As adult beverage preferences evolve, convenience stores are tapping into specialty beer trends.
By David Bennett, Senior Editor
Studies show craft beer is not only good for overall industry volume, but is re-energizing beer lovers, bringing new people into the beer category. Seasonals, variety packs, ambers, pale ales and wheat beers not only hold the promise of retail variety, but profitability.
“The growth of craft has really been driven by consumer demand for fuller-flavored beer and local products from independent producers,”said Bart Watson, staff economist with the Boulder, Colo.-based Brewers Association. “We’ve seen a lot of producer innovation on the supply side, producers with new flavors that weren’t available before, reviving old styles, doing a lot to connect with consumers in interesting ways.”
A report from research firm Technomic Inc. shows that mainstream domestic beer production declined 2.4% in 2013 and light beer dropped 3.5%. Comparably, craft beer last year reached almost 8% volume share and 14% final retail dollar sales share. Such performance was driven, in part, by consumers—especially Millennials—seeking more adult beverage options.
Meanwhile, imported beer grew 2% during the same period with significant momentum coming from Mexican imports.
“Convenience is clearly one of the hot channels for craft right now, Watson said. “The IRI group, which tracks scan data, has craft up 27% in dollar sales year to date, and we’re seeing it in some of the channels that craft hadn’t initially penetrated as it has become a more mainstream adult beverage option. So places like convenience stores are really taking a look at craft beer, and I think they’re seeing it as a really exciting part of a beer category, which otherwise is flat right now.”
GROWLING FOR DOLLARS
The potential of craft beer has certainly captured the attention of Damian Wyatt, beverage category manager for Brentwood, Tenn.-based MAPCO Express Inc., which operates 370 store locations in Alabama, Arkansas, Georgia, Kentucky, Mississippi, Tennessee and Virginia.
Wyatt researched the feasibility of implementing a craft beer offering at the convenience store chain more than two years ago and settled on a program that promised solid profits and a following among customers.
Now with a growing number of store locations with growler stations, MAPCO is enjoying the fruits of its labor. The growler stations offer customers 6-8 taps of national and local craft beer brands—like the popular Nashville, Tenn.-brewed brand of Yazoo—that stream into 64-ounce growlers. Growlers are filled straight from the tap, sealed with a twist-cap and plastic wrap over the top to ensure freshness until commuters arrive at their final destinations.
At MAPCO, a growler can be purchased once, then refilled at any participating MAPCO location. Customers can buy a growler for a one-time price of about $3-$4. Filling up the container with the beer of their choice costs between $8-$10, depending on the brand.
The craft program has exceeded company expectations, with sales of craft product at least double that of original projections.
MAPCO has added growler stations in the Tennessee cities of Brentwood, Clarksville and Nashville, as well as Louisville, Ky.; Auburn, Ala.; Tuscaloosa, Ala. and Southaven, Miss. The retailer earlier this year introduced the program in Arkansas, which thanks to a change in the state’s liquor policy now allows any store with a retail beer permit to request to sell reusable 32- and 64-ounce growlers full of fresh-from-the-tap beer.
Wyatt chose to use smaller kegs to ensure freshness by reducing likelihood of oxidation, thus changing the flavor.
“It’s not in every store; it’s in about 20 stores right now with plans to grow to upwards of 50 stores by the end of 2015,” Wyatt said.
MAPCO’s venture began with the story of another retailer that was exploring the craft trade.
“I read an article two years ago. Someone in Portland was pouring beer into a growler and I thought it was so innovative and a way to differentiate yourself from the rest of the community of c-stores,” Wyatt said.
An integral part of the program has been to adequately train staff to conduct the program, which includes operating the taps, pouring a quality growler serving and answering questions about craft brands and processes.
“It’s a head-turner,” Wyatt said, referring to customers who first encounter the growler station. “If they’re a beer drinker, they are intrigued.”
Customers of Aloha Island Mart retail stores, operated by Aloha Petroleum Inc. are finding that frigid caves are a sure way to beat the Hawaiian heat while grabbing their favorite craft brews. That’s a result of the planning of Gary Altman, Aloha Petroleum’s general manager of company-operated stores, who helped plan the company’s first beer cave in 2011. The original 285-sqare-foot space allowed Aloha to store larger cases of beer in a cold environment. The investment has combated out-of-stocks, whether it’s a case or a 12-pack of bottles.
“We expanded to the point where we have five beer caves. When we’ve done remodels, where we could, we’ve added the beer caves,” Altman said.
The beer cave has allowed Altman the opportunity to added three times the number craft beer SKUs—which sell at a higher margin, compared to Aloha stores with just glass door beverage coolers. This proved that a beer cave could drive foot traffic in their c-stores.
Currently, Aloha Petroleum markets its products in 100 Aloha, Shell and Mahalo-branded gas stations and 40 Aloha Island Mart retail stores located on the Big Island of Hawaii, Kauai, Maui and Oahu.
“We have pretty consistent temperatures here (in Hawaii) in the 80s, and they love walking into the beer cave, where we keep it between 28-31 degrees,” Altman said. “That’s part of the buzz.”
Women Now Driving Adult Beverage Sales
Young and ethnic women in particular—are an increasingly important force in the adult beverage market, touted a recent Technomic study “Special Trends in Adult Beverage Report: Women’s Purchases & Preferences.”
The majority of women in the U.S. are of legal drinking age—and they’re increasingly engaged, experimental and educated consumers of spirits, wine and beer. Young and ethnic women, in particular, will shape the future of the adult beverage industry.
“Men are traditionally the target of adult beverage marketing initiatives, but women truly are influencers. We find women are increasing their knowledge of adult beverages, open to promotions, interested in trying new drinks and eager to share their discoveries with others,” said Donna Hood Crecca, senior director at Technomic. “Their behaviors vary by location, age, income and ethnicity; this is a very diverse and increasingly important group of adult beverage consumers.”
In comparison, regular, light and imported beers are consumed by between 34-38% of older women (ages 35+), and by between 47-50% of the general population. Craft beers are consumed by 30% of older women, and 42% of the general population.
In addition, hard ciders and flavored malt beverages are consumed by 54% and 62% of young women (ages 21-34), respectively. In contrast, those categories are consumed, respectively, by just 19% and 26% of older women, and 41% and 34% of the general population.