Consider it a positive sign for the rest of the year that seven of the top 10 in-store categories posted decent unit sales growth in the first half of 2014.
That’s according to figures from IRI, which showed gains for most of the top category heavies. Compare that to the first half of 2013, when only two categories eked out an increase.
According to Bonnie Herzog, managing director for beverage, tobacco and convenience store research for Wells Fargo Securities LLC, New York, there’s no question that weather has played a role. After a brutal winter, spring and summer weather was better than historical averages—depending on the area of the country, of course. Two-thirds of the cities Wells Fargo tracks had less rain during second-quarter 2014 than the same period last year, while 60% had warmer temperatures.
It’s a force that played out in the second biggest sales driver in c-stores: beverages. A Wells Fargo survey asked c-store retailers to rate how several factors were affecting beverage sales for the quarter. Weather was the largest positive, with 85% of respondents indicating it had a better impact on sales relative to last year. As one retailer described it, “We had a very cold winter and people had cabin fever and now want to get out and have fun and relax.”
Indeed, data from IRI shows c-store sales for beer, energy drinks, bottled water, sports drinks, juices and refrigerated teas gained in the 24 weeks ending June 15.
Meanwhile, more than half of Wells Fargo survey respondents said foot traffic was having a positive effect on sales, likely because of improved weather conditions. This may be reflected in foodservice, where c-stores posted their strongest gain in traffic in two years, up 3% for the year ending May 2014, outpacing quick-serve restaurants and grocery/drug, according to data from The NPD Group.
But, as always, there are counterbalances. With gas prices trending higher relative to last year, about 85% of respondents to the Wells Fargo survey highlighted this factor as a bigger drag on beverage sales vs. last. And while Herzog is encouraged that conditions are improving in 2014, especially compared to the difficult first half of 2013, she warns that c-stores cannot be complacent, especially in light of growing threats from channels such as dollar stores.
“Broadly, I think the retail lines are blurring,” says Herzog. “That trend will likely continue. From a retailer perspective, that’s where they have to continue to ... think outside the box: Do everything they’ve been trying to do, focus on foodservice and other items to drive traffic into the store.
“Target’s small box, Walmart—it’s going to continue to evolve. C-stores really need to think about what they’re selling and how to provide convenience for their customers.”
CONTINUED: Top 10 Subcategories
Top 10 Subcategories
C-store sales, 24 weeks ending June 15, 2014
| Subcategory | C-store sales ($ millions) | PCYA* | Unit sales (millions) | PCYA* |
| Cigarettes | $23,069.9 | -1.8% | 3,773.9 | -3.3% |
| Beer/ale/alcoholic cider | $7,456.4 | 3.8% | 1,423.4 | 4.3% |
| Carbonated beverages | $3,855.2 | -0.9% | 2,296.0 | -1.0% |
| Energy drinks | $3,479.4 | 3.9% | 1,397.5 | 4.2% |
| Smokeless tobacco | $2,458.6 | 5.4% | 587.4 | 2.0% |
| Salty snacks | $2,022.7 | 4.7% | 1,218.0 | 2.2% |
| Bottled water | $1,407.1 | 4.3% | 899.5 | 3.0% |
| Chocolate candy | $1,226.3 | 2.4% | 863.1 | 0.4% |
| Cigars | $1,081.5 | 1.1% | 721.6 | 7.1% |
| Sports drinks | $1,068.4 | 6.9% | 610.1 | 6.7% |
Source: IRI
* Percent change from a year ago
Subcategories on the Move
C-store sales, 24 weeks ending June 15, 2014
| Category | Dollars PCYA* | Units PCYA* |
| Electronic smoking devices | 27.0% | 25.4% |
| Automobile fluids/antifreeze | 26.9% | 20.0% |
| Bakery snacks | 24.8% | 12.8% |
| Shelf-stable canned juices | 19.1% | 13.9% |
| Spirits/liquor | 17.1% | 19.3% |
| Wine | 14.5% | 8.0% |
| Refrigerated entrees | 8.6% | 7.4% |
| Dried meat snacks | 8.0% | 4.4% |
| RTD tea/coffee | 7.1% | 3.5% |
| Sports drinks | 6.9% | 6.7% |
Source: IRI
* Percent change from a year ago
Fastest Growing (by percentage of units)
C-store sales, 24 weeks ending June 15, 2014
| Category | C-store unit sales PCYA* |
| Electronic smoking devices | 25.4% |
| Automobile fluids/antifreeze | 20.0% |
| Spirits/liquor | 19.3% |
| Shelf-stable canned juices | 13.9% |
| Bakery snacks | 12.8% |
Source: IRI
* Percent change from a year ago
On the Decline (by percentage of dollars)
C-store sales, 24 weeks ending June 15, 2014
| Category | C-store dollar sales PCYA* |
| All other tobacco products | -8.4% |
| Frozen appetizers/snack rolls | -6.8% |
| Smoking accessories | -5.2% |
| Gum | -4.5% |
| Cigarettes | -1.8% |
Source: IRI
* Percent change from a year ago
On the Decline (by percentage of units)
C-store sales, 24 weeks ending June 15, 2014
| Category | C-store unit sales PCYA* |
| Frozen appetizers/snack rolls | -14.8% |
| Frozen dinners/entrees | -9.6% |
| Smoking accessories | -9.5% |
| All other tobacco products | -7.6% |
| Gum | -5.6% |
Source: IRI |* Percent change from a year ago
CONTINUED:Tobacco Competition Grows
Tobacco: More Competition, Fewer Dollars
When CVS announced plans to quit selling tobacco, many analysts predicted that the convenience channel stood to benefit most from the drug behemoth’s exit.
It was a brief bit of good news amid the increasingly competitive market for declining tobacco sales. Yes, the channel may inherit some of CVS’ cigarette shoppers. (The chain has not yet announced whether they will continue to sell electronic cigarettes.) But as value chains such as Dollar General and Family Dollar further ramp up their tobacco strategies and vape shops pop up across the country, Wells Fargo analyst Bonnie Herzog warns c-store retailers to ready for battle.
“It’s a much more competitive landscape, and I think that will continue for the channel,” she says.
When it comes to more established retail outlets, such as drug, big box and dollar, Herzog says the smaller players have the most to lose. “What I’m seeing and hearing is it’s the larger chains that seem to be faring better with this competition,” she says. “It’s a lot of the smaller independents that are possibly facing more of the pressure from the dollar-store chains. It could just mean a different level of merchandising or sophistication, [but] that’s what I’m hearing.”
But that’s not the case when it comes to vaping-centric shops and lounges, which number in the thousands across the country. “Many of the retailers in our surveys have suggested vape shops are either currently a threat or something they’re keeping their eye on,” Herzog says. “I think vape shops are a real threat to the c-store channel.”
The threat is especially concerning as more and more consumers turn to the higher-tech personal vaporizer units (also known as tanks or mods) sold in vape shops, preferring the experience over the traditional “cig-alike” electronic cigarettes sold at most c-stores. That might be the reason we’ve seen a deceleration in e-cigarette sales over the past several quarters: While electronic-smoking-device dollar sales were up by 184.3% in the first half of 2013, they were up just 27% this year; similarly, unit sales were up 229.2% last year, and 25.4% in 2014.
“The interesting trend people keep asking about is the deceleration for e-cigs,” says Herzog. “Some retailers are already moving other categories within vapor, carrying a wider selection.”
The problem is a lack of data. Besides the fact that sales from vaping shops and lounges are not tracked, Nielsen has yet to track vaporizer or e-liquid sales at all. So any speculation about how well the segment is doing—or what specific products and brands are selling—is just that.
“There’s a lot of misperception about what’s truly going on,” Herzog says. “But if you talk to the retailers about what they’re selling, which is what I do with the survey work, [vaporizer sales] are happening.”
These alternative-tobacco sales continue to be increasingly important to the c-store channel. Out of the eight tobacco subcategories tracked by IRI, only electronic smoking devices boasted more than a 5% growth rate in both dollar and unit sales. Four of the categories boasted negative dollar and volume trends, something Herzog predicts is here to stay.
“For tobacco, it’s kind of the similar trends we saw last year,” Herzog says. “It’s all still on the other categories like e-cigs and vapor; otherwise, combustible cigarettes continue to be pressured, but that’s to be expected. If anything, over the last year those same (negative) trends have accelerated."
CONTINUED:Tobacco Trends and Data
Product Trends: Tobacco
- Electronic-cigarette manufacturers are evolving their product lines to catch the bigger vaping wave. NJOY, 21st Century Smoke and others have expanded their portfolio to include vaping pens and e-liquids that allow the user to customize their experience.
- Meanwhile, some manufacturers are placing their bets on females to be the major vaping demographic. Many female-centric e-cigarettes and vaping devices were on display at The NATO Show this year.
- Seasonal LTOs often found in food and beverages have migrated to tobacco. Swisher’s steady stream of seasonal cigarillos includes Island Madness, a watermelon and rum variety; and Sticky Sweets, a caramel and peach option that rolled out in time for holiday selling.
Tobacco
C-store sales, 24 weeks ending June 15, 2014
| Subcategory | C-store sales ($ millions) | PCYA* | Unit sales (millions) | PCYA* |
| Cigarettes | $23,069.9 | -1.8% | 3,773.9 | -3.3% |
| Chewing tobacco/snuff | $236.54 | 4.9% | 563.2 | 2.1% |
| Spitless tobacco | $93.2 | 19.2% | 24.2 | 0.04% |
| Cigars | $1,081.5 | 1.1% | 721.6 | 7.1% |
| Electronic smoking devices | $287.1 | 27.0% | 26.5 | 25.4% |
| Smoking accessories | $111.6 | -5.2% | 68.5 | -9.5% |
| Pipe tobacco | $33.8 | -8.4% | 4.6 | -1.7% |
| Roll-your-own tobacco | $24.9 | -8.5% | 4.6 | -12.9% |
Source: IRI
* Percent change from a year ago
Cigarette Manufacturer Market Share
C-store sales, 52 weeks ending July 4, 2014
| Manufacturer | Dollar share | Dollar sales PCYA* | Unit share | Unit sales PCYA* |
| Altria Group Inc. | 54.8% | -1.4% | 53.5% | -3.1% |
| Reynolds American | 25.9% | -1.0% | 27.0% | -3.1% |
| Lorillard | 14.2% | 0.8% | 12.8% | -1.3% |
| Imperial Tobacco | 1.3% | -9.0% | 1.5% | -10.2% |
| Private label | 0.8% | -10.2% | 1.2% | -8.8% |
Sources: Nielsen C-Track Database and Wells Fargo Securities LLC
* Percent change from a year ago
E-Cigarette Manufacturer Market Share
C-store sales, 52 weeks ending July 4, 2014
| Manufacturer | Dollar share | Dollar sales PCYA* | Unit sales | Unit sales PCYA* |
| Lorillard (blu) | 43.0% | 135.6% | 33.9% | 164.7% |
| Logic | 19.8% | 125.4% | 21.7% | 174.7% |
| NJOY | 17.5% | -20.3% | 15.9% | -11.3% |
| CB Distributors | 3.9% | -43.6% | 6.6% | -32.4% |
| Nicotek | 2.4% | -2.1% | 3.7% | 15.0% |
| Reynolds (Vuse) | 1.8% | ** | 2.7% | ** |
| Altria (Mark Ten) | 1.7% | ** | 1.7% | ** |
| FIN Branding Group | 1.6% | 40.3% | 2.0% | 71.0% |
| VMR Products | 1.4% | ** | 2.4% | ** |
| Green Smart Living | 0.9% | 19.3% | 1.7% | 18.5% |
| Ballantyne Brands Inc. | 0.7% | -87.2% | 0.9% | -91.1% |
| Cigirex | 0.1% | -85.1% | 0.1% | -84.1% |
Sources: Nielsen C-Track Database and Wells Fargo Securities LLC
* Percent change from a year ago
** New product; no data available yet
CONTINUED: Sunny Sales for Beverages
Beverages: Weather, Energy Boost Sales
While weather dampened c-store beverage sales in 2013, this year’s outlook is downright sunny: According to a Wells Fargo analysis of 15 key c-store markets, the temperatures were up by 0.6% in 2014 vs. 2013, with 3.3% less rain.
“For c-stores, there’s no question that the weather plays a role,” Herzog says. “If it’s super-hot, your beverage sales go up.”
C-store operators agree with this assessment, with 85% of retailers questioned for Wells Fargo’s “Beverage Buzz” survey saying weather is having a more positive effect on beverage sales than last year, especially after such a brutal winter.
The trends are so positive that, despite the fact that Herzog describes 2014’s July 4 holiday week as “wetter and colder” than 2013, the “Beverage Buzz” report shows that holiday sales were still up by 5.2% this year, compared to 2.7% in 2013.
Not surprisingly, retailers predict water, energy and iced teas will lead the pack in 2014, with an anticipated 10% growth rate for each. Energy sales growth has softened some; Herzog estimates the category is up 8% in second-quarter 2014, vs. double-digit growth in the three previous quarters. But there are still plenty of positives, thanks to the higher average ticket and greater gross dollars the category boasts.
“Our survey respondents indicated that not only has the energy category shown the most growth of any beverage category within the c-store channel, but the category is continuing to take shelf space from other categories,” Herzog says.
It’s a trend she expects to continue through 2014 and beyond. “On our calls, it’s been estimated that energy is 20% [of beverage sets] today,” says Herzog. “Retailers expect it to be a third of their beverage offering in the next five years.”
In terms of alcohol beverages, the warmer weather has helped as well—as has a growing diversification of convenience offerings. Take the beer category: Bucking negative dollar and volume sales trends in the first half of 2013, IRI data shows the category grew by 3.9% (in dollar sales) and 1.4% in unit sales. However, just two of the top-five selling brands enjoyed positive sales in the first half of 2014.
That means offering just the traditional top-selling brands is no longer enough, something Herzog attributes to the diversification of the beer category and of c-store consumers. “The channel’s consumers are evolving,” she says. “If you’re talking new consumers, it’s a little bit like your tobacco set. Sure, you need to offer the Marlboros and the Buds, but you need to be smart about the other offerings such as higher-margin and differentiated products.”
CONTINUED: Beverage Trends & Data
Product Trends: Beverages
- Cider rollouts continue at a steady stream from both regional players and the big guys. Some are experimenting with unique techniques such as barrel aging, while others are adding unusual flavors such as hops, peach and even chocolate.
- Packaging innovations include non-glass, single-serve wine, resealable closures for cans, and unique marketing such as The Coca-Cola Co.’s Share a Coke campaign, which replaced the Coke logo with 250 of the most popular U.S. names for teens and millennials.
- Flavor trends within the beverage category include Hispanic flavors, found in Boyd’s Cinnamon Churro coffee and Arriba Horchata energy drink; yogurt-based drinks; and the use of alternative sweeteners such as stevia.
Alcohol
C-store sales, 24 weeks ending June 15, 2014
| Subcategory | C-store sales ($ millions) | PCYA* | Case/volume sales (millions) | PCYA* |
| Total beer | $7,441 | 3.9% | 338.8 | 1.4% |
| Wine | $335.1 | 15.9% | 4.0 | 14.2% |
| Sparkling wine/champagne | $16.9 | 17.2% | 0.1 | 14.8% |
| Spirits/liquor | $339.0 | 17.1% | 56.8 | 19.3% |
Source: IRI
* Percent change from a year ago
Nonalcohol
C-store sales, 24 weeks ending June 15, 2014
| Subcategory | C-store sales ($ millions) | PCYA* | Unit sales (millions) | PCYA* |
| Carbonated beverages | $3,885.2 | -0.9% | 2,296.0 | -1.0% |
| Energy drinks | $3,479.3 | 3.9% | 1,397.5 | 4.2% |
| Bottled water | $1,407.1 | 4.3% | 899.5 | 3.0% |
| Sports drinks | $1,068.4 | 6.9% | 610.1 | 6.7% |
| Ready-to-drink tea/coffee | $900.9 | 7.1% | 556.1 | 3.5% |
| Total milk | $870.9 | 1.6% | 329.9 | -2.9% |
Source: IRI
* Percent change from a year ago
Juice
C-store sales, 24 weeks ending June 15, 2014
| Subcategory | C-store sales ($ millions) | PCYA* | Unit sales (millions) | PCYA* |
| Shelf-stable bottled juices | $246.1 | 0.5% | 404.5 | -1.1% |
| Refrigerated juices/drinks | $275.6 | 3.8% | 117.2 | 2.9% |
| Shelf-stable canned juices | $165.6 | 19.1% | 137.4 | 13.9% |
| Shelf-stable non-fruit drinks | $107.8 | 2.8% | 58.0 | 6.7% |
| Refrigerated teas/coffees | $87.1 | 6.1% | 1.1 | 3.5% |
Source: IRI
* Percent change from a year ago
Brands on the Move
| Brand | Dollars | Units |
| Beer | ||
| Corona Extra | +12.2% | +10.0% |
| Michelob Ultra Light | +12.7% | +9.8% |
| Modelo Especial | +28.7% | +23.1% |
| Bud Ice | +11.9% | +13.1% |
| Pabst Blue Ribbon | +9.8% | +8.6% |
| Wine | ||
| Barefoot | +18.7% | +20.5% |
| Sutter | +9.5% | +8.6% |
| Woodbridge | +16.7% | +14.9% |
| Spirits/liquor | ||
| Smirnoff | +10.8% | +21.2% |
| Crown Royal | +14.9% | +6.6% |
| Captain Morgan | +18.4% | +23.7% |
| Energy drinks | ||
| Red Bull | +7.2% | +7.1% |
| Monster Energy | +6.5% | +5.8% |
| NOS Energy | +16.1% | +17.3% |
| Rockstar Energy | +6.7% | +6.6% |
| Monster Energy Ultra Blue | +111.4% | +99.9% |
| Bottled water | ||
| Glaceau smartwater | +9.6% | +9.8% |
| Aquafina | +7.9% | +8.5% |
| Nestle Pure Life | +9.0% | +12.3% |
| Fiji | +17.0% | +14.1% |
| Zephyr Hills | +15.7% | +11.5% |
| Deja Blue | +29.0% | +25.5% |
| Sports drinks | ||
| Gatorade Frost | +59.9% | +61.8% |
| Powerade | +256.0% | +226.6% |
| Gatorade | +86.9% | +107.8% |
| Ready-to-drink tea/coffee | ||
| Lipton Brisk | +10.9% | +5.9% |
| Lipton Pure Leaf tea | +33.7% | +33.5% |
| Lipton | +26.8% | +33.6% |
| Pure Leaf tea | +60.5% | +59.6% |
| Fuze | +8.4% | +7.7% |
| Starbucks Frappucino | +9.7% | +7.7% |
| Starbucks Doubleshot Coffee | +10.3% | +9.9% |
| Juice | ||
Ocean Spray apple juice | +12.6% | +10.8% |
Ocean Spray cranberry juice | +7.7% | +7.1% |
Snapple | +30.9% | +29.8% |
Minute Maid fruit juice blend | +82.4% | +75.3% |
SunnyD | +6.2% | +5.2% |
Good 2 Grow | ** | |
Minute Maid lemonade | +6.6% | +8.9% |
Ocean Spray orange juice | +8.2% | +6.5% |
Tropicana Pure premium orange juice | +8.1% | +8.3% |
Mountain Dew Kickstart | +60.1% | +62.9% |
| Milk | ||
TruMoo refrigerated flavored milk | +26.4% | +20.2% |
Private label flavored milk | +12.5% | +10.2% |
Oak Farms skim/lowfat milk | +55.3% | +55.3% |
Oak Farms whole milk | +45.8% | +44.8% |
Prairie Farms whole milk | +13.6% | +9.0% |
Source: IRI
* Percent change from a year ago
** New product; no data available yet
CONTINUED: Candy Thrives
Candy: Candy Thrives, Hand to Mouth
Cassandra Matos, product director of confection and snacks for McLane Co., Temple, Texas, expects gum sales to be down in 2014 compared to 2013. However, she expects a flattening toward the end of the year, with increasing innovation staving off further declines.
“We’re seeing good items with the new Wrigley 5 Ascent, Sour Patch Kids gum is doing extremely well, and some new Trident flavors,” she says. Mints, meanwhile, are growing sales almost proportionate to gum’s decline, though Matos does not see it taking all of the subcategory’s business.
“Within mints, we still see fruit flavors growing and doing well,” she says. “They are not the largest portion of the mint category—it is still minty flavors, the same with gum. But fruit flavors are growing and leading some growth.”
McLane has been advising retailers to cut back on gum space where it makes sense and allocate it to items with good growth potential, such as nonchocolate hand-to-mouth items.
In chocolate, single bars enjoyed good growth in the first two quarters, reversing the course of much of 2013. “Toward the end of 2013 and beginning of 2014, we saw suppliers moving toward more of good middle ground between promoting king and standard,” she says. “We’re seeing the fruits of that.”
Hand-to-mouth chocolate continues to go gangbusters, with single-serve packages showing the greatest growth
in c-stores. Matos believes that the subcategory could soon have separate king, standard and hand-to-mouth segments, she says. For now, McLane advises retailers to partner hand-to-mouth with its king counterpart in plan-o-grams.
With hand-to-mouth doing so well, is there still room for theater boxes? Although sales are down, Matos believes so, pointing out that it is a different consumer. “I believe that’s more driven by consumers knowing where they can get that sweet-spot price point,” she says. “That’s drawing from theater boxes in the c-store. It’s still a viable segment and shouldn’t be completely removed from the peg bag set or confection in total, but we’re recommending retailers take a look and make sure they have top-selling items.”
In nonchocolate, most of the growth remains in king sizes, and hand-to-mouth is also doing well for items such as Jolly Rancher and Twizzler packs, says Matos, who cites the car-cup pouch pack as a great innovation. Gummies, sour candy and fruit snacks are also performing well.
Sales for chocolate peg bags are moving toward gusseted. “If you look at chocolate and see hand-to-mouth, king, peg and gusseted bag, that peg doesn’t have a perceived value any longer in many instances,” she says. “We’re seeing those items decline in volume and they’re coming out of the peg-bag set; but in return, we’re getting more demand and pulls on gusseted chocolate items.”
The same dynamic is happening in gum, where car cups and pouches are drawing greater sales because of their perceived value.
With hand-to-mouth doing so well, Matos cautions suppliers not to overdo it on new products—similar to the limited-time-only crash of a few years back.
CONTINUED: Candy Trends & Data
Product Trends: Candy
- A big theme at this year’s Sweets & Snacks Expo was health, with the National Confectioners Association making it a major focus through education sessions and tasting panel participation by dietitians. Many exhibitors continue to launch products with portion-control packaging and simple ingredient sourcing.
- The pool of premium confections continues to grow, with decadent additions such as sea salt, truffle oil and high-end chocolate.
- As gum sales continue to slump, manufacturers are attempting to resuscitate the category with innovations such as Ice Breakers Cool Blasts, which starts as a gum before dissolving into a breath-mint-like blast; and Juicy Fruit’s new sugar-free soft-chew and bubble gum formats.
Gum
C-store sales, 24 weeks ending June 15, 2014
| Subcategory | C-store sales ($ millions) | PCYA* | Unit sales (millions) | PCYA* |
| Sugarless gum | $409.3 | -5.1% | 267.6 | -7.4% |
| Regular gum (no sugarless) | $87.3 | -1.7% | 104.1 | -0.8% |
| Total gum | $496.7 | -4.5% | 371.7 | -5.6% |
Source: IRI
* Percent change from a year ago
Chocolate candy
C-store sales, 24 weeks ending June 15, 2014
| Subcategory | C-store sales ($ millions) | PCYA* | Unit sales (millions) | PCYA* |
| Box/bag/bar less than 3.5 ounces | $1,025.3 | 1.2% | 747.3 | -0.2% |
| Box/bag/bar greater than 3.5 ounces | $159.5 | 9.7% | 79.9 | 4.5% |
| Total chocolate candy | $1,226.3 | 2.4% | 863.1 | 0.4% |
Source: IRI
* Percent change from a year ago
Nonchocolate candy
C-store sales, 24 weeks ending June 15, 2014
| Subcategory | C-store sales ($ millions) | PCYA* | Unit sales (millions) | PCYA* |
| Chewy | $499.8 | 6.0% | 393.7 | 2.6% |
| Novelty | $83.2 | -3.4% | 67.9 | -4.5% |
| Licorice | $60.0 | -2.1% | 36.4 | -1.7% |
| Specialty nut/coconut | $51.3 | -5.0% | 40.8 | -5.8% |
| Hard sugar candy | $44.8 | -5.1% | 72.4 | -3.1% |
| Plain mints | $35.0 | -4.3% | 30.1 | -5.7% |
| Total gum | $780.9 | 2.4% | 645.5 | 00% |
Source: IRI
* Percent change from a year ago
Brands on the Move
C-store sales, 24 weeks ending June 15, 2014
| Brand | Dollars | Units |
| Sugarless gum | ||
| Mentos Pure Fresh | +39.3% | +38.9% |
| Stride | +16.0% | +11.9% |
| Dentyne Ice | +12.3% | +7.8% |
| Wrigley's Extra | +4.6% | +3.8% |
| Wrigley's Spearmint (regular) | +9.5% | +13.7% |
| Chocolate candy <3.5 ounces | ||
| Nestle Butterfinger | +185.1% | +148.2% |
| Cadbury Caramello | +15.0% | +12.5% |
| Woodbridge | +16.7% | +14.9% |
| Chocolate candy >3.5 ounces | ||
| Nestle Butterfinger | +22.6% | +17.2% |
| Reese's Fast Break | +8.0% | +5.8% |
| Snickers Squared | +5.2% | +5.5% |
| Reese's | +15.6% | +5.5% |
| Chewy | ||
| Lifesaver Gummies | +42.0% | +39.9% |
| Haribo Gold Bears | +41.2% | +39.4% |
| Starburst | +37.3% | +31.8% |
| Sour Patch | +26.9% | +24.2% |
| Air Heads Xtremes | +28.5% | +17.2% |
| Skittles | +17.0% | +15.5% |
| Air Heads | +31.1% | +15.4% |
| Trolli Sour Brite Crawlers | +11.4% | +9.8% |
| Sour Patch Kids | +11.3% | +9.5% |
| Jolly Rancher | +14.7% | +4.7% |
| Swedish Fish | +6.8% | +4.0% |
| Hard sugar candy | ||
| Jolly Rancher | +10.5% | +15.9% |
Source: IRI
* Percent change from a year ago
CONTINUED: Health, Innovation Drive Snack Sales
Snacks: Health, Innovation Drive Sales
When it comes to the snack category in 2014, it pays to be in good health.
Kristen Hamby, snacks category manager for McLane Co., Temple, Texas, says that according to internal data for first-quarter 2014, a few subcategories are showing double-digit growth, all with a healthy halo.
First off: healthy bars. “Growth in healthy bars is attributed to the growth of c-store consumers reaching for products that are perceived as healthier and on-the-go,” says Hamby, citing that the limited ingredient, all-natural appeal of many of these products, such as Kind bars, attracts consumers who want to keep things simple when snacking. According to IRI figures for the 24 weeks ending June 15, c-store sales of nutritional/intrinsic health value bars rose about 7%.
Trail mix has also enjoyed steady growth over the past few years because of its healthful appeal and retailers dedicating more space to the segment on inline salty sets, Hamby says. C-store sales in the 24 weeks ending June 15 were up 8.7%, according to IRI. And packaged popcorn, though a small segment, is gaining item count in snack sets thanks to new bold and savory flavors. IRI figures show ready-to-eat popcorn up by double digits.
Those subcategories on the decline, per McLane data: protein bars, cookies and crackers, and “other” salty snacks.
“The decline in protein bars may be due to more space being allocated to the other growing bar segments, such as healthy,” says Hamby, pointing out that retailers need to ensure that the appropriate space is being allocated to each segment. McLane recommends a set mix of 40% protein, 25% energy, 25% healthy and 10% diet.
Customers are also reaching more for protein alternatives, she says, such as jerky and nuts. “People have a different mindset instead of just heavy protein,” she says. “Now it’s on healthier snacks overall.”
Cookies and crackers, meanwhile, are slumping because of a lack of innovation, though some new items show promise.
In particular, Hamby points to “tweener” items such as Nutella & Go, which is merchandised in the cookie and cracker set.
Hamby expects the snacks category overall to grow sales in 2014 vs. 2013. Two years ago, the category saw a lot of new item innovation, which caused sales to spike and then level off in 2013 for some segments.
“This year is another year of innovation, which has caused an upswing,” she says. Trends include bold and spicy flavors or those that resemble indulgent meals, as well as resealable packaging and snack/dip combinations.
“People are snacking more than ever,” Hamby says. “Also, the improvement in the economy has led to consumers spending a little more money on themselves.”
CONTINUED: Snack Trends & Data
Product Trends: Snacks
- The specialty-food industry is taking stalwart c-store products such as jerky, chips and bars and making them their own. Craft snacks are proliferating in every subcategory of snacks, from “small batch” meat snacks to high-quality chips with exotic ingredient lists.
- The NPD Group recently reported that consumers largely don’t understand how much protein they need in a day, but that doesn’t stop them from seeking it out at every snack occasion. Manufacturers have responded with an influx of meat snacks, more variety in the nut aisle and Greek yogurt infused into just about anything. Up next for protein: pea protein, a meat- and soy-free alternative being used more regularly in snack bars.
- The variety of bars seems to multiply monthly, with both big brands rolling out line extensions and specialty players elbowing their way in. Recent innovations include savory flavors such as Mediterra bars featuring sun-dried tomatoes and basil, and Kind Bar’s Smoked Honey BBQ; and the increased use of seeds, such as in Clif Bar’s Kit’s Organic Fruit + Seed line.
Sweet Snacks
C-store sales, 24 weeks ending June 15, 2014
| Subcategory | C-store sales ($ millions) | PCYA* | Unit sales (millions) | PCYA* |
| Bakery snacks | $339.9 | 24.8% | 252.8 | 12.8% |
| Cookies | $286.9 | 1.1% | 275.5 | 0.6% |
| Pastry/Danish/Coffeecakes | $275.3 | -1.0% | 218.1 | -4.2% |
| Doughnuts | $258.7 | 18.5% | 177.2 | 13.2% |
| Muffins | $64.6 | -3.1% | 38.6 | -5.2% |
Source: IRI
* Percent change from a year ago
Salty Snacks
C-store sales, 24 weeks ending June 15, 2014
| Subcategory | C-store sales ($ millions) | PCYA* | Unit sales (millions) | PCYA* |
| Potato chips | $653.1 | 5.0% | 411.1 | 2.6% |
| Dried meat snacks | $591.8 | 8.0% | 239.9 | 4.4% |
| Tortilla/tostada chips | $380.9 | 7.7% | 206.5 | 4.1% |
| Other salted snacks (no nuts) | $344.7 | 2.0% | 194.1 | 1.4% |
| Cheese snacks | $235.2 | 4.9% | 148.1 | 1.5% |
| Crackers | $172.5 | -0.5% | 162.9 | -5.0% |
| Corn snacks | $145.4 | 2.1% | 87.4 | -1.3% |
| Pretzels | $99.4 | -1.8% | 65.5 | -2.6% |
| Ready-to-eat popcorn/caramel corn | $88.3 | 12.6% | 54.0 | 10.5% |
| Pork rinds | $75.7 | 4.4% | 51.3 | 1.6% |
| Nutritional/intrinsic health value bars | $226.0 | 7.1% | 109.9 | 6.9% |
| Breakfast/cereal/snack bars | $77.8 | 0.4% | 67.4 | -3.2% |
| Granola bars | $43.9 | -6.6% | 55.2 | -5.2% |
| Snack nuts | $230.1 | 4.7% | 188.2 | 2.4% |
| Sunflower/pumpkin seeds | $133.9 | -1.4% | 113.3 | -10.5% |
| Nutritional snacks/trail mixes | $88.5 | 8.7% | 34.2 | 6.4% |
Source: IRI
* Percent change from a year ago
Brands on the Move
C-store sales, 24 weeks ending June 15, 2014
| Brand | Dollars | Units |
| Bakery snacks | ||
| Tastykake | +13.3% | +14.4% |
| Cookies | ||
| Private label | +6.8% | +11,2% |
| Nabisco Belvita | +68.1% | +66.2% |
| Pastry/Danish/Coffeecakes | ||
| Tastykake | +17.1% | +10.1% |
| Doughnuts | ||
| Little Debbie | +15.7% | +8.6% |
| Tastykake | +32.8% | +22.7% |
| Salty | ||
| Pringles | +8.2% | +8.1% |
| Lay's Kettle Cooked | +9.8% | +7.1% |
| Herr's | +4.8% | +8.0% |
| Private label | +6.4% | +10.8% |
| Lay's Sabritas | +12.8% | +8.3% |
| Utz | +5.2% | +6.2% |
| Wavy Lay's | +15.3% | +27.2% |
| Cape Cod | +9.4% | +10.8% |
| Dried meat snacks | ||
| Slim Jim | +15.7% | +11.8% |
| Jack Link's All American | +22.1% | +18.9% |
| Jack Link's jerky | +7.8% | +4.1% |
| Jack Link's Matador jerky | +18.7% | +13.8% |
| Tortilla/tostada chips | ||
| Doritos Sabritos | +44.7% | +41.6% |
| Cheese snacks | ||
| Chester's | +5.1% | +4.7% |
| Crackers | ||
| Sunshine Cheez It | +4.3% | +3.2% |
| Combos | +93.6% | +92.1% |
| Corn snacks | ||
| Baken Ets | +21.1% | +18.8% |
| Nutritional/intrinsic health value bars | ||
| Nature Valley Sweet & Salty Nut granola bars | +7.7% | +6.6% |
| Clif nutritional bars | +17.7% | +17.6% |
| PowerBar Protein Plus nutritional bars | +13.8% | +16.8% |
| Kind Plus nutritional bars | +87.3% | +83.6% |
| Snack nuts | ||
| Wonderful | +46.5% | +47.1% |
| Blue Diamond | +26.1% | +18.0% |
| Sunflower/pumpkin seeds | ||
| David | +6.7% | +5.0% |
| Spitz | +9.1% | +9.0% |
| Big's | +37.1% | +29.4% |
Source: IRI
* Percent change from a year ago
CONTINUED: C-Store Foodservice Outperforms the Economy
Foodservice: C-Stores Outperform in Flat Economy
When looking at foodservice from 20,000 feet up, the terrain is decidedly flat.
According to research by The NPD Group, restaurant traffic for the years ending May 2011, 2012, 2013 and 2014 remained flat after a 3% drop in 2010—and that’s considered good news.
“We have not been able to recover traffic losses,” says Bonnie Riggs, restaurant industry analyst with Port Washington, N.Y.-based NPD.
But while much of the foodservice industry is flat, growth areas exist: Riggs points to coffee, doughnut and bagel operators. Also, among retailers with foodservice operations, c-stores saw traffic up 3% for the year ending May 2014, while QSRs and food/drug remained flat.
“[C-stores] are focusing on offering more and higher-quality, fresher food offerings,” says Riggs. Lunch and snacks have seen the greatest growth in traffic, while morning meal is also doing well, according to NPD figures.
Yet consumers continue to trade down when eating out, picking cheaper entrees such as hamburgers over the more expensive steak to keep the check low.
“The industry as a whole is not going to grow more than one-half percent a year,” Riggs says. “It will continue to be a battle for market share. There are winners out there, and it is those that are new, different, innovative, creative and fulfilling particular needs.”—Additional reporting by Abbie Westra
Product Trends: Foodservice
- While some in the restaurant industry are wondering if the frozen-yogurt trend is dead, the sweet treat has found a welcome home in the c-store industry, where some retailers are reporting healthy profits. The show floor at this year’s National Restaurant Association Restaurant, Hotel-Motel Show, with its deluge of products and equipment for all types of blended and dispensed treats, likewise indicates a continuation of the trend.
- Perhaps in reaction to sluggish carbonated-soft-drink sales, a bounty of unique products have come out for the fountain, often focusing on better-for-you and functional ingredients such as green tea and super fruits. Blended beverages are likewise receiving a lot of attention in the nation’s R&D kitchens.
Traffic Distribution by Day-Part
Year ending May 2014
C-stores
| Day-part | Share of traffic | PCYA* |
| Morning meal | 34% | 3% |
| Lunch | 18% | 1% |
| Supper | 6% | 5% |
| p.m. snack | 42% | 4% |
Food and Drug
| Day-part | Share of traffic | PCYA* |
| Morning meal | 20% | 11% |
| Lunch | 29% | -3% |
| Supper | 21% | -6% |
| p.m. snack | 30% | 0% |
QSR
| Day-part | Share of traffic | PCYA* |
| Morning meal | 22% | 2% |
| Lunch | 36% | -1% |
| Supper | 29% | -1% |
| p.m. snack | 13% | 3% |
Source: The NPD Group/CREST
* Percent change from a year ago
Competitive Channels: Traffic Change
Convenience stores have been the best-performing segment over the past three years, increasing traffic each year.
| Channel | Year ending May 2012 | Year ending May 2013 | Year ending May 2014 |
| C-stores | 2% | 1% | 3% |
| Food and drug | 0% | -1% | 0% |
| QSRs | 1% | 1% | 0% |
Source: The NPD Group/CREST
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