Midyear Check-In Shows Convenience Channel Sales Lagging
NATIONAL REPORT — About halfway through the year, it appears that convenience store sales are tracking somewhat softer than a year ago, according to the 2017 Convenience Store News Midyear Report Card. However, the industry’s performance is about in line with CSNews’ 2017 forecast, which was published in the January issue.
Download the full report via the link at right.
The forecast predicted a good year for the c-store industry, but warned of a few weak spots that tempered the strong sales growth of recent years. Citing high consumer confidence, healthy consumer spending and low unemployment, CSNews’ consulting economist Maureen Maguire provided an upbeat 2017 forecast with some reservations.
Retailers and suppliers, also polled in CSNews’ exclusive Forecast Study, gave positive forecasts for sales, store count and product category growth, with nearly nine out of 10 retailers anticipating their sales per store would increase this year, by a mean average of 4.6 percent.
CSNews’ 2017 Forecast Snapshot predicted strong dollar sales and unit volume gains for the following categories: other tobacco products, salty snacks and packaged beverages; relatively flat sales and volume for candy and beer/malt beverages; and declines for edible grocery. Cigarette unit volume was also projected to decline by a moderate 0.6 percent.
“C-store channel sales remain soft, but outperforms other channels in key categories,” Bonnie Herzog, senior analyst at Wells Fargo Securities LLC, reported in her analysis of first-half 2017 performance.
Commenting on the most recent four-week period, Herzog noted, “U.S. convenience store channel dollar sales were flat … [however] c-store sales outperformed other channels in beer, snacks and cigarettes, but lagged in nonalcoholic beverages.”
Here’s a deeper look at how the top c-store product categories are performing:
Herzog, in her report on first-half performance, described cigarette dollar sales as positive, with solid pricing offsetting weak volume. According to the CSNews Midyear Report Card, cigarette dollar sales are running about a half-percent better than the first six months of 2016, but unit volume has fallen back into its historic 3-percent-per-year decline.
So far this year, packaged beverages have underperformed their 2017 forecast. Through the first six months, the total category is running flat to slightly down in both dollar sales and unit volume. The biggest culprits appear to be carbonated soft drinks, bottled water, juice/juice drinks, and sports drinks. The star of the category this year so far is enhanced water, which is up more than 15 percent over the year-ago six-month period in dollars, and up more than 13 percent in units.
As forecasted by CSNews in January, beer category sales have been flat compared to the same six-month period a year ago. For the first six months of 2017, total beer sales in dollars were up only 0.7 percent, while unit volume grew by just under 1 percent. Within the category, dollar sales gains on a percentage basis were strongest in super premium and import brands.
Edible grocery has lived down to its lackluster forecast. Through the first six months of this year, dollar sales are down 1.29 percent, while unit volume dropped off 2.77 percent. Breakfast cereal, packaged coffee and tea, and water beverage enhancers were all in negative territory, while condiments saw a slight dollar and volume gain in the first six months.
OTHER TOBACCO PRODUCTS
As CSNews forecasted, other tobacco products (OTP) is off to a rousing start in 2017. Through the first six months, the total OTP category is up nearly 9 percent in dollar sales and a little more than 8 percent in unit volume. Cigars and electronic cigarettes experienced solid dollar sales and unit volume growth in the first half, while the smokeless tobacco subcategory is running about 4 percent higher in dollar sales this year on flat unit volume.
The candy category so far this year is underperforming CSNews’ flat forecast. Total candy category dollar sales are running almost 1 percent below last year’s levels, while unit volume is down about 3 percent. Bright spots within the category have been bagged/repackaged/pegged candy (up 6 percent) and novelties/seasonal candy (up nearly 7 percent).
Salty snack sales and volume have slightly underperformed pre-year predictions. Dollar sales are up about 3 percent so far this year, about two percentage points below forecast, while unit volume is down 2 percent, about five points below forecast. However, there are several bright spots in the category. Potato chips, a huge subcategory, were up more than 7 percent in dollar sales on a slight volume gain for the first half.