The convenience channel is the strongest channel for beer, accounting for more than half of category dollar sales, according to NIQ data shared by 3 Tier Beverages.
To help understand the channel, market research firm Circana released a “retail thought leadership” report on c-stores. While the report focuses on c-store sales across all CPG, Brewbound has distilled down the most relevant data insights for Insiders in bev-alc.
Consumers Trips to C-Stores Increase for Second Consecutive Period
Consumer trips to c-stores increased +1.1% year-over-year (YoY) in Q2 (ending June 25), Circana reported. The growth marks the second consecutive quarter of growth for c-store trips, after a +3.4% Increase in Q1.
The number of “buyers” at c-stores also increased in the quarter (+2.2%). Buyers have increased for at least six quarters. In Q1 2023, growth slowed to +0.5%. However, the quarter was cycling +10.7% growth in Q1 2022. Q2 2023 cycled a +6.9% increase in buyers in Q2 2022.
The growth of both buyers and trips was driven by “high-income customers,” according to Circana.
C-store dollar sales growth (across all categories, not just bev-alc) outpaced all other off-premise channels in Q2, marking the first time the channel has done so since Q1 2021. C-store dollar sales increased +5.2% YoY in Q2, while multi-outlets (MULO) increased +4.5%.
MULO recorded its second consecutive quarter of decelerated YoY dollar sales growth, with a +7.7% YoY increase recorded in Q1 and +9.9% increase recorded in Q4 2022.
C-stores now hold a 18.5% share of MULO + convenience sales through Q2, an increase of 1.7 share points versus Q1 and 0.1 share points versus Q2 2022.
Dollar sales in the food channel increased +3.4% YoY in the quarter, while drug store dollar sales declined -3.7%. Drug store dollar sales have been down or flat since Q3 2022, after five consecutive quarters of growth, four of which outpaced all other channels.
Regionally, c-store dollar sales growth outpaced MULO across all regions except mid-South and California. The channel’s strongest growth in Q2 was in the West (+8.4% YoY, to $5.5 billion), followed by the Plains (+6.7%, to $4.2 billion) and the Southeast (+6.2%, to $8.4 billion).
The largest growth states for c-stores were Washington (+14.1%) YoY), West Virginia (+10%), Oregon (+9.5%), Minnestota (+9.1%) and New Mexico (+9.1%), all of which outpaced MULO growth.
The weakest state for c-store dollar sales was Maine, the only state to record a decline in dollar sales (-1.8% YoY). Rhode Island (+1.1%), North Carolina (+1.6%), Vermont (+1.9%) and California (+2%) recorded the small YoY growth for the channel, all below respective MULO growth rates.
RTD Growth Less Seasonal than Hard Seltzer Growth
Beer c-store sales continued the trend and outpaced MULO beer sales. Beer dollar sales in c-stores increased more than +5% YoY in Q2, while MULO beer sales declined around -2%.
Circana also analyzed c-store trends for hard seltzer versus ready-to-drink (RTD) or “prepared” cocktails (RTDs).
Hard seltzers continue to generate more dollar sales for the channel – around $468 million – versus RTDS ($226 million). However, “the gap has decreased significantly,” Circana wrote. At hard seltzers’ peak, the segment contributed $578 million to c-store dollar sales. At the same time (Q2 2021), RTDs contributed $99 million.
RTD c-store dollar sales increased +61% YoY in Q2. Hard seltzer dollar sales also increased in the period. However, hard seltzer growth is typically seasonal, with flat or negative growth in the third quarter, followed by declines over the winter months. RTD growth has been more steady and consistent since 2020, without the seasonal peaks and valleys.