A ‘Pretty Exciting’ Year for Packaged Beverages

Growth for all subsegments; full category sales up 6.5%

Steve Holtz, Editor in Chief, CSP Daily News

convenience store sales beverage contribution

ROSEMONT, Ill. -- In a year when average gasoline margins hit a record 22.3 cent per gallon and convenience-store industry’s pretax profit grew an amazing 47.3% to reach $10.2 billion, there were a lot of things to cheer about at this year’s State of the Industry Summit.

One element that may have flown beneath the radar for some was the “pretty exciting” performance by the packaged-beverage category.

Accounting for 22.7% of in-store sales contribution and 22.4% of gross-profit dollars, the non-alcohol packaged beverage category grew sales by 6.5% in 2014, and beer sales grew 3.5%.

“Packaged beverages has had the highest amount of gross-margin percent for the past five years,” said Kevin Smartt, CEO of Kwik Chek Food Stores, during the NACS SOI Summit earlier this month.

In 2014, non-alcohol packaged beverages saw 39.8% gross margin, averaging $22,824 in sales dollars (up 6.5% from 2013) and $9,083 in margin dollars (up 5.9%) per store, per month, according to preliminary SOI data presented during the conference. Beer sales averaged 19.08% gross margin with $15,432 in dollar sales (up 3.5%) and $2,944 margin dollars (up 5.6%) per store, per month.

Digging deeper, Smartt noted that every subcategory in packaged beverages—even carbonated soft drinks (CSDs)—saw growth in c-stores in 2014. (See chart below.) “Sales were pretty exciting,” he said.

CSD unit sales were basically flat at 0.3% growth, but dollar sales grew 1.4%. Energy drinks (called alternative beverages in the data) grew volume 7.0%. Sports-drink volume grew 5.0%, and ready-to-drink iced tea grew 10.4%, according to Nielsen data.

Beer sales also grew nicely in c-stores, with the channel accounting for 59% of all beer sales in the United States, according to Nielsen data. Much of that growth came via smaller subcategories, Smartt said. “If it’s flavorful, sweet or local, it’s in demand,” he said of the beer category.

Steve Holtz, CSP/Winsight By Steve Holtz, Editor in Chief, CSP Daily News
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