Whether you want to call it a blessing or just a lot of pressure, it’s generally agreed that beverages are the biggest draw for getting customers into a convenience store.
In fact, 58% of consumers reported buying a nonalcohol beverage on their most recent c-store visit, driving more traffic into the store than any other major category, according to consumer research specialists The NPD Group. And 64% of these purchases were packaged beverages.
But that’s just the tip of the consumerdata iceberg. In this report, CSP aims to provide statistics, data points and consumer insights to apply to your store(s) based on typical traffic, demographics and other factors.
Breaking It Down
For every “universal” suggestion to help sell more beverages, there are three, four, probably more ideas that are going to be specifi c to a region, a convenience-store chain or even a store.
“You clearly have a ton of traffi c that’s going directly back to the cold vault to buy a beverage, but there’s also a significant subset [of consumers] that’s coming in just to pay for gas or to buy something else that haven’t made that voyage back to the cold vault,” says Brad Higginbotham, director of customer advisory services for The Coca-Cola Co., Atlanta. “Making the beverages as easy to access as possible is key. We’ve said for years we want to be within an arm’s reach of desire for the shopper.”
Each of the vendors interviewed for this story devote considerable time and effort to collecting consumer-insights data, some of which they were willing to share, and others that they opted to keep close to the vest pending proprietary agreements.
The convenience retail channel “is an insights desert compared to other channels in the amount of data that’s available to us,” admits Scott Finlow, vice president, shopper and channel insights for PepsiCo, Purchase, N.Y. “So our approach is more direct investment in understanding the channel and to make those investments directly in partnership with our customers so that we can get real-time learnings.”
Consider it the result of the c-store industry once being the underappreciated mutt of retailing: It’s lovable, and always there when you need it, but it’s the first dog to get kicked to the curb in the fight for the dog bowl or, in this case, budgeting the funds to collect consumer insights.
Shopper Opportunities
But that’s changing as retailers, consultancies, researchers and suppliers realize the value of the c-store industry. “When we look at shopper behavior and what is driving shoppers to convenience and gasoline outlets vs. other choices that they have, beverage is the No. 1 reason that they’re going into a store,” says Jeff Jones, general manager for PepsiCo. “So what that means for our retail partners is: They need to think about the role that beverages can play in driving traffic to their outlets.”
Adds Manny Zayas, vice president, small format for St. Louis-based Anheuser-Busch InBev, “If you think about a convenience store, the nature of it, it’s used for 100 different occasions throughout the day. Whether you’re talking about folks on their way home from work, or they’re headed out to a party or some other event, it’s an important thing to be prepared to service a lot of different shopper opportunities.”
While such data can influence a retailer’s set, it is just as likely to direct one’s promotions.
“If you have a cleaner, brighter, welllaid- out store, both Bubba and the professional are going to go in there,” says Steve Seager, senior retail marketing manager for Nestle Waters North America Inc., Stamford, Conn. “But we did some research on how these various segments would respond to different kinds of promotional offers. So it gets to what else they purchase and how they purchase and why are they buying in a c-store.”
Higginbotham says Coca-Cola is doing the same. “We’re leveraging all those insights we have about the shopper, which channels they’re going to for which occasions and which need states, to then build out what is the right packaging and promotional strategy for each of those different channels.”
David Portalatin of NPD says promotions appeal to today’s “value-driven” consumers. “That doesn’t always mean the lowest available price,” he says. “Many consumers are looking for a ‘deal’ as a means to either get more (quantity) or trade up (quality). Consumers in c-stores are more likely than average to report buying a beverage on deal. Retailers can leverage this to increase basket size by offering bundles, two-for-one specials or incentives to upsize. They can also increase check size by offering attractive discounts on premium items.”
So just whom should you be marketing to? Read on for the appropriate insights, data and statistics. Each of the vendors cited in these pages encourages retailers to contact their representatives with requests for additional info as needed.
General Beverage
Current C-Store Sales Trends
For most of 2011, packaged-beverage sales in convenience stores saw some trends continue and new ones emerge. Carbonated soft drinks, in general, continue to struggle, while iced tea continues to break out as a must-have subcategory. Meanwhile, sparkling bottled water is seeing double-digit growth.
The good news: The most volume growth came in subcategories that offer the largest margin (notably energy drinks and wine). And where there were declines in volume—small drops for both beer and carbonated soft drinks (CSDs)—there were still increases in dollar sales, thanks to price increases.
Consumer Insights
Nonalcohol-beverage sales account for more than $16 billion, with c-stores leading all channels in sales of single-serve beverages.
Source: Nestle Waters North America/Mintel
The cold vault is the top-shopped section and key trip driver for a c-store:
- 29% of c-store shoppers said they visit for the alcohol-beverage cooler.
- 21% visit for the nonalcoholbeverage cooler.
Source: E & J Gallo Winery/SmartRevenue
Overwhelmingly, the decision about beverage type, brand, fl avor/ variety and size are all made before a shopper has entered the store.
Source: Dr Pepper Snapple Group/LG&P Research
Beverage Categories That Skew Female
- Bottled water
- Iced tea
- Juice
- Other noncarbonated beverages
Beverage Categories That Skew Male
- Beer
- Energy drinks
- Sports drinks
Source: The NPD Group
58% Percentage of consumers who bought a nonalcohol beverage on their most recent c-store visit, driving more traffi c into the store than any other major category.
64% of these purchases were a can or bottled beverage.
27% were machinedispensed.
Source: The NPD Group
24% Percentage of c-store shoppers who report buying from the cold vault on impulse; 16% report the purchase was a deal or special price.
Source: The NPD Group
80% Percentage of all beverage buyers who specifi - cally planned to buy the beverage type they purchased before entering the store.
Source: Dr Pepper Snapple Group/LG&P Research
57% Percentage of all beverage buyers who said the beverage purchase was the “main reason” he or she visited a c-store that day.
Source: Dr Pepper Snapple Group/LG&P Research
2 Median number of times per month a c-store shopper buys a beverage.
Source: Nestle Waters North America/Ryan Partnership
Beer
Current C-Store Sales Trends
Total cases of beer sold have slipped a bit, but dollar sales are up. Recession or not, a tip of the hat goes to those higher-margin craft beers and progressive adult beverages (think Four Loko), which may not deliver the volume but still pack a margin and market-basket punch. Of course, light beers and premium beers still rule the day, so don’t throw the baby out with the bath water.
The Typical C-Store Beer Shopper is …
- Single
- Male
- 21-34 years old
- Blue collar
- Earning less than $40,000 a year
- Living in a metropolitan area
- Hispanic
Three Shopper Motivations for Buying Beer in a C-store:
- Can buy as needed, managing portion control and wallet.
- Feels emotionally safe because the setting is familiar and nonjudgmental.
- It’s simple; not overwhelmed by choices.
Beer Shopping ‘Occasions’:
Shed the Day: Transitioning from the “world of work” to “beer time.”
Bring the Beer: En route to a party or other social gathering.
Chilling at Home: Relaxing alone or with friends/family. Source: MillerCoors
Consumer Insights
The alcohol-beverage cooler is most shopped from 6 to 8 p.m.
Source: E & J Gallo Winery/SmartRevenue
The decision to buy beer is often made earlier in the day, while the decision on the brand and pack size is made closer to the point of purchase.
Beer-buyer trip frequency is 45% higher than the average c-store shopper.
Source: MillerCoors
Craft beers are defi nitely growing, but premium beers continue to be the lion’s share of the business. So it’s really important to think very carefully about how you select your mix and have the right offering.
Source: Anheuser-Busch InBev
$15.3 billion Total c-store dollar sales for 52 weeks ending Nov. 27, 2011, up 2.23% compared to the previous year.
761 million Total c-store case sales for 52 weeks ending Nov. 27, 2011, down 0.34% compared to the previous year. Source: SymphonyIRI Group
50% Percentage of shoppers who think of a convenience store as a place to buy beer. Source: E & J Gallo Winery/Smart- Revenue
70%-80% Approximate percentage of c-store beer transactions that are considered rote exercises with a goal of “little inconvenience or emotional drama.” Source: MillerCoor
$14.93 Average ring per c-store trip when craft beer is in the shopping basket. Source: Boston Beer/SymphonyIRI 32% Percentage of c-store consumers who buy beer at least once a week or more from a particular store. Source: E & J Gallo Winery/Smart- Revenue
3 Median number of times per month a c-store shopper buys beer. Source: Nestle Waters North America/Ryan Partnership $11.49 Average ring per c-store trip when beer is in the shopping basket. Source: Boston Beer/SymphonyIRI
Bottled Water
Current C-Store Sales Trends
Bottled-water sales trends have turned based on health reports, they’ve turned based on eco-friendly efforts, and they’ve turned based on the economy. Results from 2011 sales suggest a return to growth for the subcategory, with unit sales of PET still water up a healthy 5% even as dollar sales dipped a smidge. On top of that, sparkling-water sales grew double digits in c-stores, most likely on Nestle Waters’ rollout of its regional brands in sparkling formats.
Consumer Insights
Top reason consumers give for why they are drinking more bottled water: health.
Top reason consumers give for why they are drinking less bottled water: cost. Source: Nestle Waters North America
Promotional Concepts Most Acted On:
- Discount price on bottled water with purchase of gasoline
- Discount price with purchase of two bottles of water
- Discount price on bottled water with purchase of another beverage
- Discount price on bottled water with purchase of a food item Source: Nestle Waters North America/Ryan Partnership
Suggested Target Consumer for Pack Sizes:
- 20-ounce: 25- to 44-year-olds
- 700 ml. sport cap: Females 25-44 years old
- 1 liter: Males 25-44 years old
- 1.5 liter: 25- to 44-year-olds
- 1 gallon: Males 35 and older; outdoor workers
- 3 liters: Females 25-44 years old
- 24-pack: 35 and older; families
Source: Nestle Waters North America
$2.6 billion Total c-store dollar sales of PET still water for 52 weeks ending Nov. 27, 2011, down 0.36% compared to the previous year. (Sparkling/mineral waters were up 15.66% to $45 million.)
1.8 billion Total c-store unit sales of PET still water for 52 weeks ending Nov. 27, 2011, up 5.1% compared to the previous year. (Sparkling/mineral waters were up 14.33% to 30 million units.) Source: SymphonyIRI Group
88% Percentage of c-store bottled-water buyers who plan their water purchase prior to entering the store. Source: Nestle Waters North America
21% Percentage of bottled-water buyers who had “no particular brand in mind” until after entering the store. Source: Dr Pepper Snapple Group/LG&P Research
76% Percentage of bottled-water buyers who said it is “important” that a c-store carry their preferred package size.
20% Percentage of bottled-water consumers who said they would not purchase water in a c-store where their preferred package size was not available. Source: Nestle Waters North America
CSDs
Current C-Store Sales Trends
In an age when health and anti-obesity initiatives are the rule of thumb, carbonated soft drinks remain challenged in c-stores and beyond. Still, through ambitious marketing and promotional campaigns by the major manufacturers, volume growth was down only a bit (0.36%), while price increases bumped dollar sales up slightly (0.75%).
Top 5 ‘Benefits’ That Drive CSD Sales:
- Cool and refreshing
- Good by itself, without any food to go along with it
- Comforting to drink
- Can drink without feeling guilty
- A special treat
Source: Dr Pepper Snapple Group/LG&P Research
Top 5 Other Products in the Market Basket of Packaged- CSD Purchasers:
- Candy or gum 41%
- Gasoline 39%
- Lottery tickets 37%
- Salty snacks 36%
- Tobacco products 34%
Source: Dr Pepper Snapple Group/LG&P Research
85% Percentage of CSD buyers who specifi cally planned to buy a CSD before entering the store.
83% Percentage of packaged-CSD buyers who planned to purchase a specifi c CSD brand before entering the store. Source: Dr Pepper Snapple Group/LG&P Research
$8.7 billion Total c-store dollar sales for 52 weeks ending Nov. 27, 2011, up 0.75% compared to the previous year.
5.3 billion Total c-store unit sales for 52 weeks ending Nov. 27, 2011, down 0.36% compared to the previous year. Source: SymphonyIRI Group
Top 5 Most Coke-Friendly Major Markets:
Los Angeles
Atlanta
Houston
Washington, D.C.
Miami
Source: Buxton
Most Pepsi-Friendly Major Markets:
El Paso, Texas
Bakersfi eld/Delano, Calif.
Baton Rouge, La.
Memphis, Tenn.
Fresno, Calif.
Source: Buxton
Most Dr Pepper- Friendly Major Markets:
Tulsa, Okla.
Nashville, Tenn.
Knoxville, Tenn.
Louisville, Ky.
Pittsburgh
Source: Buxton
Energy Drinks
Current C-Store Sales Trends
A few years ago, energy drinks took the c-store industry by storm, offering an entirely new—and highly desirable—subcategory of beverages that attracted key c-store demographics and high margins. More recently, sales growth began to slow as those key consumers grew up, the recession took away discretionary spending and energy shots stole the thunder. In 2011, sales growth was easily in the double digits for both subcategories. C-stores are by far the primary channel for energy drinks. The other main outlets for purchase are in bars, restaurants and clubs. A growing number of consumers also purchase in grocery/mass/club stores for take-home packs. Source: Red Bull
Consumer Insights
“Selection” is becoming more important for c-store shoppers and is notably important for energy-drink and teacategory buyers, meaning retailers wanting to grow these categories may need to broaden the assortment. Source: The NPD Group
79% Percentage of energy-drink buyers who specifi cally planned to buy an energy drink before entering a c-store.
71% Percentage of energy-drink buyers who planned to purchase a specifi c energydrink brand before entering the store. Source: Dr Pepper Snapple Group/ LG&P Research
14-39 Age range of the majority of energy-drink buyers. Gender split is around 70/30 for the category. 65% Percentage of energy-drink buyers who visit a c-store fi ve to 20 times every four weeks; 14% visit fewer than fi ve times, while 21% visit more than 20 times. Source: Red Bull
$5.4 billion Total c-store dollar sales for 52 weeks ending Nov. 27, 2011, up 16.40% compared to the previous year. (Energy shots were up 17.74% to $887 million.)
2.2 billion Total c-store unit sales for 52 weeks ending Nov. 27, 2011, up 16.90% compared to the previous year. (Energy shots were up 16.17% to 282 million units.) Source: SymphonyIRI Group
Top 2 Other Products in the Market Basket of Energy-Drink Purchases:
Nothing else
Another energy drink Source: Red Bull
Iced Tea
Current C-Store Sales Trends
$1.1 billion Total c-store dollar sales for 52 weeks ending Nov. 27, 2011, up 2.55% compared to the previous year.
910 million Total c-store unit sales for 52 weeks ending Nov. 27, 2011, up 5.1% compared to the previous year. Source: SymphonyIRI Group
72% Percentage of iced-tea buyers who specifi cally planned to buy an iced tea before entering the store. Source: Dr Pepper Snapple Group/ LG&P Research
Wine
Current C-Store Sales Trends
Consumer Insights
Wine shoppers spend more time in a c-store than most other category shoppers do, averaging 140 seconds per visit. Source: E & J Gallo Winery/ SmartRevenue
$447 million Total c-store dollar sales for 52 weeks ending Nov. 27, 2011, up 11.60% compared to the previous year.
5.7 million Total c-store unit sales for 52 weeks ending Nov. 27, 2011, up 14.09% compared to the previous year. Source: SymphonyIRI Group
19% Percentage of shoppers who think of a c-store as a place to buy wine, the same percentage who thinks of a c-store as a place to buy milk.
36% Percentage of consumers who “never thought about purchasing wine” in “general market” c-stores, compared to 24% in “affl uent stores.”
50% Percentage of customers in “affl uent” c-stores who like when the store provides information about wines. Percentage is 38% in “general market” c-stores. Source: E & J Gallo Winery/Smart- Revenue
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