Cold Vault Offers Mixed Bag
Overall, packaged beverages appear to be heating up the coolers at convenience stores. But taken individually, it is clear that some segments of the category are not pulling their weight.
By year-end 2011, packaged beverages were expected to reach average sales of $144,156 per store and 84,696 units. This represents an increase from 2010, when average sales totaled $137,516 per store and 82,820 units. "In 2011, we were off on the low side by 5 percent, so packaged beverages have done much better than expected," said Maureen Maguire of Think Research.
Convenience store market share also has been rebounding in the past couple of years, she noted. "In 2009, we had a dip down in convenience stores, but in 2010, it seemed to come back," Maguire explained. "There is no reason to think it will be otherwise in 2011."
Fig. 7
Packaged Beverages Forecast (% change)
(Includes CSD5, bottled water, sports, energy and other beverages)
Drilling down into the category, carbonated soft drinks are still battling their way back. "2010 was not a good year at all, any way you look at it," she said. "In 2011, the unit volume per store is slightly up and the dollar sales per store is not bad, but overall sales are down."
Specifically, average sales per store were expected to finish 2011 at $56,812 and 36,449 units. This marks a slight improvement from 2010 ($56,005 and 36,364 units), but Maguire's figures for 2012 forecast the segment to remain relatively flat.
Triantafellou of Handee Marts' experience in his stores seems to be a real-life reflection of the numbers.
"For 2011, units are up in our case. Sales dollars will probably be down because of the advent of two-for pricing," he said. "Almost all the majors have something almost all year round. Gross profit dollars are up, but in my experience, two-for pricing drove the overall unit growth."
Another segment of the cold vault pushing itself up the charts is bottled water. "In 2009, there were declines in the 9-, 10-, 11-percent level. In 2010, we started to see a reverse of that and in 2011, the year is shaping up to be positive," Maguire said, adding that 2012 is forecasted to be even better.
While it is not exactly clear why 2009 was such a bad year for bottled water, Maguire said around that time, there was a big environmental push away from bottled water because of the plastic bottles.
Numbers-wise, bottled water was expected to finish 2011 at $12,071 in average sales per store with 8,671 units. This increase is coming off 2010's actual numbers of $ 11,727 in average sales per store with 8,504 units. Bottled water is forecasted to reach $12,550 in average sales per store and 8,999 units this year.
Alternative drinks, on the other hand, continue to fluctuate from year to year. "In 2009, the numbers were very strong; they were double digits," Maguire said. "There was a little moderation in 2010 and in 2011, we are seeing strength again."
As for this year, alternative drinks are expected to show some moderation again, but still remain a strong segment, she said.
Energy shots are also continuing to moderate from their off-the-charts introduction to the c-store market a few years ago. The growth rate back in 2009 was more than 100 percent, Maguire said, adding "it was ridiculous." Even taking into consideration that energy shots were coming off a very low base, "we still saw spectacular growth," she said.
"We are seeing moderation; it is still strong growth, but it is half of what we saw in 2010, in 2011 and I expect further moderation in 2012," she continued.
A key factor behind that could be players exiting the energy shot arena, as many retailers agree that the projected growth for the segment is being driven by 5-hour Energy.
MALT BEVERAGES
The cold vault segment that seems to have the hardest time keeping its balance is malt beverages. Average sales per store came in at $106,422 in 2010; however, it was expected to finish 2011 down 1 percent. Things are not forecasted to be much better in 2012 â a 0.4 percent decline is predicted.
"We had a bad 2009, a bit of a recovery in 2010 and not a great 2011. It's like this see-saw effect. We can't quite get a hold on it," Maguire said of the malt beverage category.
Fig. 8
Beer/Malt Beverages Forecast (% change)
Fig. 9
Energy Shots Forecast (% change)
She is intrigued, though, with what affect the craft beer segment will have on malt beverages. "If you look at the grocery stores and see what they are carrying in terms of craft beer, it is huge," she noted. "The price point is significant, and I wonder if there is any room for that on the convenience store level."
She added that microbrews are showing tremendous growth, but like energy shots they are coming off a low base. "I wonder if that will help jump start something in the rest of the beer/malt beverage segment," Maguire said.
Schaninger of Quick Chek explained that, even though the c-store chain only carries malt beverages in its upstate New York stores, the company has noticed everyone is looking for value.
"What is selling for us in upstate New York are the low end and the high end," he said. "People are looking for a way to treat themselves now and then. I see that in a lot of categories."
"People are looking for ways to treat themselves now and then. I see that in a lot of categories."
âJohn Schaninger Quick Chek