Opportunities Abound in Beer

beerWhile domestic beer brands account for the bulk of c-stores sales in alcoholic beverages, smart and aggressive convenience store operators who haven’t already done so will begin to put more mental energy and elbow grease behind building their craft beer business.

Many will face the same stigma they had to overcome with food: too many consumers won’t accept they can get high-quality food and beverages in the same place they gas up.

But to overcome this sales stigma, chains must understand what craft brands are available in their markets, learn what their customers want and commit to sharp category management through in-store merchandising and suggestive selling.

Domestic beer sales in U.S. convenience stores for the 52 weeks ended Dec. 31, 2012, totaled $16.43 billion, up a healthy 6.93%, according to SymphonyIRI.
But the brands experiencing the biggest jump in sales were primarily import and craft brews.

Modelo Especial, for example, saw sales increase a whopping 29.29% to $286.20 million despite being the fourth highest-selling brand tracked by SymphonyIRI at $26.94 per case. Corona sales increased 8.35% to $588.36 million.

Seizing an Opportunity
Beer is one category that convenience stores must hold on to, especially as drug store chains like Walgreens look to encroach on the category, according to Lou Maiellano, president of TAZ Marketing & Consulting Group. “I think what’s interesting is that when you look overall at the market, convenience stores sell 60% of the beer in the country,” he noted. “When you look at the way NACS evaluates this category, grocery sells about 35%, with drug selling 4-5% and mass merchandisers, excluding Walmart, less than half a percent. So we outsell the grocers almost two to one.”

The rub, however, is that for 2011, convenience stores accounted for only 2.1% of the craft beer segment. “The overall sales in the beer market for craft beer is 9%,” Maiellano  said. “So even though we’re the primary seller for the entire category, we’re not doing a good job in the particular segment.”

How to do better? Certainly employee education and training to make them familiar with a handful of local craft beers—and how to best sell them to customers by talking them up—makes a lot of sense. Making room for craft brews, both in and out of coolers, and devoting some merchandising effort will also help. But it must all begin with identifying local and regional craft beers in the first place.

“You will need a little more focus on some of the regional players,” Maiellano said. “Bring in more local brews and focus on learning how to sell craft beer, which is different than traditional beer. For example, you can sell it warm because it’s a different type of buyer.”

Private label is another way some c-store operators have chosen to go, Maiellano pointed out, both to enhance its brand and offer consumers a lower price point.

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