Growing Market Share in the Challenging Wine & Liquor Category
NATIONAL REPORT — While the category is holding its own in the convenience channel, boosting wine and liquor sales can be challenging for operators due to the hurdles they face that grocery, mass and club stores do not.
Lack of merchandising space, which can result in a limited wine and spirit inventory, is one of them, according to Jay Hornback, manager of convenience channel sales for New York-based Beam Suntory, the 2024 Convenience Store News Category Captain for wine and liquor.
"Due to limited space, they traditionally offer the core products in each flavor segment," Hornback said of c-stores. "We find that innovation and LTO [limited-time offer] items are more challenging to merchandise in the convenience channel vs. grocery and mass stores."
There are ways, though, that space-challenged convenience stores can tackle that challenge.
"We do see some progressive retailers who reserve space for small endcaps or utilize bin stackers for smaller displays," Hornback reported. "With limited space for inventory, they need to make sure the items they are displaying are strong-performing brands that will move quickly. These displays can provide incremental purchases along with other adult beverage categories."
The way consumers shop c-stores compared to other retail channels is another factor that impacts inventory and purchase decisions. "With the convenience channel consumer spending much less time in the store, having the core brands is what they expect since they are saving time vs. visiting a larger retail outlet," Hornback pointed out.
Herb Smith, vice president of customer development for Modesto, Calif.-based Gallo, echoes this. "When consumers purchase wine and spirits at convenience stores, they look for products they plan to consume right away — 85% of their purchases are consumed within one hour of purchase," he said. "Their product preferences point to convenience and immediacy."
Those preferences are driving sales of products in small-package formats, according to Smith. He noted that Circana wine data from July 2024 showed that "small-size packaging is still expanding its presence in c-stores, primarily driven by 500-milliliter Tetra Paks, growing 9%."
A final challenge for the convenience channel that can be tougher to tackle is keeping inventory both safe and easily accessible for the majority of c-store shoppers who want just a quick in-and-out trip for alcoholic beverages to fill an immediate need.
Many stores now keep product in locked cases to prevent theft, which can significantly impact sales, according to internal insight studies conducted by Beam Suntory. While not specific to the convenience channel, the studies showed that when shoppers wait for lockbox assistance, retailers have roughly five minutes to aid the shopper to minimize lost sales risk.
[Read more: Convenience Retailers Temper Outlook for Beverage Sales]
Placing lockboxes in prominent, easy-to-find locations to reduce the time and effort required to access wine and liquor products; making sure employees are readily available to assist during core shopping hours; making it easy for patrons to request help; and monitoring in-stocks to ensure on-shelf availability are ways stores can temper the risk, Hornback advised.
He also offered a way to keep customers waiting for access to products engaged. "Incorporate technology with interactive touchscreens/virtual displays, so shoppers can be entertained and educated about spirits and mixology," he suggested. "This can minimize shopper boredom while potentially building the basket through cocktail suggestions."
Business-Boosting Strategies
Given the unique challenges c-store operators face in the wine and liquor category, how can they grow market share? Hornback and Smith offered the following tips:
Create impactful displays. Retailers that take the time to creatively merchandise products in ways that capture consumer awareness "can really win big," said Hornback. Because wine and spirits sometimes aren't "easily viewable" in c-stores, "making consumers aware that wine and spirits are sold in the store is the first step," he explained, adding that stores that incorporate creative, high-impact displays have reaped the benefits.
Publicize your pricing. This means making sure stores offer competitive pricing that is easily visible. "Typically, c-stores are slightly higher in price [for wine and liquor products], but if they are closer in price to their grocery and mass competitors, they have a better chance of gaining share," Hornback said. Allowing customers to mix and match for one price also can be an effective tactic.
Build up baskets. "C-store customers are looking for a range of products, ready to go, cold," Smith said. So, he recommends dedicating space within coolers and walk-in beer caves to wine. In particular, offering 750-milliliter sizes in the cold box, allowing shoppers to consider larger formats, which can increase basket size.
Include wine and spirits on mobile apps. Retailers that have mobile apps should make wine and spirits visible on their app, where legal, according to Hornback. "Most of the promotions and visual items within adult beverage are beer items," he said. "By promoting wine and spirits, it helps remind consumers that these items are sold by the retailer."
Pay close attention to consumer demand. Staying on top of shopper preferences can provide information needed to adjust assortment and merchandising in ways that will drive sales. Smith cited Soju, a low alcohol distilled spirit made from rice milk, as one example of a product segment to consider. "Consumers are looking for Soju, which presents an amazing growth opportunity for the convenience channel," he said.
When selecting inventory and making merchandising decisions, Smith said retailers should consider the fact that "more consumers are purchasing across all four alcoholic beverage categories than ever before; very few consumers limit their selection to just one category.
"If their destination status is beer, then expanding their products to serve the total alcoholic beverage needs of the broader population may drive traffic and revenue," he continued. "Offering products that are relevant to the ever-evolving alcoholic beverage consumer, especially younger legal drinking age Gen Z and millennial generations, is critical."