Beer Sales Grow Slowly, C-Stores Lose Share

While the percent of convenience stores selling beer remained unchanged from 2008 to 2009, at three-quarters of the industry, the average sales per store grew a half percent to $126,033. This increase is down compared to the resurgence seen in 2008, when beer sales per store grew 3.3 percent.

Beer sales growth in convenience is a signal of the recession's impact on consumer habits — as Americans cut back on dining out and frequenting on-premise locations for alcohol beverages, they increasingly turned to convenience stores, supermarkets and other off-premise outlets for their beer needs.

When comparing beer sales across channels, convenience stores' market share suffered while drug and supermarkets posted gains. C-store share of the beer category was 60.57 percent by dollar sales and 71.69 percent in unit volume. Supermarkets increased its dollar share to 34.91 percent, a sign that consumers are making planned purchases for beer and also going for larger pack sizes that can provide a value. Drug stores increased its dollar share, reaching 4.52 percent. C-store retailers expect the drug channel to continue to chip away at the convenience industry's share of beer, particularly as Walgreen Co. continues with its plans to sell malt beverages in its locations nationwide.

Fig. 27

Category Analysis — Beer/Malt Beverages

(10.31 percent of in-store sales, 7.07 percent of gross margin dollar contribution)

Fig. 28

Stores Selling Beer

Looking only at convenience stores selling beer (rather than the total industry results), the category made up 13.3 percent of in-store sales, and contributed 9.2 percent of in-store gross margin.

By beer segment, premium beer continues to lead the way in sales and unit volume in convenience stores. Totaling $69,438 in per-store sales for 2009, premium beer also made up roughly 47 percent of the beer category unit volume in convenience. Despite these positive figures, the premium beer segment did drop nearly one full percent in sales per store (0.9 percent) and 1.2 percentage points in unit volume share.

Meanwhile, the No. 2 segment, budget beer, increased 8.9 percent in per-store sales in 2009, and 0.9 percent in unit volume share. The average store sold $15,550 in budget beer in 2009.

Also last year, popular beer passed imports for third place, and grew 7.8 percent in average sales per store. Popular beer now makes up 11 percent of c-stores' dollar sales and 13.6 percent of unit volume for the beer category. Dollar share for imports dropped down to 10 percent, reflecting the continuing decline in popularity of pricier import beer brands by U.S. consumers, who are shifting towards value.

However, when it comes to indulging, consumers are willing to pay for the more-costly microbrews and craft beer. While a small segment of convenience stores' beer category (1.7 percent of beer category sales), per-store sales of this segment jumped 11.9 percent, and reached $2,106 on average per store.

Fig. 29

Percent of Beer/Malt Beverages $ Sales and Unit Volume

Fig. 30

Beer Competitive Channel Market Share

Another switch was seen between super premium brews and flavored malt beverages (FMBs). Super premium beers suffered a 6.2-percent decline in per-store sales, while FMBs grew average store sales by the same amount. Dollar sales share also shifted, with FMBs now making up 3.6 percent of c-stores' beer sections, while super premium comes in at 3.4 percent.

Consumers' desire for value when making purchases is also reflected in the top 10 beer SKUs for 2009, according to Nielsen Scantrack data for the 52 weeks ended Dec. 26, 2009. The only SKU in the top 10 showing unit volume growth for 2009 is the 30-pack Bud Light Genuine Cans, growing 9.5 percent and ranking at No. 10. Four 12-packs in the top 10 SKUs suffered double-digit unit volume declines, as did a six-pack SKU. Meanwhile, the two 18-pack SKUs on the list declined more moderately at 1.1 percent and 5.2 percent.

BOTTOM LINE:

• Average beer sales per conveneince store increased one-half percent in 2009.
• Popular beer now outsells import brews on a dollar and unit basis.
• Convenience stores lost beer market share to the supermarket and drug channels in 2009.