In-Store Sales Strengthen

Convenience stores continued to dig themselves out of the recession last year, racking up dollar sales gains in five major product categories that account for almost one-third of their total in-store sales. According to the Convenience Store News First Look report, salty snacks (up 7.4 percent), packaged beverages (up 6 percent), candy (up 5.8 percent) and other tobacco products (up 3.7 percent) achieved dollar sales gains in 2011 — and beer eked out a 0.2-percent gain.

The annual Convenience Store News First Look report provides convenience store retailers with a first glimpse of 2011 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 margin data on all the major c-store categories, including cigarettes, foodservice and fuel.

Fig. 1

STORE COUNT SHARE BY REGION

Packaged beverages, which represents the third largest in-store sales category after cigarettes and foodservice, saw accelerated sales growth in both dollar sales and volume last year. The 6-percent dollar sales gain follows a 2.4-percent increase in 2010. Meanwhile, volume was also up 4.6 percent in 2011 after a 2.4-percent increase in 2010.

Fig. 2

PACKAGED BEVERAGES — Sales/Units % Change

Fig. 3

PACKAGED BEVERAGES SHARE BY REGION

The biggest increase in the category was generated by alternative beverages, which includes energy drinks. Alternative beverage sales were up 15.4 percent last year, exceeding 2010’s gain of 8.5 percent. In volume, alternative beverages were up 14.6 percent, almost doubling the rate of growth of 7.5 percent experienced in 2010.

Fig. 4

BEER — Sales/Units % Change

Fig. 5

BEER SHARE BY REGION

Fig. 6

CANDY — Sales/Units % Change

Sports drinks, such as Gatorade and Powerade, were up 11.5 percent in dollar sales last year, continuing a strong comeback started in 2010 when the subcategory grew by 5.4 percent. Volume was also up 13.9 percent in 2011. This sub-category was thought to be dead a couple of years ago when sales plunged by 10.2 percent in 2009.

Bottled water more than doubled its growth rate from 2010, increasing 2.4 percent in dollar sales last year compared to 0.7 percent the previous year. However, the increase was probably aided by moving the "enhanced water" (water with nutrients and vitamins added) out of the bottled water category. Enhanced water was down 1.7 percent in sales dollars in 2011.

The largest sub-category within packaged beverages had something of a revival in 2011 as well. Carbonated soft drinks (CSDs) were up 2.2 percent in dollar sales on an increase of 1.4 percent in volume last year. That compares favorably to a 2.2-percent dollar decline and 1.3-percent volume shortfall in 2010.

BEER

Beer remains the fourth largest in-store product category, but suds sales were essentially flat last year. The 0.2-percent sales gain came on a 1.4-percent decrease in volume. Those figures were down from 2010, when beer dollar sales in the convenience channel increased 1.5 percent on flat volume.

Within the beer category, the biggest gains were registered by super premium beers (high-end brands such as Michelob, Rolling Rock and George Killian's) and microbrews.

Super premium beer was up 10.7 percent in dollar sales on a 12.4-percent increase in volume, while micro brews were up 13.9 percent in dollar sales on a 16.2-percent increase in volume. In contrast, premium beer (such as Budweiser and Miller) was down 1.2 percent in dollar sales on a 2.9-percent decrease in volume in 2011.

Fig. 7

CANDY SHARE BY REGION

Fig. 8

SALTY SNACKS — Sales/Units % Change

Fig. 9

SALTY SNACKS SHARE BY REGION

Fig. 10

ENERGY SHOTS — Sales/Units % Change

The biggest disappointment in the category was non-alcoholic beer, which fell 11.2 percent in sales with a 14.6-percent volume decline.

CANDY

With the exception of gum, the candy category had a stellar year in 2011. After just a 2.9-percent increase in 2010, the candy category grew by 5.8 percent in 2011. Volume was down slightly by 0.5 percent last year, similar to the 0.9-percent decline in 2010.

Chocolate bars and packs continued to perform well, up 8.8 percent in dollar sales on a 1.5-percent volume increase. In 2010, chocolate bars were up 5.9 percent in sales on a 2.3-percent volume gain.

Bagged or repacked pegged candy also performed well, up 9.8 percent in sales on a small increase in volume. Non-chocolate bars and packs performed better in 2011 than in 2010, increasing 8.7 percent in sales on flat volume, compared to a decline in 2010.

Novelties and seasonal candy had a terrific year at c-stores in 2011. This category, which lost 3.5 percent in sales the previous year, grew by 10.3 percent last year on a 2.3-percent volume gain.

Gum and mints continued to flounder in 2011. Gum dollar sales were down 2.9 percent last year, after about a half a percent decline the previous year. Volume was down 5.1 percent in 2011, following a 4.7-percent decline the previous year.

SALTY SNACKS

The salty snacks category was up 7.4 percent in dollar sales on a unit volume increase of 1.8 percent in 2011. Sales were up only 1.6 percent the previous year.

The gains in the category were spearheaded by potato chips, nuts/seeds and pretzels. Potato chips were up 8.8 percent in dollar sales on a 4.5-percent volume gain; nuts/seeds were up 11.1 percent on a 6.5-percent increase in volume, and pretzels were up 9.6 percent on a 2.9-percent volume gain. Nuts/seeds and pretzels bounced back from lackluster results in 2010.

Tortilla corn chips posted a relatively lackluster 3.7-percent increase on a 2.3-percent volume dip. However, those figures were better than the 4.8-percent dollar sales and 4.5-percent unit volume declines of 2010.

OTHER TOBACCO PRODUCTS

The OTP category's fast-track growth hit a speed bump last year. Total category sales were up 3.7 percent on a volume gain of 3.3 percent. That was well below 2010's growth rate of 12.5 percent in dollar sales and 9.1 percent in volume increases.

Much of the slowdown could be attributed to the cigar category, which saw sales decline by 1.8 percent on a 2.6-percent gain in volume. Those figures are well below the previous year's growth of 12.3 percent in dollars and 8.9 percent in volume.

The smokeless subcategory, though, performed admirably. Smokeless tobacco sales were up 7.6 percent on a 4.7-percent increase in volume. Still, those figures were off from the 13-percent dollar and 10.6-percent volume gains of 2010.

ENERGY SHOTS

Although it's not one of the top five major product categories, energy shots were once again the fastest-growing subcategory in convenience stores last year. The CSNews First Look report shows this category is still growing, albeit at a slightly slower pace.

The energy shots/liquid vitamins/supplements subcategory grew 20.2 percent last year, after a 40.2-percent gain in 2010. Unit volume was up 17.7 percent, following a 38.8-percent volume gain the previous year.

For even more 2011 year-end industry results, look for the 36th annual Convenience Store News Industry Report in our June issue.