2015 Category Captains
Today’s hyper-competitive retail environment has brought new interest to category management among both convenience store retailers and their product suppliers and distributors.
Research shows the average shopper spends only three minutes in a convenience store. That means retailers must be laser-focused in their category management skills, and with the aid of leading suppliers — or Category Captains — they must take advantage of every opportunity to improve asset utilization, customer loyalty, gross margins and volume.
Suppliers and distributors that effectively manage the sales and profitability of their categories are held in high esteem by their convenience store retailer partners. In its second year, Convenience Store News’ Category Captains awards recognize companies for their category management prowess, demonstrated through their partnerships with c-store retailers. We want to share their most innovative partnering programs with c-store retailers.
From foodservice to packaged beverages, the 2015 Category Captains continue to demonstrate their understanding of retailers’ needs to address shopper demands and the execution of solutions. Dissecting categories and digging deep into SKU management is the key to cultivating a flourishing customer base.
Our winners, chosen based on information they supplied, know category sustainability is less about whose name is on the package and more about what’s inside and how they can deliver solutions to customers. This year’s Category Captains honorees are helping c-stores capture more than their share of the consumer’s attention and dollars.
ALTERNATIVE SNACKS: Kellogg’s Specialty Channels
At the Intersection of Health & Wellness
Kellogg’s wellness effort bears fruit for category growth
Research shows 61 percent of consumers believe convenience stores should carry more healthy foods, according to a March 2014 study by Mintel.
Additionally, a Mintel snacking occasion study found that millennials, aged 18-34 — a key consumer demographic for convenience stores — are more likely than older consumers to eat a snack to fuel physical activity, and snacks that are formulated to boost energy and contain protein and vitamins would appeal to millennials.
These research findings present an interesting challenge to manufacturers and retailers as views about what is considered healthy shift from weight management (low in calories) to overall wellness (local/natural/organic).
The Kellogg Co., from its inception in 1906, has always been about helping consumers eat healthier and better. To meet today’s evolving wellness need, Kellogg relaunched its Bear Naked Granola offering in c-stores in January 2014, along with trail mixes in on-the-go formats.
At the same time, Bear Naked Energy Bars were launched exclusively in the convenience channel to gain trial, and were made available in all outlets in March 2014. Then in January 2015, Bear Naked Layered Granola Bars were launched, adding to the total category growth attributed to Kellogg’s Health & Wellness Innovation.
With more than $1 million in energy bar sales after the first six months in the channel, Bear Naked products help retailers meet the needs of active consumers and millennials by offering delicious snacks that provide energy from ingredients including granola, dried fruits and nuts.
Bear Naked reaches its core audience of millennials where they are: on-the-go, through social media and events, and also supports sustainability efforts that further enforce the overall wellness goals of the brand. In convenience, secondary counter displays, merchandisers and promotions support the line. Through marketing support, on-trend flavors and convenient on-the-go food, Bear Naked is poised to satisfy consumers and increase total category sales for retailers.
BEER/MALT BEVERAGES: Anheuser-Busch
Scoring Homers by Hitting Singles
A-B’s twist on the two-fer strategy drives growth in profitable single beer sales
The increasing number of new breweries and brands has made the beer cooler more complex for consumers who want a quick and convenient purchase. With SKU proliferation at an all-time high, retailers need to ensure they are providing a clear, concise message to their shoppers in order to drive sales and increase loyalty.
In 2014, Anheuser-Busch refined the traditional two-fer merchandising tactic to deliver proposed strategies to grow the entire single-serve section. The singles mix of total beer continues to grow year after year, growing 12 percent since 2010. Singles typically have 10 percent to 15 percent higher margins than multipacks and have traditionally been a competitive advantage for the convenience channel, which currently sells 80 percent of total single-serves.
To maintain this competitive advantage, Anheuser-Busch realized the channel needed to evolve. To ensure that convenience stores continue to drive singles-beer shoppers to their stores, a seamless, quick experience was needed for those loyal consumers.
Convenience shoppers want to get in and out of the c-store without difficulties, so complexity at retail can confuse the shopper and drive them away from the purchase. Shelf tags are often difficult to read and do not break through the clutter when shopping the beer cooler.
A-B advised its retailer customers to be innovators in merchandising to directly impact shoppers at the point-of-sale. For example, where legal, retailers can merchandise singles to the target consumer in a more impactful way and take advantage of growth through incremental purchases with A-B’s “2 for” recommendation. The “2 for” strategy establishes a clear and consistent point-of-sale communication across all single-serves by identifying stair-step price points with the ability to mix and match within each price point.
Retailers can merchandise shelves to create single price points on each shelf (a “bucketed price point strategy”) and then utilize a clear point-of-purchase sign, such as 2 for $2, 2 for $3, 2 for $4, or 2 for $5. The original price of a single will be 10–15 percent more when purchased alone, which entices most consumers to purchase two (the industry average take rate is 70 percent).
To achieve maximum benefits, the messaging needs to be clear and consistent. Each shelf should follow the same pricing bucket, with parallel signs on each shelf.
Implementing “2-for” price points can deliver up to a 10-percent increase in singles sales. Additionally, implementing the strategy across all single segments, with clear and consistent merchandising, can potentially deliver an additional 10 percent sales on top of the original “2-for” delivery. Other benefits include reduced complexity, increased co-purchases, balanced promotions, and the ability to mix and match. Consistent “2-for” messaging also allows convenience retailers to target the diverse behaviors of each type of shopper and positively impact singles beer sales across all segments.
To assess the effectiveness of its “2-for” recommendation, Anheuser-Busch analyzed the efficacy in 30 convenience stores across one market with positive results. The participating stores followed these recommendations:
- Simple communication of pricing using point-of-communication material at the shelf;
- Optimized assortment of styles and brands within the door to maximize shopper purchase;
- Mix-and-match “2-for” buckets across all brands; and
- Promotions for each beer segment to distinguish multiple price points, i.e. premium or import.
The “2-for” merchandising strategy approach not only improved single-serve trends, but also total beer trends. Some overall results of the 30 stores included:
- Total beer dollar sales up 7.6 percent;
- Total singles dollar sales up 18.7 percent;
- Out-of-stocks were reduced;
- Value segment sales improved 41.7 percent;
- Flavored malt beverage segment showed a 21-percent improvement; and
- Premium-plus segment showed a 13.2-percent gain.
Between the 30-store analysis and the overall simplicity of the “Good, Better, Best” platform, the “2-for” singles program is being recommended to convenience store retailers across the country and has been well-received as an initiative to help grow the total beer category.
CANDY: The Hershey Co.
Data Drives Category Leadership
Frontend strategy helps c-store retailers fuel growth
The Hershey team has leveraged Nielsen research to create what it calls a “Power Strategy” to drive sales to the confection/candy category. The supplier believes strongly in working collaboratively with convenience store retailers on solutions to help grow their business in an environment with consistently declining shopping trips.
The category captain in candy built its category growth strategy around several key data-supported consumer trends that are impacting c-stores. First, trips to c-stores have declined for the past three years, dropping 4.8 percent in 2012, 3.7 percent in 2013 and 6.6 percent in 2014. At the same time, the volume of gasoline sold — typically the largest trip driver in the convenience channel — has risen to 1998 levels after several years of declining consumption due to cars getting better gas mileage and flat miles traveled in the U.S. over the past few years.
Since 69 percent of consumers buy only fuel at convenience stores, this means only 31 percent step foot inside the store. Of that 31 percent, research shows only 33 percent shop the center of the store. The rest go straight to the counter to pay for their fuel, cigarettes and maybe buy a lottery ticket and leave. This means only 10 percent to 11 percent of consumers truly shop inside convenience stores, creating a big opportunity to improve sales.
By converting “fuel-only” customers inside the store, the convenience store industry can increase sales by approximately $3.4 billion for each additional percentage point of consumers who shop inside, according to The Hershey Co., which has been looking for simple, turnkey solutions to help convenience stores profitably operate in an environment challenged by trip declines.
While retailers cannot always control trips, they do have an opportunity to maximize them by increasing the basket. According to the company, the best way to address this is by focusing on under the counter (UTC) transactions.
Hershey’s Front End Team has been capturing insights on the best way to optimize the UTC space in convenience stores. The insights indicate there are four “Power Categories” convenience stores need to drive to have the greatest results with UTC: candy, energy shots, general merchandise and snacks. These are the four categories consumers indicated they expect to find at the front of a convenience store. These items are highly impulsive, have high household penetration and are purchased with high frequency.
To further support retailers, Hershey has developed a proprietary Front End Benchmark tool to determine the optimal assortment for UTC. The company recommends the following UTC space allocation for the Power Categories:
- Confection: 40–45 percent (75 percent candy, 19 percent gum, 6 percent mints)
- Energy shots: 25-30 percent
- General merchandise (i.e. lighters): 20-25 percent
- Snacks: 10–15 percent
Hershey has partnered with multiple convenience store retailers to implement UTC racks in more than 30,000 stores. Through Hershey’s total store solutions and insights, retailers leveraging UTC are driving highly profitable growth of 10 percent to 18 percent through improved shopper conversion. These results are not limited to just confection, but include all of the Power Categories.
FOODSERVICE/FULL PROGRAM: McLane Co. Foodservice
Turnkey Foodservice at Retail
McLane Kitchen platform provides right solution for every c-store need
Built on the pillars of premier food safety standards, cold supply chain integrity and training for excellence, the McLane Kitchen platform ensures that every foodservice at retail program sourced through distributor McLane Co. Inc. is executed to exacting standards that help ensure the long-term success of foodservice programs for retail customers.
The foundational pillars are merely one chapter of the story, however. Every McLane Foodservice at Retail program starts in the McLane Kitchen. More than a cookie-cutter foodservice at retail offering, McLane Kitchen is an ever-evolving resource dedicated to the sustainable success of McLane’s foodservice at retail customers.
Comprised of a wide variety of foodservice at retail offerings, the platform covers all dayparts with a variety of equipment-based programs. All levels of operational execution from thaw-and-serve programs to expanded foodservice offerings are also addressed.
Utilizing a variety of proprietary tools such as the McLane Kitchen Menu, McLane Kitchen Program Manual, Recipe Builders and Labor Profitably tools, the McLane Kitchen platform helps each customer craft a unique, category management-based foodservice at retail program that meets the operator’s specific foodservice at retail goals.
Additionally, McLane Kitchen ensures that program recommendations are destined for success by matching the program with c-store operators’ foodservice capabilities. McLane Kitchen education materials are routinely refined and published to help operators establish and/or expand existing foodservice at retail operations in a smart, safe and effective manner.
It is important to note that no two McLane Kitchen-developed foodservice at retail programs are alike because no two c-store operators are the same.
By utilizing McLane Kitchen’s category management tools and capabilities, c-store operators are equipped to grow their share of foodservice dollars. Through McLane’s premier standards of service, the c-store operators can focus on retail execution, knowing the product will arrive on time and within temperature requirements specific to each item.
McLane customers are not confined to the McLane Kitchen portfolio, but rather encouraged to explore and innovate with the help of McLane Kitchen as well as supplier partners.
FOODSERVICE/PREPARED FOOD: AdvancePierre Foods
New Items Equal Record Growth
Award-winning new sandwiches fill c-store need for variety in prepared food
AdvancePierre Foods (APF) credits a focus on customer service and innovation as the key drivers for its record 2014 net sales of approximately $1.6 billion, a 6-percent increase over 2013 results. APF has also increased volume and margins in what has been a difficult year for the food industry by keeping pace with rapidly changing trends and record protein inflation.
With 2 million sandwiches produced each day and nearly 2,000 associates dedicated to sandwich making, APF expanded its sandwich production by 25 percent in 2014. The company’s full-service, value-add capabilities — which encompass making the protein, baking the bread, assembling, packaging, distributing, securing retail presence and marketing the product — enhance operational and commercial excellence while ensuring APF ingrains innovation and quality through every step of the process.
The efforts have resulted in numerous product accolades, including a recent Best New Products Award designation by Convenience Store News for its Fast Choice hand-wrapped sandwich line. In early 2015, APF earned another accolade for Product of the Year from Automatic Merchandiser and VendingMarketwatch.com for its BIG AZ Chicken Bacon Cheddar Club. APF was also named a Food Processing Magazine large company R&D Team of the Year.
The company’s 48-member team, which includes a dedicated consumer insights group, completed nearly 230 new projects and 171 new SKUs in 2014, with more than 11 percent of APF’s 2014 sales coming from products on the market less than two years.
Inside the convenience division, its top brands like BIG AZ have flourished, enjoying double-digit growth in three out of the last five years and 40-percent growth in the last two years. This success has been attributed to successful launches of new sandwiches such as the BIG AZ BaconAddict and the Angus Cheddar Cheeseburger.
Other APF sandwich brands, such as the butcher-wrapped Hot’n’Ready line, have been a source of innovation with new offerings in the Better-for-You category, like the Canadian Bacon, Egg White and Cheese on Pretzel Flatbread.
AdvancePierre’s commitment to c-stores is seen in the quality, taste and value of the company’s offerings.
HEALTH & BEAUTY CARE: Lil’ Drug Store Products
Data-Driven, Proven Performance
Lil’ Drug Store Products provides unbiased insights to manage the HBC category
Lil’ Drug Store Products states it has become the No. 1 supplier of health and beauty care (HBC) products to the convenience channel because it provides a combination of insight, innovation, adaptability and access. In its 40-plus years of convenience industry HBC experience, Lil’ Drug has developed a turnkey category management program that utilizes category insights and data analysis to deliver customized resources for participating convenience channel customers.
The company’s extensive experience, proven performance and long-time relationships with convenience retailers, wholesalers and distributors gives Lil’ Drug the context to develop unique solutions to meet the needs of customers in this channel.
The Lil’ Drug Store Products Category Management Team simplifies the category manager’s job and achieves measurable results by providing:
- Data-driven, unbiased insight based on retail-level and national syndicated data, HBC trends, category SWOT and pricing analyses, and proprietary consumer research;
- Full HBC planogram review, including gap analysis and retail pricing recommendations;
- Outstanding service targeted to customers’ specific category objectives; and
- Complete, turnkey solutions resulting in total HBC category profit growth.
Lil’ Drug continues to invest time, energy and resources into its category management program to allow its customers to see continued growth in total HBC sales and profits year after year. In late 2014, Lil’ Drug launched a consumer attitudes and usage study with Frank N. Magid & Associates to better understand the convenience HBC shopper. With this consumer research as context, Lil’ Drug also partnered with Nielsen and Affinnova to conduct a study that tested millions of retail scenarios with convenience HBC consumers to determine the best mix of products in four key HBC subcategories: pain, cold/sinus, allergy and gastrointestinal.
With these consumer insights added to Lil’ Drug’s category management data arsenal, the supplier can now better predict and understand convenience trends to make smart, unbiased recommendations to grow HBC sales and profits for its retail and wholesale partners.
Within the convenience channel, 19 of the top 25 retailers (including multi-division retailers such as Circle K, Kroger and GPM Investments) utilize Lil’ Drug as their Category Captain for HBC and rely on the Lil’ Drug Category Management Team to manage their entire HBC set. In fact, more than 100 of the top convenience store chains depend on Lil’ Drug for HBC category management analysis and recommendations.
Lil’ Drug takes a unique, holistic approach to category management, analyzing the products, pricing and merchandising of all items in the HBC set to achieve a balance that maximizes sales and profits — no matter who the manufacturer is. Retailers rely on its data-driven decisions and unbiased insight to manage their HBC category and deliver measurable positive results.
OTHER TOBACCO PRODUCTS: Swisher International Inc.
Swisher’s highly trained category management team helps grow OTP sales
Category management has always been critical to the success of Swisher International and its trade partners. The foundation of its efforts has been a balanced portfolio approach, with an intense focus on innovation, analytics and execution of winning strategies focused on the success of the entire other tobacco products (OTP) category.
One of the key pillars of category management is people. Swisher provides highly trained individuals, including certified national account managers, to develop proven category recommendations that are actionable for retailers. Swisher was one of the first companies in OTP to become involved in category management certification.
Utilizing MSAi insights, programs and planograms are customized to meet specific customer goals and adult consumer demands. Swisher’s Partners in Profit program is a perfect example of the execution of that strategy. The supplier provides its partners with revenue-generating products and promotions in all of its OTP lines, with the objective to grow not only Swisher sales, but the full OTP category in every store.
One of the most significant challenges in the OTP category over the last two years has been the expansion of blends and pre-priced items in the large cigar segment. The Swisher category management team worked proactively to understand these tasks from both an analytical and channel perspective. The Swisher category management and analytics team completed detailed analysis of the data to determine proper space allocation by segment in this changing environment. Despite competitive pricing, the overall category has delivered healthy growth on the strength of the “Right Items in the Right Stores” approach.
Swisher has incorporated both a detailed and high-level approach to assist retailers in analyzing adult consumer preferences and purchase patterns. By utilizing distributor-to-retailer data, the supplier has been able to develop specific, tailored analytics for its retail partners in an immediate fashion.
In October 2013, Swisher Sweets launched its inaugural limited-edition line of large cigars with a goal to create unique and creative blend profiles, and generate adult consumer excitement in the category. Due to the popularity of Sticky Sweets (peach/caramel blend) and Summer Twist (lemon/mango blend), Swisher Sweets has continued the trend of releasing new and intriguing blends including Dulce de Leche and Calypso Cream (blueberry orange cream). Most notably, on Jan. 1, 2015, Swisher released unsweet Swisher Diamonds. Just three months in, Swisher had introduced 19 million unsweet cigars into the market.
The OTP market is cluttered with multiplying SKUs and squeezed by tight margins and tax compliance issues. It’s a challenge for even the savviest marketers. However, Swisher is seeing rewarding results from its focus on quality products and category management. For the 26 weeks ended March 7, 2015, large cigar category volume grew 4.5 percent vs. a year ago, while Swisher’s large cigar volume delivered 22.2-percent growth.
Category management is guided by education and certification. Blaine Ross, executive vice president of global sales and marketing for the Category Management Association’s Certification Board, commented that: “Swisher International Inc. is the first tobacco company to provide certification for their key account teams. Swisher has taken a very proactive approach by investing in the personal growth and development of their associates in order to provide value-added solutions for their retail partners. Swisher’s investment in certification is a commitment to excellence and demonstrates their leadership position within the convenience channel, and their ability to better understand consumer needs.”
PACKAGED BEVERAGES: The Coca-Cola Co.
Retailers Share in Success of ‘Share a Coke’
Innovative campaign increased c-store beverage sales across brands
In June 2014, Coca-Cola launched its “Share a Coke” campaign across the U.S., allowing consumers to find their names — and the names of family members, friends and coworkers — on bottles of Coca-Cola, Diet Coke and Coke Zero. True to its mission of sharing moments of happiness, Coca-Cola replaced three of its iconic logos on 20-ounce bottles for the 250 most popular first names among American teens and millennials. Shareable 1.25- and 2-liter bottles sported group names like Family and Friends, while colloquial nicknames like BFF, Star, Bestie, Legend, Grillmaster, Buddy and Wingman appeared on 12-ounce cans.
Share a Coke packaging debuted nationwide in June and remained on shelves through August. The campaign came to life online and via social media as consumers personalized virtual bottles and shared them with friends on Facebook, tumblr, Twitter and Instagram.
Share a Coke was a No. 1 global trending topic in July 2014, with nearly 700,000 posts across all social platforms. By using the #ShareaCoke hashtag, consumers shared their stories and photos for the chance to be featured on interactive Coca-Cola billboards across the country. Online, ShareACoke. com received nearly 7 million visits over the course of the campaign and more than 965,000 virtual Share a Coke bottles were made. Additionally, a 500-stop, cross-country Share a Coke tour featuring traveling kiosks enabled fans to customize more than 1 million Coca-Cola mini cans for themselves and a friend.
Throughout all channels, retailers saw huge growth and success with the campaign. Share a Coke drove significant sales, increasing overall volume and revenue by 11 percent and growing share 1.6 points vs. the prior year. In the 20-ounce package, the Coca-Cola brand saw the largest year-over-year growth in its history — more than 19 percent. The campaign also produced strong performance for 12-pack cans, growing volume by 18 percent.
Within the convenience retail channel specifically, Coca-Cola saw tremendous growth in velocity across the category during the campaign, but did not appear to cannibalize other beverage brands. During the Share a Coke campaign, Coca-Cola increased its velocity growth by more than 20 percent, Coke Zero increased by 3 percent and Diet Coke grew by 7 percent. During the first month alone, retailers sold more than 10 million incremental units.
Convenience retailers that supported the launch with branded share bins, secondary displays and point-of-sale materials experienced total category results nearly double the market trend. Those who activated the campaign in their stores saw a 25.9-percent increase in volume in July for the Share a Coke 20-ounce bottles.
Due to its overwhelming success and engagement from consumers, Share a Coke has returned in 2015 with more than 1,000 names in the program and more ways to share through additional retailer activation opportunities.
PACKAGED SWEET SNACKS: McKee Foods Corp.
A Sweet Deal
McKee’s shopper marketing objectives help retailers increase total category sales
At McKee Foods, the category insights team works with retailers to help them grow the entire baked sweet goods category. They are a team of analysts, space management, merchandising and category management personnel dedicated to support retail partners in the maximization of the category.
Their goal is to provide an objective view of the category and bring insights to the retailers that they may otherwise overlook. This is provided by using both qualitative and quantitative data to develop insights, trends, observations and analysis to grow the category. They also provide retailer support through merchandising, planogram and shopper marketing programs.
Over the past year, McKee Foods has:
- Built thousands of planograms to help c-store partners maximize their sales and optimize their product mix in the category;
- Provided quantitative data-based category analysis to help retailers understand how their category is performing both internally and compared to the rest of the market and channel;
- Provided retailer-specific analysis to objectively show category performance;
- Worked with one chain to develop an Every Day Low Cost (EDLC) model that led to an overall 12-percent lift in year-over-year sales;
- Shared industry trends with c-store partners to help them develop category strategies; and
- Developed targeted shopper marketing programs to drive category sales and bring new customers into the category.
The supplier’s category management team provides retailers with near-future insights into the baked sweet goods category, such as the growth of Hispanic-oriented products; the potential growth opportunities for domestic brands from acculturated Hispanic customers; the importance of variety and uniqueness; the importance and growth of millennial consumers; and the need for brands to reduce costs to drive margin for demanding retailers.
Meanwhile, McKee’s shopper marketing objectives help retailers increase total category sales by targeting customers based on shopping patterns, past purchases, affinities and daypart solutions. This type of sophistication earned McKee a 2015 Category Captains award.
WINE & LIQUOR: E.&J. Gallo Winery
Millennial Meet Merlot
E.&J. Gallo’s Good, Better, Best selection puts c-stores in the wine game
America is the No. 1 wine-consuming country in the world. Wine shoppers in the U.S. have changed the way they view and buy wine. Convenience stores are seen as neighborhood stores and often offer a quick one-stop shopping experience for wine purchasers.
According to Nielsen Homescan Panel data, convenience dollar growth is up 3 percent vs. the prior year, outpacing all other channels. However, c-stores are only retaining 7.1 percent of their wine shoppers’ dollars, meaning these shoppers are buying wine elsewhere the majority of the time.
Millennial make up 26 percent of the shoppers within the convenience channel. They also account for 25 percent of the U.S. population and are the largest over-21-year-old population group. As more are reaching the legal drinking age (all will be 21 by the end of 2015), making more money and trending toward consuming more wine, it is important to cater to their unique shopping styles to increase convenience retention and become profitable within the category.
Millennial demand convenience and embrace trial; however, approximately 47 percent of millennial who drink wine say they are a novice and know very little about the drink. So, offering a well-crafted wine selection presents a great opportunity for retailers.
A year ago, E.&J. Gallo took on a new endeavor partnering with Murphy USA to launch the c-store retailer’s entry into the wine category. Murphy USA and Gallo saw that entering the category would drive incremental sales within the store and capitalize on targeting the millennial customer. Murphy USA previously offered wine in only 47 of its 350 alcohol-eligible stores.
In order to ensure a successful wine category launch, Gallo gathered additional data through qualitative research to further understand convenience store shopping needs and habits. The research yielded four main barriers deterring shoppers from the channel: overall awareness, selection, merchandising and pricing.
Knowing that one-size-fits-all would not work for the target convenience shopper and that c-store shoppers have only a limited amount of time to shop each category, Gallo planned its go-to-market strategy around an innovative solution calling out a “Good, Better, Best” wine selection. The developed solution directly addresses the barriers listed above and limits the wine knowledge required to make a quick, smart purchasing decision. Original signage along with strategic shelf flow make up the core of this program for both the dry shelf and cold box.
Murphy USA launched the Good, Better, Best wine program in 2013 and 2014 by targeted test stores with high wine demand, and made sure to also address each flagged barrier.
To improve overall awareness, Gallo created internal buzz with sales management and gave Murphy store associates goals and incentives for the category. For the launch, wine was cross-promoted with craft beer to piggyback on this already strong segment with the millennial consumer within the convenience channel. The cross-promotion included displays at the front of the stores and a cross-merchandising coupon opportunity.
Convenience stores need to satisfy any wine occasion but must do it in a small amount of space. By offering a limited but focused selection, Murphy USA offers diversity while not overwhelming the shopper. Items for Murphy USA were preselected using market data and demand for each store to cater to the shoppers in the area. Along with helpful merchandising, the customer is no longer looking at an overwhelming wall of wine as in typical grocery.
Point-of-sale was produced to put the words “Good, Better, Best and Everyday Wines” right in front of the consumer on the stores’ wine shelving. Signage was also produced for the cold box racks following the same guidelines. The simple language helps the shopper identify the wines that meet their shopping occasion so they can quickly and confidently make their selection. For example, a shopper looking for an everyday wine to have with dinner that night can select from the value options on the bottom shelf (Everyday or Good), while the shopper looking to impress can confidently purchase something a bit more premium from the top shelves (Better and Best).
In order to offer a selection that satisfies any occasion, Murphy USA has chosen to offer a range of price points. When evaluating items, a price range of $3 to $15 was used. This range caters well to millennial who typically spend between $5 and $14 on wine. Additionally, when categorizing items into the Good, Better, Best buckets, the demand of each store was taken into account to cluster like stores together. Stores with a high-performing wine index are allocated more Best items and inversely stores indexing higher in popular-priced wines are weighted heavier in the Good section.
Murphy USA’s 2013 launch saw wildly successful results. In regards to the launch, John Deichler, category manager for alcohol at Murphy USA, said: “With Gallo’s universal and consistent plan, we really maximized our opportunity within the category.”
Murphy USA was so pleased with the test results that the retailer, with Gallo as a partner, set out to launch wine into 150 stores in 2014 with plans to expand into just over 250 stores by the end of 2015. When just looking at the test stores from 2013 to early December 2014 (not including Christmas, one of wine’s largest volume holidays), the wine trend was up 19 percent. In fact, most of the stores are seeing double-digit growth since their launch in 2013. Adding wine into their stores has helped increase overall wine sales by 49 percent.