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01/11/2022

How C-stores Are Raising the Bar in Alcoholic Beverages

The channel is embracing wine and liquor more as sales rise due to the pandemic.
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NATIONAL REPORT — 2021 was a spirited year for wine and liquor in the convenience channel.

In February, Savannah, Ga.-based Parker's debuted Parker’s Spirits, the company’s first-ever liquor-focused banner. The new store, adjacent to an existing Parker's convenience store in Pooler, Ga., stocks premier wines, craft beers, collectible bourbons, and other packaged beverages.

In April, Casey's General Stores Inc., headquartered in Ankeny, Iowa, developed a single barrel bourbon in partnership with Buffalo Trace Distillery. Available in 375-milliliter bottles, it is part of the retailer’s plan to innovate around its beer, wine and spirits offerings.

In mid-June, Irving, Texas-based 7‑Eleven Inc. added to its private brands portfolio with the launch of Plot + Point chardonnay and pinot grigio, packaged in Tetra Pak containers. And just two months later, the company teamed up with Minibar Delivery to deliver beer and wine — national brands, as well as 7-Eleven’s own portfolio. The collaboration kicked off in Florida, Texas and Virginia, with plans to expand to additional markets later.

“Over the past year, wine and liquor have been strong categories for 7-Eleven stores,” Julie Trapp-Clark, director of alcohol for 7-Eleven, told Convenience Store News. “Ready-to-drink (RTD) beverages and innovative alcohol flavors are driving growth in the category and bringing new customers into our stores.”

While hard seltzers, beer and RTD malt beverages have been getting much buzz during the pandemic, wine and liquor have proven resilient in the convenience channel. According to the 2021 Convenience Store News Industry Report, average sales per store in the category increased by 32 percent in 2020. Wine and liquor’s share of overall in-store sales at U.S. convenience stores rose from 1.55 percent in 2019 to 1.97 percent in 2020.

A Promising Future

Industry insiders expect 2022 to bring more positive movement in liquor and wine sales.

“The future is bright,” predicts Herb Smith, vice president of customer development for E. & J. Gallo Winery. “This channel is only one of two channels where wine is outpacing grocery. The other is the dollar channel.”

Trapp-Clark has an equally positive outlook.

“We do not anticipate the customer demand for wine and liquor to decrease soon,” she says. “These continue to be extremely strong categories for us, and we are constantly working to expand our product assortment, with vendor partners and through our private brand portfolio.”

C-store operators that are already committed to wine and liquor and eager to profit from the rise in sales should focus first on communication.

“I realize beer sales may represent 65 to 85 percent of total alcohol sales in the store, but letting consumers know that you actually carry spirits is the first step,” stressed Jay Hornback, national account manager and convenience retail lead at Beam Suntory, producer of premium liquor brands such as Jim Bean. “Retailers also should do a better job of letting consumers know what they offer — whether through signage, their mobile app, or even a menu-type poster at the register.”

Operators also should not forget to fine-tune their wine and liquor displays.

“I have been in many stores where the product is partially hidden, hard to locate, or not well-lit from a distance,” said Hornback, pointing out that this can inhibit the kind of cross-shopping that will boost sales.

Case in point: A customer might come in for a 12-pack of beer, but could be tempted by a 200-milliter bottle of a spirit if they see it. “Those are extra sales retailers should try to pursue to increase their gross sales,” Hornback advises.

A wide selection of products can also help c-stores capture more purchases, notes Liz Paquette, head of consumer insights for online alcohol marketplace Drizly, a partner of c-stores.

“Typically, we see customers order from one retailer that has all the products they are looking for, rather than split their order across retailers,” she said. “By stocking top-sellers across all categories, convenience stores can become more competitive with other retailers in their area.”

A convenience store’s product mix should depend on the size of the store overall, and the space it has to promote wine and liquor specifically, according to Hornback.

“For traditional bottled spirits, leading with core selling brands is always the safest bet, as c-stores don’t have the space to satisfy the demand that large-format grocery and liquor stores have,” he explained. With spirit-based RTDs trending, he suggests also adding an associated branded spirit — a move that could mean a larger sale.

The tight, competitive cooler space resulting from the popularity of RTDs is another consideration. “I would look at creating dedicated space based on the size of the cooler to start promoting singles, four-packs and eight-packs,” he said. “Typically, the price is higher. But as we are currently seeing in the data, consumers are showing strong trial and repeat purchase, especially those who are loyal to the master spirit.”

On the wine side, Smith recommends making space for a 3-foot to 4-foot ambient wine department in a high-traffic location within the store, plus a full door of cold wine to capture “wine dollars” while customers are inside the store.

Like Hornback, Smith points to the popularity of RTD products and how that can inform a retailer’s decision on what to carry.

“While better-for-you wines are becoming more popular, the ready-to-drink category has really penetrated the c-store channel by offering consumers multiple formats,” Smith said. “Consumers often want to enjoy a single glass of wine, so the 750-milliliter package can sometimes be a barrier. Single-serve packaging formats — such as cans, 375-milliliter half-bottles, three-liter boxes, and RTD — are incredibly important as we look to win new friends for wine and provide consumers with more dynamic options.”

At 7-Eleven, single-serve wine products are up more than 20 percent, and they continue to grow in popularity, according to Trapp-Clark.

In select states, the retailer has added promotions and bonus offers on wine and liquor through its 7Rewards loyalty program in the 7-Eleven app. The initiative is ongoing, and producing positive results thus far.

“Giving customers the opportunity to rack up loyalty points or score discounts on their favorite wine and liquor products continues to drive brand loyalty and repeat trips,” Trapp-Clark said.