Covering investment, new markets and the growth of energy drinks, a trio of convenience-store managers talked packaged beverages and related subjects May 6 during a Retailer Talks session at CSP’s 2024 Cold Vault Forum in Schaumburg, Illinois.
Pilot Co.
In its New Horizons initiative, Knoxville, Tennessee-based Pilot Co. is investing $1 billion over the next three years to overhaul more than 400 travel centers.
Pilot’s investment aims to enhance three areas, said Corey Nicely (pictured center), category manager for cooler, and so far has remodeled 130 stores, with 92% getting an expansion of retail space and 50% getting more food.
More Cold Vault Forum Coverage:
- Offering Packaged Beverage Variety Is a Must Despite Challenge of Limited Space, Expert Says
- In Packaged Beverages, Imports Are Beer’s Best Friend, Expert Says
- Packaged Beverages Losing Share to Dispensed in Convenience Channel
- Convenience-Store Retailers Are Adding More Space for Energy Drinks
The first investment aims to enhance the employee experience, while another involves equipping travel centers for future trends and embracing technology advancements and alternative fuels, Nicely said.
The third is designed with customer comfort in mind, providing a consistent experience and carrying a wide range of offerings for all occasions.
“In the cooler space, we’ve added two to three doors with every remodel, which we love to see has really helped us with agreements with the vendors and a lot of different things,” Nicely said. “And then from a beer space perspective, we’ve seen between one to two doors added or a whole new case.”
With two to three extra doors, Nicely said, she can add between 15 to 20 SKUs throughout a set.
“That allows us to be more diversified on our offerings from a regional perspective to capitalize on a local demographic,” she said
The extra space also provides the option to add a beer cave.
Wawa
Matthew McHale (pictured left), category space planner, Wawa, said the Wawa, Pennsylvania-based company is planning to double its store count, to 1,800-plus, by 2030 in existing and new markets, including four new states by mid-2025.
This growth has its challenges in packaged beverages, McHale said, including:
- Customer familiarity
- Regionality within offer
- Distribution complexity
- Subcategory mix and share of space
- New legal constraints
What the future holds with these “openings, prototypes and layouts” and possible drive-thrus presents a lot of challenges, said McHale, who started at Wawa 14 years ago as a cashier in high school.
Moving into new markets brings challenges in package beverage flow, particularly getting to know the new customers.
“We know our customers in our market in Florida, we know what the behaviors are and how they change from season to season and from year to year,” he said. “But we don’t necessarily know in Alabama [where Wawa opened its first store in April] what customers want, what they expect and how to change. So, what does that mean and how do we address that? Regionality in the offer is something we’re trying to incorporate out there today.”
Because Wawa doesn’t necessarily know customers in new areas based on its own data, it leans on data from others to figure things out, talking with distributors, brands and manufacturers. “We want to make sure that we’re not listing things that can’t actually get to the store,” he said.
One regionality example McHale gave is that Alabama indexes much higher for carbonated soft drinks, “somewhere around 25% to 30%” of packaged beverage sales.
“We need to make sure we’re accounting for that. I’m sure [our vendor] would love to see four shelves and a third door,” he said. “So, we gave them about six extra shelves, which is about 50% of spacing. We’re even overindexing in the planogram to account for that index.”
Speedy Stop
Mary Sonatore (pictured right), marketing manager, Speedy Stop, Victoria, Texas, spoke on the growth of energy drinks in her stores last year.
“Energy really took over units, gross profit and dollar sales for year 2023,” Sonatore said. “The energy drink segment dominated and crushed all of their packaged beverage segments in unit sales and gross margin dollars. The energy drink margin dollars contributed 30% to 35% of total pack bev, category margin dollars with Red Bull and Monster combining for 24.4%, and all other energy contributing about 10.6% to that total. That 10.6% is a big number, right?”
Energy drinks continue to grow their share of cooler space sales, she said, with carbonated soft drinks declining.
“I think some of that is demographics and pricing,” she said, adding that carbonated soft drinks seem to be declining in popularity at c-stores compared with big box and value stores.
Meanwhile, she said, changing demographics and energy drink companies and their more strategic and focused marketing campaigns—and promotional offers—have been driving energy’s growth in c-stores.
“This is the fifth year in a row we’ve seen year-over-year growth in the energy category, so we’re pretty excited about that,” she said.
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