While convenience store sales of beer slowed considerably last year as compared to 2020, the category remains at its highest level in years. And retailers and beer marketers are optimistic that the momentum that has lifted the segment in recent years, coupled with category innovation, means continued good health for c-store beer sales in 2022 and into the foreseeable future.
I’m selling more crafts and specialty beers than ever.
According to Jayme Gough, NACS research manager, CSX data pointed to a small increase in beer sales in 2021, “which is actually good news, when you consider the big gain in 2020, and the fact that beer had been showing slower growth in recent years.” In 2021, average monthly sales per store of beer stood at $20,345, NACS State of the Industry Report of 2021 Data indicate. That’s up 2.6% from 2020’s stellar year when the category benefited from closures of on-premise venues and a consumer-buying frenzy, which sent sales surging 18.1% over 2019.
While 2021 was marked by a slowdown in sales growth, suppliers said c-stores were among their strongest performers. Ryan Calong, national accounts director, convenience, at Pabst Brewing Co., reported that convenience outperformed other channels in terms of dollar sales trends last year, driven by imported brews and flavored malt beverages (FMBs). And the category has remained a top performer for c-stores, too. Michelle Yeeles, senior director, small format category leadership, at Anheuser-Busch, citing IRI data, noted, “Over the past two years, beer has led total c-store growth as the No. 1 growth category, delivering more than $3.7 billion in growth.”
At Coen Markets, which sells beer in 15 of its roughly 60 locations in Pennsylvania, Ohio and West Virginia, beer sales softened a bit last year, a result of “more consumers in restaurants,” Colin Dornish, senior director of operations, said. Still, thanks to strong performances for alcoholic seltzers, flavored malt beverages and “renewed interest in domestic Industry Sales light beers,” Dornish is bullish on the category’s prospects. “We see opportunity for beer,” he remarked. “That’s why we’re building out our beer caves and adding beer in Pennsylvania stores where we can. We’re becoming a destination for beer.” Dornish credits the pandemic for helping to build his stores’ reputation for beer. “We provided credibility. Customers liked that they could come in when buying gas and pick up beer. As a result, we’re working to give beer the proper space it deserves,” he said.
Pat Determan, owner of Lyons Filling Station in Clinton, Iowa, agreed that the pandemic has had a favorable impact on beer sales. “Drinking at home, not going out has become part of people’s lifestyles,” said the retailer, adding, “I haven’t seen any slowdown since the pandemic.” Moreover, customers at his store are trading up. “I’m selling more crafts and specialty beers than ever,” Determan noted. “My customers like the variety.”
RETURN TO NORMALCY
Following a year of nearly insatiable demand for beer, 2021 marked a return to normalcy, Gough said. “Restaurants are open, COVID-19 concerns have started to wane, people are going back into offices,” she remarked. Still, the news hasn’t been all good. Supply-chain issues abounded within consumer package categories, and beer wasn’t immune. Major beer suppliers conceded that the challenges—ranging from shortages of packaging supplies to labor to transportation—hampered their overall businesses, and those concerns have continued this year.
Topo Chico, Truly and White Claw are still on fire in our stores.
Convenience retailers, however, are encouraged by recent trends for some beer subcategories and package formats. “There’s been so much innovation in the hard seltzer space,” said Dornish. “Topo Chico, Truly and White Claw are still on fire in our stores.” Calong pointed to opportunity for FMBs that feature spirits-branded labels, such as Jack Daniel’s Country Cocktails, which Pabst distributes via a partnership with brand owner Brown-Forman. With liquor continuing to gain in popularity, products like Country Cocktails allow c-stores to leverage the trend, particularly if they can’t legally compete in spirits sales, he said. Another spirits-branded product, the Smirnoff Seltzer line from Diageo Beer Co., is also seeking to capitalize on the spirits boom and will soon relaunch with a “flavor-forward distinctive role,” according to the company.
Among other subcategories, craft beer continues to gain, c-store operators reported. At Mighty Moose Mart in Keene, New Hampshire, craft accounts for the majority of the store’s beer sales, Chris Rietmann, owner, reported. “Craft dollar sales are trending 2-to-1 versus mainstream domestic beers,” he said. “IPAs, double IPAs and hazy IPAs are the biggest drivers.” To maximize the trend, Rietmann takes the time to educate himself about the locally produced beers. Looking ahead, he said, “we’ll continue to expand and curate our craft line.” Yeeles agreed that premiumization is a big factor for the beer category in c-stores. “Consumers are looking for options that enable self-expression, self-reward and elevated connections with product attributes that deliver on quality, authenticity and are purpose driven,” she said.
Last year also saw a return to normalized packaging preferences among c-store beer shoppers. While multipack sales surged in 2020 as consumers loaded up, “shoppers returned to traditional convenience-sized packages, such as 12-packs and singles, versus larger packs,” Calong said.
Retailers confirmed strong trends for high-margin singles, particularly brews packaged in 19.2-, 24- and 25-ounce cans. “Singles do extremely well at our store,” said Rietmann, pointing to crafts like Bell’s Two Hearted and New Belgium’s Voodoo Ranger in 19.2-ounce cans. To make room for the packages, Mighty Moose recently removed some hard seltzers from its cold box that weren’t performing well. And at Tank-N-Tummy in Cleveland, Oklahoma, owner DeAnn Tracy promotes value by pricing 25-ounce singles at the same price as their 24-ounce counterpart. Indeed, A-B’s Yeeles advised retailers that to maximize singles’ “profitable trip-driver attributes,” they should ensure optimized SKU mix, clear price buckets and communication.
ROOM TO EXPAND
While beer remains a top category for c-stores—accounting for 8.8% of in-store sales in 2021, according to NACS SOI data—there’s certainly room to expand. Gough pointed to opportunity to market to Gen Z consumers, many of whom are closing in on legal drinking age. “Research has found that they’re drinking FMBs and RTDs and less traditional beer,” she noted, as well as low- and non-alcoholic brews. Indeed, A-B, Diageo Beer and a host of other beer marketers have recently launched new non-alcoholic brews to appeal to younger and older consumers seeking more mindful options to traditional beer.
Beer marketers offer a number of tips to convenience retailers to keep the category’s momentum going. Yeeles and Calong pointed to the importance of a balanced product selection and proportionate space. “As beer demand continues to be elevated, retailers should be looking to meet evolving shopper expectations, balancing both volume and variety,” the A-B executive said. According to Calong, “Beer is the largest alcohol category in terms of volume sales and has the highest percentage of exclusive shoppers. It’s a staple that delivers on convenience, versatility and variety, trends that are important to convenience store shoppers.” Lucienne Castillo, consumer insights and strategy director at Pabst, added that one of the biggest challenges for c-stores is “a high price/value perception. C-store operators have the opportunity to reframe value in shoppers’ minds and use creative messaging that shifts away from price toward motivation.”
While rising inflation could play a part in c-store shoppers’ shopping habits this year, retailers and suppliers share a positive outlook. “Remember, beer traditionally offers value and convenience to consumers,” said Calong. “Beer has always been an affordable luxury for the convenience shopper.”
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