2021 Packaged Beverages Year in Review

CHICAGO — The packaged-beverage product category in convenience stores went through many changes in 2021. Some stores added alcohol-delivery options, while others focused on juggling out-of-stock problems.

Some segments, like carbonated beverages, performed well, while others, such as previous darling hard seltzers, saw growth slow down.

Click through to see the highlights of the year from the cold vault …

Alcohol consumers now have more ways than ever to get beer, wine or liquor delivered to their homes.

7-Eleven Inc. was one of many c-store retailers that partnered with an app-based delivery service in 2021. The Irving, Texas-based chain is working with alcohol delivery service Minibar Delivery to bring beer and wine to adults in select markets.

Casey’s General Stores, Ankeny, Iowa, partnered with DoorDash to allow its customers to order beer and in December, launched a way for customers to order brews from its own app, too.

Meanwhile, DoorDash announced in September that it was going to start delivering alcohol in 20 states and Washington, D.C. This follows a multiyear journey of fulfilling alcohol on-demand delivery for many national and local merchants via its own channel with DoorDash Drive, the company’s white-label fulfillment service, the San Francisco-based company said.

DoorDash and other delivery companies have also partnered with brick-and-mortar liquor stores this year to enhance their offerings. DoorDash partnered with Spec’s Wine, Spirits and Finer Foods’ 175 stores in Texas, and Philadelphia-based Gopuff acquired Liquor Barn, an independent chain of beer, wine and liquor stores in Kentucky. 

Sparkling beverages—from energy drinks to carbonated soft drinks (CSDs) and sparkling water—saw ample growth in dollar sales in c-stores in 2021, according to Chicago-based market research firm IRI.

While total sparkling dollar sales were up, energy drinks were the only segment in sparkling growing share in c-stores, IRI Executive Vice President and Practice Leader Sally Lyons Wyatt said.

CSDs were up in sales and units in c-stores, according to IRI, but trends softened in some areas as foodservice reopened. 

“Single-serve CSD performance has stabilized and is about in-line with total nonalcohol performance impacted by consumers gradually migrating back to fountain drinks,” Chris Stewart, director of packaged beverages at Casey’s, told CSP in September.

In bottled water, seltzers, sparkling and mineral waters saw double-digit gains in c-stores for the first half of 2021, IRI said. Health benefits are one factor driving this, Wyatt said.

“Millennials and Gen Z consumer groups prefer less sweet drinks, zero sugar, enhanced flavored waters and clean energy,” she said.

Ready-to-drink (RTD) alcohol products took off in 2021—even causing retail-traffic researcher VideoMining Corp. to question whether it should be its own category.

The past few years have seen a significant rise in the popularity of alcohol beverage segments, referred to as RTD or beyond beer by brewers. The segments included in this are hard seltzers, RTD cocktails, ready-to-serve cocktails, flavored malt beverages (FMBs), hard kombucha, hard water, hard coffee, cheladas and canned/boxed/bottled single wines, said State College, Pa.-based VideoMining’s Founder and CEO Rajeev Sharma.

When treated together, RTDs account for more than 11% of sales for total alcohol beverages, he said. Sales of RTDs have increased steadily year-over-year, from 7% in 2019 to 11% in the first half of 2021.

While the most impressive growth in RTD alcohol beverages has come from hard-seltzer brands such as White Claw and Truly, as well as new RTD cocktail drinks, Sharma said traditional beer is taking the biggest hit.

RTD alcohol is doing well when it comes to online delivery services, too. The segment increased its share of beverages ordered on app-based alcohol delivery service Drizly during Labor Day weekend.

The Boston-based company reported that RTD beverages have been on the rise this year and the segment’s share increased from 4% to 7% year-over-year on the app.

The COVID-19 pandemic has caused supply-chain pressures everywhere, and packaged beverages have been particularly hard hit in 2021. And those pressures are getting worse, Goldman Sachs Managing Director Bonnie Herzog said in her analysis of retailer feedback from the New York-based investment management firm’s third-quarter 2021 Beverage Bytes survey.

Retailers reported being broadly frustrated by out-of-stock challenges in alcohol and nonalcohol drinks, and expect the challenges to remain a concern for the next few quarters.

In nonalcohol, retailers faced issues acquiring 1.5-liter bottled waters, several Monster Brands, certain Coca-Cola Co. package sizes and some of PepsiCo.’s Gatorade flavors, Herzog said.

In beer, as retailers watched consumers stock up with larger packages during the pandemic, the backlash was fewer c-store trips and a challenge for market basket replenishment. Brewers continue to grapple with the aluminum-can shortage, and the Brewers Association suggests supply will not meet demand until the end of 2021, leading some craft brewers and smaller brands to pause production or create alternative packaging.

“We’ve responded [to the shortage] by being as nimble as possible, because a package you have this week might not be available next week, and vice versa,” Erick Dowling, category manager of the beer segment for Salt Lake City-based Maverik, told CSP in February. “Our default response is to take as much as we can get when it is available … and when it isn’t, then double-face an adjacent item.”

Could hard seltzers’ previously triple-digit growth numbers be a thing of the past?

Hard-seltzer dollar sales showed modest growth in 2021, reflecting ongoing pressures and tough comparisons to previous periods, Goldman Sachs’ Herzog said in December.

Total hard-seltzer sales for a two-week period ending on Nov. 20 were up just over 3%. Industrywide can shortage issues, a shift of some volume to the on-premise channel and an overall moderation in growth trends affected seltzer’s growth, she said.

The Boston Beer Co. said in a second-quarter earnings report that there was lower demand for its Truly Hard Seltzer, one of the major players in the field along with Mark Anthony Brands’ White Claw.

“We overestimated the growth of the hard-seltzer category in the second quarter and the demand for Truly, which negatively impacted our volume and earnings for the quarter and our estimates for the remainder of the year,” Boston Beer President and CEO Dave Burwick said in July. “We increased our production of Truly to meet our summer peak and have had lower than anticipated demand for certain Truly brand styles, which has resulted in higher than planned inventory levels at our breweries and increased supply-chain costs and complexity.”

However, new hard-seltzer brands and line extensions of brands on the market are still being released. Topo Chico Hard Seltzer, for example, is releasing a new variety pack with margarita flavors in 2022. The drink is from Atlanta-based Coca-Cola Co. and distributed by Chicago-based Molson Coors Beverage Co. Molson Coors is also launching Vizzy Watermelon Hard Seltzer.

Constellation Brands, Chicago, is also launching a new hard-seltzer brand extension in the new year. Corona Hard Seltzer Seltzerita will launch in March nationally.