The growth of imports in the beer segment stands out for Scott Love (pictured), principal, retail client services at Circana, Chicago.
In a recent talk with CSP on alcohol innovations and trends, Love said that in the past 52 weeks through July, beer import sales are up 7.6% on a unit basis and 12.5% on a dollar basis versus the overall category, which is basically flat on a unit basis and up 4.8% on a dollar basis.
“Imports have been just growing and evolving over the last few years and continue to outpace,” Love said. “Beer is a very large category, but it has really slowed in growth relative to other segments.”
In addition, he said, imports in the past several years have substantially improved their marketing game and have been “much more effective than they have been historically.”
Meanwhile, liquor’s been on a tear. “It’s a much smaller piece of the business, but it’s been growing as younger generations aren’t consuming beer at the same rate as boomers or Gen Xers,” he said. If younger generations are consuming beer, it’s imports, he said.
Love explained that imports are growing for a few reasons. One is the appeal of a foreign product, another is the manufacturers “focusing on the market and really driving it.” Other segments, including budget beer and cider, are down.
Seltzers Dip
Another area in alcohol that’s down is alcohol seltzers, “a really big thing for a couple years,” Love said. While seltzers are still important, they’ve declined on a unit and dollar basis.
“A lot of the seltzers have evolved from a malt-based liquor to an actual spirit now, so they’re using that or adding more premium ingredients to try and offset their trends, but it still really hasn’t offset.”
Ready-to-drink (RTD) cocktails, he said, are “exploding, up 31.5% on a unit basis and up 55.5% on a dollar basis” in the 52 weeks ending in July.
That trend is going to continue as more offerings come into the market, he said. “We’re even seeing some ultra-premium offerings of ready-to-drink cocktails starting to hit the market.”
The alcohol content allows theses products “to be sold in many more locations than a spirit,” Love said. “In a lot of states, depending on the alcohol level of the RTD, you can sell it in a convenience store, but you can’t sell an actual bottle of vodka.
“There’s a lot of people who don’t drink beer but want an alcoholic drink—and it’s a lot easier than making a cocktail yourself at home, so it really fills that niche,” he said.
FMB Surprise
Flavored-malt beverages are another surprise, Love said. Despite there being little new in innovation, unit sales are up 12.9% and dollars are up 23.7% in the 52-week period.
“Twisted Tea is exploding,” he said. “It’s up 15.3% on a unit basis and 32.6% on a dollar basis. They don’t really have anything new. It’s one of those things that they’ve been out there for a while and all of a sudden—maybe it’s a combination of targeting and marketing and really driving that awareness—people are coming back from seltzers and other places in the category to Twisted Tea. It’s a really interesting phenomenon because it wouldn’t have been projected or predicted.”
Innovation Varies
Innovation in alcohol varies by category, Love said. “What you’re seeing in seltzers, the innovation is evolving from malt-based liquor, which is what a lot of them launched with, to an actual spirit, so either vodka or tequila or rum, and then adding more premium, natural ingredients—so real fruit.”
When hard seltzers first launched, companies were “throwing all kinds of stuff out there because it was exploding and everybody was in it,” Love said. “Now, however, offerings are more niche, meeting a specific need such as a nutritional component.”
Love is hesitant to say that seltzers have gotten old. Rather, “they had dramatic growth for a couple of years and then they’ve slowed, and there’s an evolution of the product itself. You’re getting a better-quality product now, and that’s how they’re using it to really drive and stay in the business.”
While beer remains very important, it’s also slowing relative to other categories, which is why c-store retailers must have the appropriate selection, including imports, he said.
Selection Matters
While beer is still the biggest player in the alcohol beverage category—it accounts for 85% of the business in c-stores—retailers must offer a wide selection because there are those who don’t buy it.
“They buy the malt beverages, the seltzers, the ready-to-drink cocktails,” he said, adding that a lot of the innovation is happening outside of the beer category.
“If you’re a retailer, you have to balance all of these things to be able to maximize your sales out of your vault, because if you focus solely on beer, you miss the people who are looking for alternatives,” Love said. “If you focus too heavily on seltzers, ready-to-drink cocktails, you can run out of stock on beer because it is the big piece of the business. You have to balance that innovation plus existing business.”
Beer is slipping not only because less can be done with it in terms of innovation but also because “younger generations just don’t consume beer at the same rate as older generations for a multitude of reasons,” Love said. “The calorie piece is part of it. Beer is just heavier.”
Ingredients Important
In addition, he said, ingredients are critical to shoppers now more so than ever. “This is why I think you’re seeing a lot of stuff happening with seltzer, where you have spirit-based seltzers and more premium ingredients popping up in a lot of them.”
C-stores tend to be out in front of an emerging trend, Love said, with many manufacturers using c-stores to test products.
“It’s a good testing ground for innovations, and you can see a lot of results very quickly,” he said. “It’s easier to communicate with shoppers in a smaller space. The balance retailers struggle with is capturing the wave while managing their core business.”
Retailers must have the key drivers of their business while including innovative items “that can be incremental purchases,” Love said. “Maybe they go buy their 12-pack of beer, but they pick up a ready-to-drink cocktail on the way out as well.”
Data Details
Year-over-year unit and dollar sales for the 52 weeks ending July 2 in the c-store channel, per Circana.
Growth of imports within beer
- Units: Up 7.6%
- Dollars: Up 12.5%
Alcohol seltzers have decreased sales but remain import to the assortment as they continue to generate significant sales
- Units: Down 5.2%
- Dollars: Down 9.3%
Ready-to-drink prepared cocktails have seen steady sales growth and innovation
- Units: Up 31.5%
- Dollars: Up 55.5%
In the beer category, favored-malt beverage growth ...
- Units: Up 12.9%
- Dollars: Up 23.7%
... is driven largely by Twisted Tea
- Units: Up 15.3%
- Dollars: Up 32.6%
Key Trends, Takeaways
Year over year (YOY) data from July 2022 to July 2023, where noted, plus other stats, per Circana:
- Beer is 13% of total store sales dollars for the convenience channel
- Imports and flavored-malt beverages are growth drivers in the beer category
- FMB sales dollars increased 24% YOY and average weekly items selling per store increased 17%
- Twisted Tea is 34% of sales dollars for the subcategory and increased 33% YOY
- Imports increased the total share of beer from 23.7% to 25.4% YOY
- Modelo is 48% of imported beer sales dollars and is up 21% YOY
- Corona is 29% of imported beer sales dollars and is up 8% YOY
- FMB sales dollars increased 24% YOY and average weekly items selling per store increased 17%
- Prepared cocktails have seen steady dollar sales growth while seltzers have decreased
- Alcohol seltzers decreased 9% in sales and average weekly items selling per store decreased 11% YOY
- Prepared cocktails increased sales 56% and average weekly items selling per store increased 29% YOY
- In prepared cocktails, High Noon has seen the greatest increase in dollar share of subcategory, 9% to 13% YOY
- White Claw and Truly have entered the prepared cocktails space with new products that have combined to generate nearly $10 million in sales YOY
- Alcohol seltzers continue to generate more sales dollars than prepared cocktails, $1.8 billion vs. $695 million YOY