Grocery, drug and liquor store retailers would be wise to keep an eye on their local convenience-store competitors when it comes to the wine category. Due to c-stores’ responsiveness to changing consumer trends and demands, the channel is emerging as a favorite destination for many of today’s wine shoppers.

“C-stores are quickly catching up with other channels and are one of the fastest-growing channels for wine,” remarked Pete Ayling, vice president, business intelligence and shopper insights at Chateau Ste. Michelle, the Woodinville, Washington-based winery, whose brands include 14 Hands. He pointed to the “innovation of the c-store channel over the last 10 years,” including its more shopper-friendly attributes, ability to meet wider consumer needs and more premium offerings. “Until recently, the wine selection in c-stores had been mostly sub-premium,” Ayling explained, but with expansion in price points, the channel’s reputation is changing. Indeed, the wine marketer added that “retailers who may be offering just low-priced wines in the corner of the store” are missing out on a big opportunity.

Dave Derby, senior vice president, marketing, at Trinchero Family Estates—supplier of the Sutter Home, Bandit, Ménage a Trois and Joel Gott brands—said, “Convenience stores are thriving in today’s wine culture, which celebrates convenient alternative packages that can be purchased quickly and enjoyed immediately in casual environments.” For the 52 weeks ending August 10, 2019, c-stores were outperforming the overall wine category in both dollar and volume trends, Derby reported.

According to wine marketers, c-stores are well positioned to continue to benefit from changing consumer shopping patterns, product demands and revised state regulations, giving them an edge over other trade channels. “There are fewer weekly stock-up occasions and more frequent immediate-need shopping occasions,” said Ayling, adding that in recent years, several states, including Colorado, Oklahoma and Tennessee, have loosened restrictions on the sale of wine in c-stores. And convenience stores can often be the perfect outlet for some wine shoppers. “We often find that convenience stores have a leg up when selling wine because consumers who are intimidated by traditional wine shops and sections are drawn to the curated wine offerings that convenience stores provide,” Derby remarked.

Trading-Up Trends

While wine remains a niche in convenience stores—accounting for just 0.24% of in-store sales last year, according to NACS State of the Industry Report of 2018 Data—its growth in recent years has been impressive. Average sales per store jumped 25% last year to $12,662, marking the best performance of all categories tracked. Wine’s gross margins averaged 28%, with average gross profit dollars per store of $3,566, a 31% increase from the year prior.

C-stores are quickly catching up with other channels and are one of the fastest-growing channels for wine.

Jayme Gough, NACS analyst, attributed the category’s increase in per-store sales to trading up to more premium wines among consumers, as well as overall higher per-capita consumption. “Wine consumption in 2018 was the highest it’s ever been, at 2.95 gallons per resident,” she explained, citing data from the Wine Institute. Chris McFerran, vice president, national accounts at Treasury Wine Estates, marketer of brands including Sterling and 19 Crimes, noted a continued trade up in purchases of premium wines priced between $8 and $15 a 750-ml. bottle in c-stores. “The consumer is willing to pay more,” agreed Ayling.

One of the more recent trends positively impacting c-store wine sales is the emergence of the can package. “Cans are exploding,” said Tammy Albert, manager of the Mangy Moose Market & Cellars in Jackson Hole, Wyoming. “Folks love to take them camping and for trips out on the river.” The package has become so popular that the upscale c-store and wine shop now devotes an entire cooler door to 10 different canned white wines, with reds merchandised outside the cooler. The cans are generally priced at $7.50 each, which, Albert noted, is “a good price for two servings of wine.”

Convenience retailers are increasingly relying on the same merchandising tools that other trade channels have found effective in promoting wine.

Dani Cone, owner of Cone & Steiner General, with three locations in Seattle, said she’s also noticed increased demand for canned wine. “They’ve really taken a jump in the past year,” she explained. “I think they’re a great way to try something different.”

Indeed, canned wine is ideal for the c-store channel. "It is more portable than a traditional bottle of wine, is permissible at events that do not allow glass and doesn't require a corkscrew," remarked Gough. Ayling added that canned wine “has gained acceptance more quickly than most expected. But it makes sense. It opens up occasion opportunities.” Ste. Michelle launched 14 Hands in 375-ml. cans in March. Derby from Trinchero, which introduced its Pomelo brand in 375-ml. cans in June, said, “We see cans as a significant opportunity, especially with our millennial consumers, who value portability and prefer to enjoy wine in non-traditional settings.” Sales of canned wine in c-stores have soared 126% in the past year, the winery executive reported.

The channel also lends itself to other alternative wine packages. Trinchero has marketed Sutter Home in 187-ml. bottles for decades, and Derby reported that the company is exploring the format for additional brands. Bandit in Tetra Paks has seen success as well, he said. “Convenient, portable packages, such as 187 ml. and Tetra Pak, will see steady growth in convenience stores, where usage occasions drive quantity, size and format decisions,” Derby projected. Treasury Wine Estates, meanwhile, packages the Sterling brand in 375-ml. resealable aluminum bottles, which, McFerran said, “allows the shopper to have the flexibility to consume immediately upon opening or to reseal and save for later.”

Everything Coming Up Rosé

Beyond cans, rosé is one of the biggest wine trends these days. “We can’t keep enough rosé in stock, especially during the summer,” said Cone from Cone & Steiner, who described her stores as “modern c-stores. They’re c-store size in footprint but cater to an urban population.” According to McFerran, for the 52 weeks ending August 11, 2019, the fastest-growing varietals in c-stores were rosé, sauvignon blanc and pinot grigio, all “easy-to-drink” and approachable wines.

Retailers also report success with locally produced wines. Steve Kimmes, president of Kimmes Country Stores in Iowa, for example, said local Iowa wines outsell more mainstream wines by a 3-to-1 margin in his stores that offer wine. Cone, meanwhile, pointing to the “robust food and beverage culture in Seattle,” said a “significant chunk” of her stores’ wine sales come from those produced in the Pacific Northwest.

Retailers looking to grow their existing wine sales should build their selection using wines from the $4 to $20 range.

Convenience retailers are increasingly relying on the same merchandising tools that other trade channels have found effective in promoting wine, including shelf talkers and in-store tastings, where legal. Ankeney Fine Foods, located in San Francisco’s affluent Nob Hill neighborhood, for example, utilizes shelf talkers that recommend food pairings for each wine, co-owner Elvis Ankeney, said. “It shows our customers that we’re providing some personal attention, and they have come to trust us,” the retailer noted.

Albert, Cone and Kimmes, meanwhile, have all employed in-store wine tastings. According to the Iowa retailer, a recent tasting included an appearance by the owner of the winery whose wines were being poured. “Customers appreciated it,” Kimmes said. “And it made for a fun atmosphere.” Albert and Ankeney maintain that team members who are knowledgeable about wine can have a big impact on sales. “I always open bottles for them to sample,” Albert said, so they can in turn talk to customers about the wine.

A Toast to the Future

There’s still plenty of opportunity to expand wine sales in c-stores. Gough recommended adding wine bags and corkscrews, where legal, and merchandising next to the bottles for a “complete wine-buying experience.” Ayling and Darby noted that the right assortment is critical. “We’d recommend that convenience stores looking to expand into or grow their existing wine sales build their selection using wines from the $4 to $20 range, as this seems to be the sweet spot,” the Trinchero executive said.

He and other wine marketers believe the c-store channel is well positioned to gain share in wine sales. “We expect that consumers will continue to value curated selections that are easily accessible and ideal for every usage occasion,” Darby said.

According to Ayling, c-stores have only begun to scratch the surface. “There are a lot of wine consumers in the U.S.,” the Ste. Michelle executive explained. “Many of those consumers shop in c-stores, maybe not for wine, but for other items. There’s opportunity to win those customers over from other channels.”