warmer months.
Supermarkets and convenience stores
Two Coles supermarkets are really pumping up the juice factor instore, with Coles Tooronga in Victoria even housing a Boost Juice kiosk.
A Coles spokesperson told Inside Franchise Business, “Coles’ sustainability concept store Moonee Ponds features a fruit and veg bar where customers can have their healthy fruit and veg sliced, diced or riced right in front of them, or squeezed into a freshly made juice. The bar helps Coles work Together to Zero waste by producing fresh, quality juice while using fruit and vegetables at their ripest for juicing.”
Coles and Coles Local supermarkets also feature a self-serve, freshly-squeezed orange juice machine.
At Woolworths there has been steady growth in the juice and chilled drinks category over the last few years, says Darren Griffiths, Woolworths category manager, chilled juice.
“Within this there is strong demand for 100 per cent juice products, particularly ones made in Australia and using authentic local ingredients, with cold pressed juices growing the fastest in the category.
“Recently beverages like wellness shots that have added functional benefits have seen more rapid growth compared to a year ago. We’ve worked hard to offer our customers an expanded range of products and have seen particular interest from customers wanting drinks with immunity benefits, and expect this to be a steady trend as we head into winter.”
Rob Kirby, 7-Eleven Australia merchandise area lead, believes customers are increasingly on the hunt for time-saving solutions, and juice and smoothies fit the bill, particularly when the products are part of a one-stop-shop spend.
“Being able to get unique blended drinks or juice options, great coffee, delicious food on the go, as well as fill up the car with high quality fuel, all in the one stop, is really convenient for our customers.
“We’re investing to give our customers more choice and innovation when they come to 7-Eleven for drinks on the go.”
7-Eleven is rolling out exclusive self-serve blended drink machines, where customers can select from more than 30 different options including smoothies, frappes and shakes.