While last year’s impressive gain in average store sales may have been a blip, the wine category is certainly gaining attention among convenience retailers for its recent packaging innovation, strong margins and growing potential. Indeed, wine is increasingly finding placement on c-store shelves and in cold boxes and, according to some marketers and merchants, is well positioned to take share from beer and hard seltzers.

With average store sales soaring 21.1% last year to $22,818 from $18,838 in 2019, according to the NACS State of the Industry (SOI) Report of 2020 Data, wine emerged as one of the top category performers in a year dramatically impacted by the COVID-19 pandemic. “Last year’s performance was an anomaly. Wine doesn’t usually see 20% growth,” remarked Jayme Gough, NACS research manager. Much of the gain can be attributed to the shutdown of bars and restaurants and “people staying home,” she explained. Gough added that through June of this year, CSX monthly data showed that wine sales were stabilizing.

Nevertheless, while state and local laws vary, wine is increasingly available in c-stores. According to SOI data, 54.3% of c-stores offered wine in 2020, up from 52.1% in 2019, marking three consecutive years of growth. The recent popularity of hard seltzers, including those that are wine based, could be contributing to increased retailer interest. As such, NACS category definitions have been expanded to include “coolers/wine cocktails” to reflect the emergence of the ready-to-drink products.

Packaging Innovation

Recent packaging innovation such as cans and Tetra Paks has aided the wine category in c-stores. Babe wine, marketed and distributed by Anheuser-Busch InBev (AB), and packaged exclusively in cans, is seeing big growth in the channel. “Cans are the right format for wine to meet the largely immediate consumption occasions people are shopping for in convenience,” said Chelsea Phillips, vice president, beyond beer, at AB. To merchandise, the company is “applying the same tricks of the beer trade” to Babe, including twofer price promotions and the use of suction cups in the cooler to drive trial, she noted, as well as warm four-packs to encourage trade up. AB is also marketing wine in 500-ml. Tetra Paks via its partnership with the Wine Group on the recently launched 101 North brand. Already, more than 75% of the brand’s volume is sold in c-stores, Phillips said, driven by the Tetra Pak. “Tetra Paks are proving to be a great fit for the c-store wine buyer due to their convenience and portability,” she noted.

Herb Smith, vice president, customer development for E&J Gallo Winery, agreed that glass bottle alternatives can be ideal for many c-store shoppers. “Consumers often want to enjoy a single glass of wine, so the 750-ml. package can sometimes be a barrier,” he said, while cans, Tetra Paks, half bottles and three-liter boxes can be more convenient. Gallo’s Vendange, Black Box, Barefoot and Liberty Creek brands are available in Tetra Paks, with the Andre and Dark Horse labels sold in cans.

The alternative packaging and profit margins that surpass that of beer are prompting c-stores to stock, expand and merchandise their wine offerings. Joe Peleg, CEO and founder of Fun Wine—which is packaged in both aluminum cans and 330-ml. aluminum bottles and available in 42 states—said he is seeing increased interest in the wine category from convenience retailers. “A lot of retailers are beginning to question the space they have devoted to hard seltzers as it now looks like the expected growth for that product may not be reachable,” he explained. “There’s more awareness in wine, and c-stores are devoting bigger spaces to the category.”

Strong Subcategories

Among the subcategories that are performing particularly well are champagne and sparkling wines, table and varietal wines, such as rosé, and coolers and wine cocktails. According to Gough, coolers and wine cocktails represented nearly a third of wine sales in 2020 and have gained share the past two years. Through June 2021, it was the only subcategory holding up against its year-earlier performance, she added. At East Delaware Pantry in Chicago, owner Michael Patel reported, “Rosé is still surging” and contributing to growth in 2021 year-to-date wine sales. Unlike other stores, East Delaware—which caters to tourists and business travelers in downtown Chicago—didn’t see an uptick in wine sales last year, but according to Patel, “this year, business is better.”

There’s more awareness in wine, and c-stores are devoting bigger spaces to the category.

At Mendez Fuel in Miami, meanwhile, Andrew Mendez, co-owner, has found a niche with natural wines, wines generally produced without pesticides or herbicides and with few or no added ingredients. Prompted by requests from customers, Mendez researched the wines and found “they’re very much like craft beer,” a category the c-store chain has been very successful with, he said. “Customers have been coming in like crazy,” the retailer said of response to the selection, adding that natural wines now outnumber traditional wines at Mendez Fuel. “I’ve gone all in. I’m even looking at taking some space from beer.” Priced at $22 to $28 a bottle, customers often purchase two at a time, Mendez said.

While the c-store channel will be hard pressed to surpass last year’s stellar performance for the wine category, there’s no question that strides are being made. “Even if sales come in flat this year, that would be a good performance because it means maintaining the growth from last year,” Gough noted.

Wine marketers are bullish for the category’s long-term prospects in c-stores. Pointing to single-serve and other alternative packaging making inroads in the category, Gallo’s Smith said, “The future is bright.” AB’s Phillips added, “Consumers are looking for great tasting and convenient options, which is a segment wine can win. I expect to see continued growth of wine in c-stores.”

Gough cautioned that while “wine fits some markets better than others,” the emergence of cans and the ability to place wine in the singles cooler allows the category to be more visible to consumers. “And with margins it makes the category attractive in terms of potential profitability,” she said.

The Power of CSX Data

CSX, the engine behind category metrics and NACS State of the Industry data, provides current and customizable tools for financial and operational reporting and analysis in the convenience industry. Retailers can measure their company by any of the myriad metrics generated via our live database. Contact Chris Rapanick at (703) 518–4253 or [email protected] for a complimentary executive walkthough.