Power of One
The single life is looking good to more beer drinkers, who are snapping up for-my-lips-only packages in greater numbers these days, especially at convenience stores.
While beer sales in food stores, drugstores, mass merchants and c-stores grew by 5.4 percent for the 52 weeks ending April 15, 2002, sales of single-serve packages were up 6.9 percent, according to ACNielsen figures (excluding Wal-Mart data) shared with Convenience Store News. Sales of single-serve beer reached $1.4 billion, up more than $10 million compared to the period the year before. The bulk of those sales — $1.3 billion worth — were made in c-stores, which saw single-pack sales rise 7.2 percent.
"Single-serve has been a great growth segment for us," said Mike Blair, product director, 7-Eleven Inc., based in Dallas. "It represented 46 percent of units sold a couple years ago. That share has moved up fairly significantly, more than 15 points."
Male shoppers between the ages of 21 and 35 are the primary purchasers of single-serve beer packages in c-stores, noted Bill Laufer, vice president, convenience, mass merchandise and club channels, for Anheuser-Busch Inc., the St. Louis-based brewer that accounts for 60 percent of overall beer volume sold in c-stores. "These typically are occasion purchases that deliver sales during high-traffic periods in the stores."
If measured in case equivalents, single-serve beer SKUs account for 45 percent of unit sales in c-stores, noted Jeff Schouten, group sales director, category development for Miller Brewing Co., Milwaukee, which offers virtually every one of its beer brands in single-serve packs.
In supermarkets, single-serve packages account for less than 20 percent of unit sales, according to ACNielsen data. "C-stores are the destination when someone wants a single," Schouten said.
In terms of unit volume at food, drug, mass merchants and c-stores combined, single-package beer sales grew 3.8 percent (compared to 1.3 percent for beer in total), during the 52 weeks ending April 15, ACNielsen reported. The c-store channel saw a 4.2-percent leap in single-serve beer units sold, compared to a 1.7-percent increase in total beer units sold in the c-store industry for the same period. (See chart on Page 60 for more information.)
The success of the segment stems from c-store operators tapping into their customers' existing shopping behavior — and making the most of it, 7-Eleven's Blair said. "We got smarter, as the consumer started pulling singles out of multipacks," he explained. "Three years ago, we'd just take the broken package and merchandise the rest as singles. We had one or two shelves of broken packages as singles."
Today, sales and other data is closely monitored to tailor mix to customer preferences, and 7-Eleven stores have four or five shelves — in some cases, a full cooler door — of single beer. The chain focuses on high-end products and tracks the number of days of supply of best-selling singles on the shelves.
Now, thanks in part to 7-Eleven's efforts, brewers are realizing the potential of single-serve. "Heineken has been a great partner and other suppliers are listening when we say we are focusing on this part of the business," Blair said. "Many of the brand folks might still have the perception of someone drinking the 99-cent single out of a brown paper bag, but there is significant play in the $2-plus single of a high-quality product in a 22- or 24-ounce bottle and flavored malt beverage end of the business."
Heineken is introducing a larger keg can and Coors is offering a 24-ounce bottle, Blair said. This summer also will see the rise of many single glass packages of flavored malt beverages (FMBs), including Smirnoff Ice, which is rolling out the Big Bopper single package.
Many of the single purchases are made by regular multipack beer customers, who are sampling the high-end beer and FMBs, Blair said. "Now we are seeing Bacardi Silver — which is the strongest FMB introduction since Smirnoff Ice — being grabbed out of six-packs for trial at home. The core customer who will pick up a 12-pack of Bud is picking up a single Captain Morgan."
Greater product presence and new introductions are driving sales of single imports and FMBs, the product director noted. "This is the most aggressive year in terms of beer introductions," he said. "Usually, it's a fairly stagnant category."
At 7-Eleven, store managers are given specific performance measures and assortment tools to help them identify space for all the new single beers and FMBs now offered by brewers.
Miller Brewing research has found the most efficient level of singles inventory is 30 to 35 different SKUs, Schouten said. "Most c-stores are in the 20 range, but customers are looking for more brands in singles than most retailers carry. You need to get at the 35 SKU level to offer the right variety, then match the space to that assortment."
In the Door
Singles are most effectively merchandised together in a cooler, not with each brand's larger packs. "Customers come in for a single beer specifically," said Schouten. "They aren't looking for their brand, then thinking, should I get a single, six-pack or 12?"
Consumers have been conditioned to shop more often, as needed, especially for food and beverages, which has helped drive the popularity of single-serve drinks of all types, he added. "People know they can get something to eat and drink on almost any street corner in nearly any place they go," Schouten said. "They don't have to plan for it or buy ahead. Going to the store for a single beer is the driver."
While many single-serve beer customers are sampling new brands, Miller's research shows 65 percent of single buyers already are regular users of that brand. "They already consider themselves a Miller Lite drinker, when they buy a Miller Lite single," Schouten noted. "They just want a convenient, single serving of the brand."
He added: "We aren't seeing much of a demographic difference between customers who purchase singles and the core beer customer."
Unlike multipacks, singles are not prone to steep price competition from the guy down the street. "The segment has become less price-driven and more occasion-driven, with margins approximately 50 percent higher than other packages," Schouten said. "Customers are not coming in and saying, 'Oh, it's only 99 cents, I think I will buy one' on impulse."
At Swifty Serve Corp., pricing of singles is kept in line with the market, but a dime one way or another won't send customers careening in or scrambling out of the store, noted Jeff Hamill, president and CEO of the 500-store chain, based in Durham, N.C. "You have more flexibility in pricing singles, whereas take-home is very competitive."
Most singles are purchased on weekdays, with larger pack sizes picking up on Friday and selling well through the weekend, he noted. "We are selling something during the week we normally wouldn't and building the business through the weekday customer, who is becoming more of a weekend customer with the take-home pack."
In most locations — where the practice isn't restricted — Swifty Serve offers a number of 22- and 24-ounce products iced down in partner-supplied bins at the front of the store.
The tactic is a good one, Miller's Schouten noted. Where ice bins are used, single sales rise 20 percent and total beer sales go up by 2.5 percent, compared to similar stores without ice bins, he said, adding, "They are worth the trouble."
In no case, however, do brewers or retailers want to appear to encourage immediate consumption of the single-serve beer.
"Single-serve packages offer opportunities to drive customer traffic and routine purchases," said Anheuser-Busch's Laufer. "Challenges include responsible marketing, merchandising and promoting of these items within local guidelines. Responsible drinking is the rule for all alcohol beverages and all container sizes, from pilsners to malt liquor, from cans to kegs."
Along with the ice bins at a typical Swifty Serve store, anywhere from half to three-quarters of a cooler door is devoted to single-serve. Hamill would like to see that grow to a full door as soon as possible.
"The single-serve selection offers the customer variety," he said. "We've discovered beer customers don't drink the same beer every time. This gives them the opportunity for trial and gives us the opportunity to build a customer base in a new product."
While brewers are beginning to realize the potential of the single-serve business, Hamill said, there are still opportunities for growth. In some Swifty Serve markets, for example, a major beer distributor does not offer the best-selling brands in a single-serve can. "The distributor is trying to cut back on SKUs, but is not taking full advantage of the business that is there for them."
Swifty Serve store managers, however, are fully attuned to the potential of the segment, he noted. "They've learned with non-carbonated beverages and other vault products that we need the newest items to grow the business. In beer, those are the single-serve varieties. We want to be much more aggressive with new products and innovations inside each category. There is not much innovation in beer, but singles are where it is at and we want to exploit that."
Leveraging the singles business will help boost each store's overall margin, he added. "It makes good category management sense to have singles become a much stronger part of the mix. It helps pay for the more competitive price on take-home packages."
While beer sales in food stores, drugstores, mass merchants and c-stores grew by 5.4 percent for the 52 weeks ending April 15, 2002, sales of single-serve packages were up 6.9 percent, according to ACNielsen figures (excluding Wal-Mart data) shared with Convenience Store News. Sales of single-serve beer reached $1.4 billion, up more than $10 million compared to the period the year before. The bulk of those sales — $1.3 billion worth — were made in c-stores, which saw single-pack sales rise 7.2 percent.
"Single-serve has been a great growth segment for us," said Mike Blair, product director, 7-Eleven Inc., based in Dallas. "It represented 46 percent of units sold a couple years ago. That share has moved up fairly significantly, more than 15 points."
Male shoppers between the ages of 21 and 35 are the primary purchasers of single-serve beer packages in c-stores, noted Bill Laufer, vice president, convenience, mass merchandise and club channels, for Anheuser-Busch Inc., the St. Louis-based brewer that accounts for 60 percent of overall beer volume sold in c-stores. "These typically are occasion purchases that deliver sales during high-traffic periods in the stores."
If measured in case equivalents, single-serve beer SKUs account for 45 percent of unit sales in c-stores, noted Jeff Schouten, group sales director, category development for Miller Brewing Co., Milwaukee, which offers virtually every one of its beer brands in single-serve packs.
In supermarkets, single-serve packages account for less than 20 percent of unit sales, according to ACNielsen data. "C-stores are the destination when someone wants a single," Schouten said.
In terms of unit volume at food, drug, mass merchants and c-stores combined, single-package beer sales grew 3.8 percent (compared to 1.3 percent for beer in total), during the 52 weeks ending April 15, ACNielsen reported. The c-store channel saw a 4.2-percent leap in single-serve beer units sold, compared to a 1.7-percent increase in total beer units sold in the c-store industry for the same period. (See chart on Page 60 for more information.)
The success of the segment stems from c-store operators tapping into their customers' existing shopping behavior — and making the most of it, 7-Eleven's Blair said. "We got smarter, as the consumer started pulling singles out of multipacks," he explained. "Three years ago, we'd just take the broken package and merchandise the rest as singles. We had one or two shelves of broken packages as singles."
Today, sales and other data is closely monitored to tailor mix to customer preferences, and 7-Eleven stores have four or five shelves — in some cases, a full cooler door — of single beer. The chain focuses on high-end products and tracks the number of days of supply of best-selling singles on the shelves.
Now, thanks in part to 7-Eleven's efforts, brewers are realizing the potential of single-serve. "Heineken has been a great partner and other suppliers are listening when we say we are focusing on this part of the business," Blair said. "Many of the brand folks might still have the perception of someone drinking the 99-cent single out of a brown paper bag, but there is significant play in the $2-plus single of a high-quality product in a 22- or 24-ounce bottle and flavored malt beverage end of the business."
Heineken is introducing a larger keg can and Coors is offering a 24-ounce bottle, Blair said. This summer also will see the rise of many single glass packages of flavored malt beverages (FMBs), including Smirnoff Ice, which is rolling out the Big Bopper single package.
Many of the single purchases are made by regular multipack beer customers, who are sampling the high-end beer and FMBs, Blair said. "Now we are seeing Bacardi Silver — which is the strongest FMB introduction since Smirnoff Ice — being grabbed out of six-packs for trial at home. The core customer who will pick up a 12-pack of Bud is picking up a single Captain Morgan."
Greater product presence and new introductions are driving sales of single imports and FMBs, the product director noted. "This is the most aggressive year in terms of beer introductions," he said. "Usually, it's a fairly stagnant category."
At 7-Eleven, store managers are given specific performance measures and assortment tools to help them identify space for all the new single beers and FMBs now offered by brewers.
Miller Brewing research has found the most efficient level of singles inventory is 30 to 35 different SKUs, Schouten said. "Most c-stores are in the 20 range, but customers are looking for more brands in singles than most retailers carry. You need to get at the 35 SKU level to offer the right variety, then match the space to that assortment."
In the Door
Singles are most effectively merchandised together in a cooler, not with each brand's larger packs. "Customers come in for a single beer specifically," said Schouten. "They aren't looking for their brand, then thinking, should I get a single, six-pack or 12?"
Consumers have been conditioned to shop more often, as needed, especially for food and beverages, which has helped drive the popularity of single-serve drinks of all types, he added. "People know they can get something to eat and drink on almost any street corner in nearly any place they go," Schouten said. "They don't have to plan for it or buy ahead. Going to the store for a single beer is the driver."
While many single-serve beer customers are sampling new brands, Miller's research shows 65 percent of single buyers already are regular users of that brand. "They already consider themselves a Miller Lite drinker, when they buy a Miller Lite single," Schouten noted. "They just want a convenient, single serving of the brand."
He added: "We aren't seeing much of a demographic difference between customers who purchase singles and the core beer customer."
Unlike multipacks, singles are not prone to steep price competition from the guy down the street. "The segment has become less price-driven and more occasion-driven, with margins approximately 50 percent higher than other packages," Schouten said. "Customers are not coming in and saying, 'Oh, it's only 99 cents, I think I will buy one' on impulse."
At Swifty Serve Corp., pricing of singles is kept in line with the market, but a dime one way or another won't send customers careening in or scrambling out of the store, noted Jeff Hamill, president and CEO of the 500-store chain, based in Durham, N.C. "You have more flexibility in pricing singles, whereas take-home is very competitive."
Most singles are purchased on weekdays, with larger pack sizes picking up on Friday and selling well through the weekend, he noted. "We are selling something during the week we normally wouldn't and building the business through the weekday customer, who is becoming more of a weekend customer with the take-home pack."
In most locations — where the practice isn't restricted — Swifty Serve offers a number of 22- and 24-ounce products iced down in partner-supplied bins at the front of the store.
The tactic is a good one, Miller's Schouten noted. Where ice bins are used, single sales rise 20 percent and total beer sales go up by 2.5 percent, compared to similar stores without ice bins, he said, adding, "They are worth the trouble."
In no case, however, do brewers or retailers want to appear to encourage immediate consumption of the single-serve beer.
"Single-serve packages offer opportunities to drive customer traffic and routine purchases," said Anheuser-Busch's Laufer. "Challenges include responsible marketing, merchandising and promoting of these items within local guidelines. Responsible drinking is the rule for all alcohol beverages and all container sizes, from pilsners to malt liquor, from cans to kegs."
Along with the ice bins at a typical Swifty Serve store, anywhere from half to three-quarters of a cooler door is devoted to single-serve. Hamill would like to see that grow to a full door as soon as possible.
"The single-serve selection offers the customer variety," he said. "We've discovered beer customers don't drink the same beer every time. This gives them the opportunity for trial and gives us the opportunity to build a customer base in a new product."
While brewers are beginning to realize the potential of the single-serve business, Hamill said, there are still opportunities for growth. In some Swifty Serve markets, for example, a major beer distributor does not offer the best-selling brands in a single-serve can. "The distributor is trying to cut back on SKUs, but is not taking full advantage of the business that is there for them."
Swifty Serve store managers, however, are fully attuned to the potential of the segment, he noted. "They've learned with non-carbonated beverages and other vault products that we need the newest items to grow the business. In beer, those are the single-serve varieties. We want to be much more aggressive with new products and innovations inside each category. There is not much innovation in beer, but singles are where it is at and we want to exploit that."
Leveraging the singles business will help boost each store's overall margin, he added. "It makes good category management sense to have singles become a much stronger part of the mix. It helps pay for the more competitive price on take-home packages."