As the post-pandemic world made its way toward normalcy, convenience retailers felt another shift in consumer purchasing behavior after experiencing an unprecedented 2020 for beer, wine and liquor sales.
Lean into sparkling wines as they are the highest movers within traditional wine, growing in both dollars and units.
The 2020 alcohol sales boom fizzled in 2021 due to restaurants and bars reopening, as well as labor shortages and supply chain disruptions—particularly for aluminum cans. Beer sales were slightly down but maintained some of their 18% sales growth from the prior year, while wine and liquor sales both declined in 2021.
The sales boom was good while it lasted, but 2021 was not all doom and gloom. Thanks to product innovation and new customers— the “pandemic drinkers” who had nowhere else to go but their local c-store to fulfill their adult-beverage needs—continuing to shop the channel, all signs point up.
POP A TOP
In 2020, average in-store sales of beer jumped 18.1%. Flavored malt beverages (FMBs) emerged as a category superstar, with average store sales surging 70.5%. In 2021, beer held onto some of its sales growth and finished the year at 6.82% of in-store sales and 3.99% of gross margin contribution. Both premium and flavored malt beverages (FMBs) held the No. 1 and No. 2 spots, respectively, while the No. 3 segment may be the one to watch: “You can’t read an industry article without it mentioning the growth of imports, specifically Mexican imports, and then specifically Modelo,” said Julie Farmer, adult beverage category manager, Circle K. “Today, Modelo is my No. 1 brand in Nevada and No. 2 in Arizona, and it’s growing. If you haven’t experienced the rise of Mexican imports in your area, it’s coming,” Farmer said.
The category lines are blurring among hard seltzers, hard sodas and ready-to-drink FMBs. If the product is malt-based, even if it carries a well known spirits brand like Jim Beam, it’s an FMB. The category blur is also occurring around national beverage brands not typically associated with licensed beverages entering the space, like Hard Mountain Dew and Topo Chico Hard Seltzer.
“We will see more collaborations between beverage and alcohol companies that will open up more occasions for consumers to shop our channel,” said Farmer.
The big takeaway for beer is that although the total category declined 2.8% from 2020, it’s still up 13.4% compared to 2019.
“As we all know, beer experienced unprecedented growth over the pandemic. The fact that we’ve been able to maintain a lot of that growth is admirable,” said Farmer.
NO SOUR GRAPES
Wine is a small category in convenience at just 0.35% of in-store sales and 0.29% of in-store gross margin. Despite its size, there is huge product innovation and new entrants to the market that are a great fit for the convenience channel.
Table/varietal wine represents most of the category’s sales (33.8%), but there are opportunities coming from canned wine, it’s rosé every day and white sparkling wine in on-the-go four-packs. “Lean into sparkling wines as they are the highest movers within traditional wine, growing in both dollars and units,” suggested Farmer.
CANNED COCKTAILS ARE HOT
Depending on region and how easy (as in complicated) it is to secure a liquor license, distilled spirits are a small segment of the adult beverage space. The segment represents barely 1% of in-store sales (0.79%) and gross margin contribution (0.73%) and did not sustain its 2020 sales growth.
The movers and shakers in the overall liquor category are tequila and canned ready-to-drink (RTD) cocktails.
“With all the movement between categories, retailers need to have an open mind when it comes to merchandising” RTD cocktails in the cold space, suggested Farmer. “Pay attention to consumer trial and syndicated data— our customers will dictate what our cold box should look like,” she said.
If you haven’t experienced the rise of Mexican imports in your area, it’s coming.
Next-generation drinkers are starting to mold the adult beverage categories, including those who prefer alcohol-free cocktails—and we’re not talking about club soda and Shirley Temples.
Near-beer and non-alcoholic wine products surged in 2021, and although a very small segment, with events like Dry January becoming more popular, retailers might want to capitalize on the 31-day booze-free trend.
Wine may be a small category, but it is mighty in innovation. Canned wines in smaller four-pack sizes in 187 ml. and 250 ml. servings are great for convenience stores. Liquor, for retailers who can sell it, can be profitable, but the key is to toss the template and create sets that best reflect the store’s demographics.
“Test and learn,” advised Farmer. There will always be adult consumers of the adult beverage categories.