With an increasing number of c-stores investing in enhanced beer and wine programs, it pays to be aware of the stop-start journey bound to occur.
The convenience channel has made great strides in the beer and wine segments, not only in catering to customers looking for ways to save time when picking up these items, but also in providing more upscale options, thus creating a destination.
From local craft beer offerings to on-trend growler programs to upscale wine varieties, retailers are designating additional space to profit from the lucrative alcohol category.
There are revenues to be made. C-store beer sales totaled more than $18.6 billion in the 52 weeks ending June 12, 2016, a 3.5% increase over the previous year, according to IRI, a Chicago-based market research firm. Table wine dollar sales totaled close to $935 million in this same period, a jump of more than 8% compared to 2015.
“Over the past 5-10 years, there has been a shift in consumer demand toward a wider variety of beer options, with consumers looking for more craft, import, flavored malt beverage and hard soda beers,” said Jake Hafele, assistant category manager at Kum & Go, a West Des Moines, Iowa-based chain of at least 430 stores, operating in 11 states. “Store-specific beer planograms have allowed us to stay responsive to this shift.”
Similar to beer, Hafele reported wine consumers are looking for more choices in convenient packaging for immediate consumption as well as sparkling and flavor-infused wines.
To meet this demand, Kum & Go has dedicated more space to chilled wine and merchandising for wine packages made for immediate consumption. “Alternative wine packages, like four-packs, canned wine and wine Tetra boxes, have become a larger part of store sets,” Hafele said.
PROGRAMS THAT FLOW
Kum & Go’s beer business has continued to grow and evolve, as the chain builds and acquires stores in more locations where alcohol can legally be sold. Wine has been added in response to the increasing number of consumers seeking a broader assortment of alcohol products and due to changes in legislation.
The chain’s beer variety in most stores ranges from national brands to local craft brews. Customers drive the assortment decisions for each location, so the selection for each store is unique. Its wine offerings are typically consistent across each state, with some variation due to store size and local or state restrictions.
Kum & Go beer and wine programs are marketed with a combination of in-store signage, sampling events and digital marketing through its new &Rewards loyalty program.
Brentwood, Tenn.-based MAPCO Express, which has more than 349 locations, instituted a growler beer program about three years ago in select stores Alabama, Arkansas, Virginia and Georgia.
“We rely primarily off of word of mouth marketing, along with our social media and MY Reward$ program,” said Damian Wyatt, beverage category manager. “We send out communication via e-mail informing consumers of new styles and brands and want our consumers to see our stores as great beer destinations for three main reasons—variety, cold [options] and convenience.”
In addition to eight linear feet of wine, Stop & Go Mini Mart, a pilot store launched in Bend, Ore., has three doors of craft beer six packs, two doors of 22-ounce craft beer and five doors of domestics and imports.
Half of the 3,000-square-foot store contains a growler filling station.
“We were the first convenience store on the West Coast with a beer cave,” said Kizer Couch, owner. “Craft beer is huge and the profits are better, while carbonated wine mixed with juice is a big seller.”
The move away from traditional wine bottles to Tetra and other boxed packaging has helped increase Stop & Go’s wine sales.
MORE TRACTION
Plaza Chevron in Costa Mesa, Calif. focuses on local beers, which encompass four cooler doors. This includes single-serve items, domestics, imports and craft varieties.
“We have a Chevron planogram we use when choosing craft beers, but I also rely on my vendors,” said Mike Mendez, manager.
The store’s white wines, which previously were sold at room temperature or in the refrigerated beer section, were recently relocated to a dedicated reach-in cooler to increase beer space. A large variety of reds also are offered, with prices ranging from $9.99 up to $50 a bottle.
“We’re located in a tourist area by the beach, so we do a big wine business,” said Marylou Mendez, Plaza Chevron’s owner. “It’s a better deal for people to purchase a $20 or $30 bottle of wine here, rather than spend $10 a glass at the hotel next door.”
GROWLERS KEEP GIVING
A segment that is growing in popularity is growlers, typically 32-ounce or 64-ounce jugs or bottles used to contain tap beer.
Stop & Go Mini Mart was one of the first c-stores to offer a growler filling station in 2012. The store currently has 36 beer taps.
“Once we started this program, we turned the model into a growler franchise business for convenience retailers,” said Couch, who also owns The Growler Guys franchise. Three of its 13 locations currently operating in Oregon, Washington State and Idaho are in c-stores.
Couch sees opportunity for retailers who have the volume potential and cold storage capacity to accommodate a large number of kegs.
“A lot of work and technology are needed to keep beer on tap the right way,” said Couch. “Plus, there’s the cost to consider, as growler stations are generally $120,000-$180,000 to implement.”
Kum & Go has begun selling growlers in some of its new Marketplace prototype stores, which has helped meet the demand of consumers seeking more local craft beer options.
“Growlers provide a unique experience for customers to take home a freshly poured draught beer,” said Hafele. “In addition to the experience of seeing beer poured, consumers also get the opportunity to try more local and draught-only specialty beers.”
MAPCO Express places an emphasis on local beers, not only to meet customer demand, but also to help support local breweries. The chain uses a standard 64-ounce glass growler, which has a changing theme, depending on the season. For example, during summer, the container portrays an American flag.
OVERCOMING CHALLENGES
Convenience retailers will always be challenged with the amount of space that can be dedicated to beer and wine.
Kum & Go has addressed these challenges by adopting a store-specific beer assortment to meet the needs of local customers.
“As demand from these customers continues to become more broad and the need for more choice becomes evident, Kum & Go has dedicated more space to beer and wine in new stores’ designs,” said Hafele. “Walk-in beer caves, adding space dedicated to serving growlers, mix-and-match six-pack coolers and more space for chilled wine are all a part of our new store design.”
MAPCO Express has concentrated its efforts around conducting research on brands and keeping abreast of new trends and varieties on beer blogs and through other media outlets.
“Operating in seven states provides us with a diverse portfolio from store to store,” said Wyatt.
Its options will expand on Jan. 1, 2017, when a Tennessee beer law goes into effect that will allow high-gravity beer to be sold in its 188 locations across the state.
“We have to continue to be smart with our internal data and analytics, which tell us through days of supply and movement how much space is allocated to a particular brand or package,” Wyatt said. “The old days of selling the same liquid through 15-20 domestic premium packages have to be lessened in order for us to continue to allow for innovation in both local and regional brands.”
