The Power of Single-Serve Beer

Or why you're not allotting enough space to these moneymakers

CHICAGO -- If a retailer’s six-pack beer sales are enjoying a hefty spike, they ought to thank their single-serve cans and bottles for the assist.

Small only in stature, 16-, 24- and 40-ounce beer servings are driving sales and attracting their own core users. Singles also are proving to be a strong sampling vehicle for customers on the fence about trading up to multipacks of brands they’ve never bought. Trial takes on greater urgency when accounting for the multitude of craft brews and imports filling the retail pipeline.

“Our 40-, 25- and 16-ounce packages provide the greatest lift, and customer sampling is one of its functions,” says Pat Determan, owner of Lyons Filling Station in Clinton, Iowa, who knows a little about beer merchandising: He’s a former regional beer distributor who morphed into a c-store operator.

In the wake of a 20% volume increase on singles in 2017, Determan allots one full door to single packages, with 16-ounce brands making up the top shelf, 25-ounce options in the middle and 40-ouncers on the bottom.

Strong cold-vault and floor merchandisers for single-serve varieties help consumers navigate a decisive path to purchase. “We dedicate more space to singles each year as it’s an increasing segment of our business,” says Brian Grotewiel, director of marketing for Midwest Petroleum Corp., St. Louis, which operates 51 Zephyr Xpress c-stores.

For Midwest’s “Buy Me, Try Me” promotion in 2017, customers who bought participating six-pack brands were entitled to a single beer or flavored malt for less than $2. The result was a 5% increase in six-pack sales for the duration of the campaign. “Performance of singles has been so strong, we’ve thought about trimming back large packages in favor of more singles,” says Grotewiel. Zephyr Xpress’ same-store sales of singles grew 3.5% in 2017, he says.

Aside from sampling, retailers have a few cards to play. In an immediate-consumption channel, people are captivated by cold beer—particularly on ice. It helps that 75% of beer buyers drink a cold one within one hour of purchase, according to research from Anheuser-Busch.

Undoubtedly, the stakes are high for c-stores regarding all new beer launches. On-premise channels that were once the landing spot for new entries now yield to off-premise channels, such as c-stores, says Joe Vonder Haar, CEO and managing partner of iSee Store Solutions, St. Louis.

“As millennial influences enter the equation, neighborhood c-stores are the venue for debuting new offerings,” says Vonder Haar. “So make the offer simple—simple communication and shelf organization that is easy to execute.”

Doubling Down on Singles

Single beer sold in c-stores is not a Johnny-come-lately trend. It traces to the mid-1990s, when 7-Eleven made a big reveal: The No. 1 SKU in many of its stores was a Budweiser 16-ounce can, says Vonder Haar.

“The chain wasn’t putting promotions behind singles, so consumers pulled them out of six-packs to buy individually,” says Vonder Haar. “Eventually, the chain established the barcode to capture transactions. Brewers were not proactively pushing singles to the consumer—it was the other way around.”

That consumer tendency was a revelation. Today, retailers still understand the opportunity in increasing singles inventory, with effective displays as the driver.

Midwest Petroleum had used wire and suction-cup fixtures, but sales suffered whenever the suction cups on the fixtures broke, says Grotewiel. “We have now implemented iSee’s Apex Rack that holds five to six cans of 16- to 25-ounce beers,” he says. “The back side has a position for POS messaging, like a billboard.”

“We see margins of at least 30%, even higher with crafts,” says Randy Morton, owner of Morton’s, Hallettsville, Texas. Six-packs are his highest-velocity package, led by Shiner Bock, LandShark and Blue Moon. But Morton’s sells a lot of craft 24-ounce cans and bottles.

“The increase of crafts is what motivated us to increase our single-beer vault,” says Morton. The store is 15 miles from the Spoetzl Brewery in Shiner, Texas, which makes a seasonal Shiner FarmHouse Rye. “Because people are not familiar with some of these beers, sampling is crucial.”

Morton blends the power of LED cooler displays with more old-fashioned display methods. For the latter, Morton created a “beer bath”: an antique cast-iron bathtub that showcases his beer on ice. It’s been an effective combination of beer-vault efforts.

Crafting a Prudent Plan

Better commitment to singles at c-stores appears to be a sustained effort, and “it’s paid off,” says Vonder Haar. “Investments have been significant, and you see that with new and better strategies in terms of compelling merchandising and category management.”

Calling single sales “on fire,” Ike Anyanwu, channel director of small format for Heineken USA, White Plains, N.Y., says import single cans are growing by 17% and flavored malt beverages (FMBs) 10%, according to Heineken data.

“With only 11 seconds to grab a shopper’s attention, it’s increasingly important for retailers to assure they have the right brand and packs to satisfy the occasion,” says Anyanwa.

Forty-six percent of c-store shoppers consider two specific brands on their trip, he says, so by creating well-defined vertical brand blocks, retailers can expand that consideration list.

Operators need to realize there are at least three other core occasions, in addition to singles, Anyanwa says: multipacks sold at lower price points, three-packs to share with friends and 12-packs for social gatherings.

FMB brands are getting in on the singles action around singles expansion in c-stores. Describing the recent launch of Seagram’s Escapes Spiked, “we generated trial—as a solution for convenience—where the bulk of segment volume is attributed to singles,” says Jennifer McCauley-Topor, brand director for Seagram’s Escapes, Seagram Beverage Co., Rochester, N.Y., which garnered strong results from Seagram’s Escapes Spiked Jamaican Me Happy and Strawberry Daiquiri items.

McCauley-Topor says gaining higher velocity comes with the way FMBs are slotted by ABV content (a range of about 3% to 8%).

“Offering an assortment of FMB products at different ABV levels drives incremental sales as they target different need states and occasions,” she says.

Retailers should be ready for the next wave of consumer adoption of this package. “Power c-store customers shop the store  five to seven times per week, and they view singles as an occasion purchase,” Vonder Haar of iSee says. “I advise merchandising them as a separate segment—a category unto itself—and let the single package be the star.”

Singled Out

Single beer can be discounted and cross-promoted, and visionary retailers will execute both. Think bundling with complementary products to fill the market basket, such as meat snacks, salty snacks and foodservice items.

Nathan Underhill, executive vice president of sales for iSee Store Solutions, St. Louis, says single beer paired with foodservice effectively leverages and lifts two powerful categories.

“This strategy is a way to differentiate from other c-store competitors, plus those in other channels, such as [quick-service restaurants] and fast casual,” he says. Twofer (and “three-fer”) offers can be activated occasionally—or without interruption, which is what St. Louis-based Midwest Petroleum Corp. does.

“With every one of our single beer brands in stock, we invariably offer a twofer deal—and to great success,” says Brian Grotewiel, director of marketing for Midwest, which operates 51 Zephyr Xpress c-stores.

Ike Anyanwu, channel director of small format for Heineken USA, advises grouping promotions by segments—for example, twofers of value, premium and import beers, and flavored malt beverage and cider twofers within a tiered price-point arrangement.

“This methodology makes it easier for shoppers to distinguish differences, and it’s easier for retailers to execute,” says Anyanwu.

Top Beer UPCs

C-store sales, 52 weeks ending Dec. 31, 2017

Singles—including the 25-ounce Bud Light can—made up two of the top 20 c-store beer UPCs by dollar sales in 2017, according to IRI.

UPCC-store sales ($ millions)PCYA*Case sales (millions)PCYA*
Bud Light Beer (12 12-oz. cans)$575.4(3.6%)24.8(4.0%)
Bud Light Beer (18 12-oz. cans)$471.2(7.0%)22.2(7.6%)
Corona Extra Beer (12 12-oz. bottles)$394.75.1%12.03.2%
Bud Light Beer (25-oz. can)$360.8(4.5%)14.2(7.4%)
Bud Light Beer (24 12-oz. cans)$284.9(3.9%)14.6(4.6%)
Bud Light Beer (12 12-oz. bottles)$269.5(6.2%)11.5(6.2%)
Modelo Especial Beer (12 12-oz. cans)$242.512.4%8.19.9%
Coors Light Beer (12 12-oz. cans)$239.3(1.0%)10.4(1.5%)
Bud Light Beer (6 16-oz. cans)$238.7(4.6%)10.3(5.7%)
Corona Extra Beer (6 12-oz. bottles)$230.67.1%6.05.4%
Total (including UPCs not shown)$18,910.21.2%786.5(0.7%)

Source: IRI | * Percent change from a year ago

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