CHICAGO —Elevated at-home beverage alcohol consumption is here to stay, according to a new report from IRI, and convenience stores are in a particularly advantageous position regarding this trend because customers wanting to try new products can buy single-serve and smaller pack sizes at c-stores.
This insight is from Scott Scanlon, executive vice president of beverage alcohol at Chicago-based IRI, who recently talked with CSP. Scanlon said customers can easily try a new product or flavor purchased at a c-store without investing “in a big count of that flavor.” If the customer doesn’t like what they bought, it’s only one or a few cans versus being stuck with a large package, he said.
“People want variety, innovative products, RTDs (ready-to-drink beverages), seltzers,” he said. “They want to try those. Retailers should ask what they have that could provide the opportunity: ‘I could be that location to provide consumers innovative new products.’”
Alcohol Not as Pricey
In its 2022 Midyear Alcohol Update: Beverage Alcohol Defies CPG Trends, the market research company shows that retail price increases for beverage alcohol are more moderate than other consumer-packaged goods categories.
In addition, the report also reveals that many consumers are celebrating and socializing at home, especially given challenges in on-premise locations driven by labor shortages, rising prices and reduced menus.
“It’s hard to ignore the catastrophic rise in take-home sales during pandemic,” Scanlon said. “People were home, bars and restaurants were closed or had limited capacity, and we saw a huge influx in that in-home consumption that has had staying power.”
In-Premise Flagging
“We thought in-premise would return to a strong degree in 2022, but in January at a presentation I said this will be the year of the on-premise resurgence,” he said. “I’ve been proven wrong primarily due to the war in Ukraine, gas prices and COVID still out there.
“People didn’t go back,” he added. “The experience isn’t what it once was.” Staff shortages (that increase wait times for a table and food), limited hours and fewer people out make for an “experience that is not what it once was. There are fewer people there because they are worried about the virus. There’s less social engagement.”
Beverage alcohol is more insulated than most in that category, Scanlon said, adding, “We have seen from previous recessionary times that it has sustained when others have fallen off in sales. Beverage alcohol continues to be that affordable indulgence, that mini vacation.”
Spirits enjoyed the greatest lift during pandemic, then beer, then wine, Scanlon said. “These were trends not borne out of pandemic, but the pandemic supercharged those trends.”
C-Store Strategy
From a convenience-store perspective, Scanlon said, retailers have big opportunities: Expand on their spirits and premium beer (and to a lesser extent wine) selections to take advantage of the growing interest in these areas. “People are more selective on their purchases,” he said, “and we’ve seen some shift in RTDs and seltzers.”
“Prices are rising while the experience is diminished,” Scanlon said. “People are asking, ‘What am I getting? Should I make meals and craft cocktails at home?’ The at-home mixologist trend was around prior to the pandemic, but the pandemic accelerated the trend.”
Other key insights in the new IRI report also revealed:
- As consumers adopt healthier habits, better-for-you beverage alcohol options and alternative alcohol products continue to gain traction.
- New twists on familiar favorites, interesting flavor combinations and contemporary claims are popular with consumers.
- E-commerce remains a viable channel for beer.
E-commerce and better-for-you products, such as low- or no-alcoholic options, are areas where c-stores might want to dabble, Scanlon said.
The report also includes implications and opportunities for growth:
- With increasing inflation and rising competition among retail outlets, promotions will be an essential strategy in retaining shoppers.
- RTD cocktails are a growth opportunity, but brands need to have a point of differentiation.
- Marketing should focus on giving consumers options and inspiration for at-home entertaining occasions.
- E-commerce is an integral part of a consumer's shopping experience and is important for omnichannel success.
IRI delivers market, consumer and media exposure information and predictive analytics for small to midsized companies in the consumer-packaged goods (CPG), retail and over-the-counter health care industries.