TEMPLE, Texas -- This year is really off to a great start. That's the assessment of McLane Co. vice president of marketing Roger Grogman, who offered up some data and analysis of company sales from the first eight weeks of 2006 as sponsor of a recent CSPNetwork CyberConference.
The OTP (other tobacco products) and packaged beverage categories have both increased significantly in growth, Grogman said during the CyberConference titled How's Business 2006Improving Your Bottom Line. And in fact, [those categories] have exceeded that of candy, which is more [image-nocss] typical of categories showing growth. [To view an OnDemand replay of this CyberConference, click here (free for retailers and wholesalers; $49 for suppliers).]
The McLane datasome of the first available for 2006show growth of $20 or more in the average purchases per-store per-week in four categories compared to the same period for 2005: cigarettes (up $532), OTP (up $52), packaged beverages (up $51) and store use/supplies (up $24). Temple, Texas-based McLane is a major supplier of consumer products to convenience stores, serving more than 35,000 stores. The data for all categories show a 10% increase in sales overall.
It's important to know that the growth in OTP has exceeded that of our year-to-date 2005 numbers. So we have a trajectory there of expansion that is quite significant, said Grogman. Packaged beverages, which many see as seasonal, also has a trajectory above our year-to-date index. [That's] primarily driven by energy drinks. An interesting note is that energy drinks are up substantially, but energy bars are not doing as well as they did at this time last year.
Grogman also noted that while per-store, per-week cigarette carton sales are up 10 cartons, the dollar growth of the category isn't quite as positive as the data show. In an apples-to-apples comparison, you first take out the blended tax across the country, which in fact increased by 96 cents from 2005 to 2006. We also had a change in mix and a slight change in pricing on a carton cost, which rose by 30 cents from 2005, he said. Applying this to the 173 cartons per store per week for this year vs. the 163 last year, [that] shows us that an increase of $218 occurred that was apart from actions taken by retailers. The net result is really a $313 increase in cigarettes, or 6% vs. the 10% [the data] showed.
Grogman accounted for the increase in store supplies by noting that retailers are doing more to keep their stores clean and neat. He also noted a correlation in cigarette, OTP and candy sales. Candy only shows an $18 per-store, per-week increase, [and that] is really driven internally by gum and mints, he said. So you've got a triad of drivers in consumables in the sense that they are habitual-type consumables. Thus, good cigarette stores are good OTP stores, and good OTP stores are good gum and mint stores.
This is the type of start [to the year] that you really like to see, he summarized. If you take the time to index this against the upcoming year, you can be nothing but optimistic.
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