In-Store Sales Bounce Back

3/1/2011

Packaged beverages, beer and OTP lead in-store comeback in 2010

The convenience store industry last year experienced dollar sales gains in five major product categories, representing almost one-third of total in-store sales. OTP (Other Tobacco Products) once again led all categories with a 12.5 percent sales gain last year, while packaged beverages reversed a 2.2 percent sales decline in 2009 with a 2.4 percent sales gain in 2010, according to the Convenience Store News FIRST LOOK report.

Beer also went from a flat 0.3 percent increase in 2009 to an improved 1.5 percent sales gain last year, while candy/gum and salty snacks achieved smaller sales gains than those categories generated in 2009.

The Convenience Store News FIRST LOOK report provides convenience store retailers with a first glimpse of industry dollar and volume sales changes in five major product categories, based on data provided exclusively to CSNews by The Nielsen Co. In June, CSNews will publish its 36th annual Industry Report, which contains sales and gross margins data on all major categories, including cigarettes, foodservice and fuel.

Packaged beverages represent the third largest in-store sales category, after cigarettes and foodservice. Last year, both dollar sales and unit volume of packaged beverages grew by 2.4 percent over 2009. The biggest percentage increase was seen in ready-to-drink iced tea, which increased 13.1 percent in sales over the previous year, on a volume gain of 17.7 percent.

The comeback in packaged beverages, though, was spearheaded by the always innovative alternative drinks sub-category, which includes energy drinks. Alternative beverages saw an 8.5 percent sales gain last year, after a 1.1 percent decline in sales in 2009. In terms of unit volume, alternative beverages were up 7.5 percent over 2009.

The sports drinks sub-category also rebounded significantly in 2010 with a 5.4 percent sales gain after a deep dive of 10.2 percent in 2009. Volume in sports drinks was up 5.8 percent after a 14 percent fall-off the previous year.

Bottled water dollar sales were up only 0.7 percent last year, but even that was an improvement over the 5.8 percent in sales that evaporated from the sub-category in 2009. Volume was flat last year, but at least it didn't decline by 8.7 percent like it did in 2009.

On the negative side, the largest sub-category within packaged beverages continued to fizzle. Carbonated soft drinks (CSDs) were off 2.2 percent in sales in 2010, after a flat year in 2009. Unit volume was also off, down 1.3 percent after a 2.2 percent decline the previous year.

BEER

The beer category toasted a 1.5 percent sales gain last year on mostly flat volume. In 2009, the category's sales were up just 0.3 percent on a volume decline of 2.3 percent.

The biggest percentage gainer in the beer category last year was flavored malt beverages, up 19.1 percent in sales and 18.3 percent in volume, beating the previous year's 6 percent sales and 14.2 percent volume increase.

Microbrews had another strong showing last year. Microbrew sales at convenience stores jumped 16.7 percent last year on a unit volume gain of 10 percent.

The continued struggling national economy did have some impact on premium and budget beer sales. The premium subcategory was down slightly, 0.2 percent, in dollars on a 1.2 percent volume drop. That follows a 1.1 percent decline in sales dollars in 2009 on a 4.7 percent volume decrease.

Imported beers, which are generally priced higher than domestic, were down 0.4 percent in dollar sales on a 1.2 percent unit volume gain. The previous year, dollar sales of imported beer fell 8.9 percent and unit volume was down 6.5 percent.

As the economy stagnated the past two years, budget beers have performed better. The budget sub-category, which was up 8.7 percent in dollar sales in 2009, increased another 4.1 percent in 2010. In unit volume, budget beers were up 3.5 percent last year after a 4.3 percent gain in 2009.

OTHER TOBACCO PRODUCTS

The OTP category continues to shine. Dollar sales in 2010 were up 12.5 percent on a unit volume increase of 9.1 percent. That follows an increase of 9.1 percent in dollar sales and a 5.5 percent unit volume gain in 2009.

Smokeless tobacco had an extremely good year after a relatively lackluster showing in 2009 due to a massive increase in federal excise taxes. Dollar sales were up 13 percent last year compared to just a 1.2 percent gain in 2009. Unit volume grew 10.6 percent compared to a 4.4 percent volume increase the previous year.

Cigars had a stellar year, although the unit volume gain was more impressive than the dollar gain. Dollar sales grew 12.3 percent in 2010, after skyrocketing by 22.5 percent in 2009. Unit volume was up 8.9 percent, even better than the 6.7 percent increase of 2009.

CANDY

Candy and gum dollar sales were up 2.9 percent at convenience stores last year on flat volume. That's a better performance than in 2009 when dollar sales were up 4.1 percent but unit volume was down 3.6 percent, meaning most of the higher dollar sales in 2009 were due to higher prices.

Chocolate bars and packs had another sweet year, with dollar sales up 5.9 percent and unit volume up 2.3 percent. In 2009, most of the 5 percent sales gain came from price increase as volume actually declined by 5 percent that year.

Bagged or repacked pegged candy also performed well, with a 5.1 percent dollar gain and 2.2 percent unit volume increase. Those figures follow a year in which pegged candy soared 9.1 percent in dollar sales on a 1.9 percent volume gain.

Gum and mints continued to stagnate in 2010. Dollar sales of gum and mints declined by about half of a percent after a meager half-percent increase in 2009. In terms of unit volume, the subcategory fell 4.7 percent in 2010 after a 7 percent decline in 2009.

Non-chocolate bars and packs, and candy rolls, mints and drops each experienced dollar and unit volume sales declines last year.

SALTY SNACKS

The salty snacks category was up 1.6 percent in dollar sales on a unit volume increase of 0.8 percent. That's a nice improvement over 2009 when dollar sales grew just 0.8 percent and unit volume declined 4.2 percent.

Potato chips spearheaded the gains, with a 5.5 percent dollar sales increase and a 10.5 percent gain in unit volume. Both figures were better than 2009's results.

In contrast, tortilla corn chips were down 4.8 percent in dollar sales and 4.5 percent in unit volume last year. In 2009, tortilla corn chips dollar sales in convenience stores fell 3.7 percent on an 8.9 percent volume decrease.

ENERGY SHOTS

Although it's not one of the top five major product categories, energy shots is the fastest growing subcategory in the store. CSNews' FIRST LOOK report shows this category still growing. The energy shots/liquid vitamins/supplements subcategory grew 40.2 percent last year, after nearly doubling in dollar sales the year before. Unit volume was up 38.3 percent.

An extended version of CSNews' FIRST LOOK, including unpublished data on the cigarettes category, is available for sale at www.csnews.com.

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