If anything is for sure at Mt. Top Convenience store in Thomas, West Virginia, it’s that liquor category sales rise every year.
“We’ve been selling liquor since 2010,and sales have increased every single year,” said co-owner Doug Smith. Indeed, his partner Mike Wood added that with the start of the pandemic three years ago, “sales really started to soar,” even though the store lost out on liquor sales to restaurants—which the state permits—during lockdown. “We made up for those lost sales with sales to consumers,” he explained.
Mt. Top Convenience isn’t alone. Many c-store operators in markets where they can offer distilled spirits have enjoyed category sales gains in recent years, driven not only by the pandemic but also by overall increased consumer demand for liquor and product innovation. According to the NACS State of the Industry Report of 2021 Data, average liquor sales per store jumped 9.8% from 2020 to 2021 to $2,914 per month, and average gross profit increased 16.4% to $906 per store per month.
While liquor remains a small piece of total sales for a c-store (less than 1%), and fewer than half of all c-stores offer the product, “the category really peaked during the lockdown phase of the pandemic,” noted Jayme Gough, NACS research manager. By 2022, however, category sales spikes had moderated, Gough added, citing CSX data, and more closely modeled pre-pandemic levels.
Tara Epps, vice president-national accounts, off-premise, at Beam Suntory Inc., said the pandemic helped raise awareness among consumers that some c-stores stock liquor, and they have continued to shop the outlets. C-stores’ increased focus on quality foodservice programs, an expanding millennial customer base and emerging grab-and-go packages have also contributed to the category’s growth in the channel, “helping to shatter its previous image as a destination for only low-budget and fortified offerings,” Epps said.
RTDS MAKE INROADS
The explosion of spirits-based ready-to-drink cocktails in the past few years has been a big contributor to the category’s inroads in c-stores. According to Gough, through the first three quarters of 2022, “prepared cocktail monthly sales soared” in c-stores. Epps added that sales of RTDs in c-stores are outpacing those in big box stores. “Convenience stores shouldn’t miss the opportunity to gain fair share and should consider investing more into prepared cocktails as consumer demand will continue to increase for years to come,” said the executive from Beam Suntory, which markets the On The Rocks ready-to-serve brand.
The 10-unit Depot Express chain in Iowa has added up to six SKUs of On The Rocks at its stores, Matthew Scheetz, COO, said. And at Wayne’s Food Mart in Montague, Michigan, “we’re carrying more canned cocktails than ever,” Jessie Hamilton, manager, remarked, with the products merchandised both in the cold box and on shelves.
The popularity of canned cocktails has led some states to revise restrictions on their sale in c-stores. According to Danny Suich, global brand director for the Fireball cinnamon whiskey brand at Sazerac Co., Florida, Michigan and Virginia are among the states that now allow c-stores and groceries with beer and wine licenses to sell spirits-based prepared cocktails under a specific ABV level, essentially growing the ranks of convenience outlets that now sell liquor products.
Texas is among the other states lobbying for such a change. In fact, the Texas Food & Fuel Association has called the ability for c-stores and groceries in the state to sell spirits-based RTDs its No. 1 priority in the current legislative session. (Listen to Convenience Matters Episode No. 365 at www.conveniencematters.com.)
Retailers and suppliers report that spirits of all types are gaining in c-stores. “Vodka has always been a workhorse,” noted Scheetz, often bringing in add-on sales of products like Bloody Mary mix, juices and energy and sports drinks. Tequila also shows promise. “We’re starting to add more brands of tequila,” including celebrity-backed labels, the Depot Express executive revealed. “We feel we’ll see an increase in this category in the near future.”
Indeed, according to Epps, through late 2022, the growth of tequila in c-stores was outpacing that of total distilled spirits. The Bean Suntory executive also pointed to the growing opportunity for whiskey in c-stores, including premium and above brands. That’s already the case at Mt. Top. “We’ve become known for having rare bourbons,” remarked Wood. “People are always calling and asking about them.” Price doesn’t seem to be an object, the retailer continued. “Whether it’s $100 or $179 a bottle, people don’t mind spending the money on them.”
We’re carrying more canned cocktails than ever.”
IMPULSE BUYS
Perhaps not surprisingly, convenient liquor packages beyond RTDs are also thriving. According to Suich, 50-ml. and 100-ml. packages are the top growth drivers in the convenience channel, and Fireball has been a key contributor. Whether marketed at the register for 99 cents a 50-ml. container, or in seasonally themed multipacks, the mini packages entice impulse purchases and help build bigger baskets, he remarked. Among Fireball’s innovative LTO offerings are 10-packs of 50-ml. bottles in candy cane packaging or heart-shaped boxes, 15-packs in “adult trick-or-treat bags,” and 20-pack buckets. Epps agrees that stocking small liquor packages can make for smart merchandising. “Studies show that making smaller size bottles visible and available for consumers to shop increased impulse sales and overall basket ring versus having them out of sight behind the counter,” she remarked.
At Depot Express, meanwhile, the sale of large liquor bottles has been strong of late. While Scheetz reported a 3% increase in the sale of spirits items at the chain in 2022, he said, “we’ve seen a 21% increase” in the sale of 1.75-ml. bottles. And the gain isn’t due to the addition of new products, he noted, but rather, “we’re just seeing growth from consistent repeat consumer purchasing.”
Regardless of the package size, liquor marketers say c-stores need to promote the products to grow consumer awareness of their availability. “Shoppable merchandising, small size offerings near checkout, small size multipack destinations, key spirits items sold cold, occasion-based messaging, digital integration and offering innovation are all ways to effectively grow category awareness,” remarked Suich. In addition to frequent Facebook posts about new product arrivals, Mt. Top offers the weekly “Wine & Whiskey Wednesday” promotion, by which customers can earn 15% off a purchase of four or more bottles of wine and liquor.
LONG RUNWAY
While liquor sales have been healthy in c-stores in recent years, the category also comes with concerns. “Shelf space is a challenge for most convenience stores, as well as knowing which brands to sell,” said Tracy Frisbie, vice president of marketing at Buzz Ballz LLC/ Southern Champion. “C-stores need to look at the sales data to make the best decisions for their outlets and sell the brands that will bring in the most revenue.” Executives at Mt. Top and Depot Express also noted that theft can be a problem with liquor products.
Still, there’s a long runway for continued growth for the category in c-stores, and along with it, basket-building opportunity. Epps from Beam Suntory points out that unlike other alcoholic beverages, liquor purchases are often accompanied with mixers, such as soft drinks and juices. With the right assortment, effective merchandising and advertising, the liquor section in c-stores can emerge as a big destination for shoppers.
