2012 Beverage Report
A Six-Pack
of Insights
Consumer data to drive product placement and promotions
as suppliers and research firms battle ‘insights desert’
By Steve Holtz || sholtz@cspnet.com
W
hether you want to call
it a blessing or just a lot
of pressure, it’s generally
agreed that beverages are the biggest
draw for getting customers into a convenience store.
In fact, 58% of consumers reported
buying a nonalcohol beverage on their
most recent c-store visit, driving more
traffic into the store than any other
major category, according to consumer
research specialists The NPD Group.
And 64% of these purchases were packaged beverages.
But that’s just the tip of the consumerdata iceberg. In this report, CSP aims to
provide statistics, data points and consumer insights to apply to your store(s)
based on typical traffic, demographics
and other factors.
Breaking It Down
For every “universal” suggestion to help
sell more beverages, there are three, four,
probably more ideas that are going to be
specific to a region, a convenience-store
chain or even a store.
“You clearly have a ton of traffic that’s
going directly back to the cold vault to buy
a beverage, but there’s also a significant
subset [of consumers] that’s coming in just
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F ebruary 2012
51
to pay for gas or to buy something else that
haven’t made that voyage back to the cold
vault,” says Brad Higginbotham, director of customer advisory services for The
Coca-Cola Co., Atlanta. “Making the beverages as easy to access as possible is key.
We’ve said for years we want to be within
an arm’s reach of desire for the shopper.”
Each of the vendors interviewed for
this story devote considerable time and
effort to collecting consumer-insights data,
some of which they were willing to share,
and others that they opted to keep close to
the vest pending proprietary agreements.
The convenience retail channel “is an
insights desert compared to other channels in the amount of data that’s available
to us,” admits Scott Finlow, vice president,
shopper and channel insights for PepsiCo,
Purchase, N.Y. “So our approach is more
direct investment in understanding the
channel and to make those investments
directly in partnership with our customers
so that we can get real-time learnings.”
Consider it the result of the c-store
industry once being the underappreciated
mutt of retailing: It’s lovable, and always
there when you need it, but it’s the first dog
to get kicked to the curb in the fight for the
dog bowl or, in this case, budgeting the
funds to collect consumer insights.
Shopper Opportunities
But that’s changing as retailers, consultancies, researchers and suppliers realize
the value of the c-store industry.
“When we look at shopper behavior
and what is driving shoppers to convenience and gasoline outlets vs. other
choices that they have, beverage is the No.
1 reason that they’re going into a store,”
says Jeff Jones, general manager for PepsiCo. “So what that means for our retail
partners is: They need to think about the
role that beverages can play in driving
traffic to their outlets.”
Adds Manny Zayas, vice president, small format for St. Louis-based
Anheuser-Busch InBev, “If you think
about a convenience store, the nature
of it, it’s used for 100 different occasions
throughout the day. Whether you’re talking about folks on their way home from
work, or they’re headed out to a party or
some other event, it’s an important thing
to be prepared to service a lot of different
shopper opportunities.”
While such data can influence a
retailer’s set, it is just as likely to direct
one’s promotions.
“If you have a cleaner, brighter, welllaid-out store, both Bubba and the professional are going to go in there,” says Steve
Seager, senior retail marketing manager for
Nestle Waters North America Inc., Stamford, Conn. “But we did some research
on how these various segments would
respond to different kinds of promotional
offers. So it gets to what else they purchase
and how they purchase and why are they
buying in a c-store.”
Higginbotham says Coca-Cola is
doing the same. “We’re leveraging all
those insights we have about the shopper,
which channels they’re going to for which
occasions and which need states, to then
build out what is the right packaging and
promotional strategy for each of those
different channels.”
David Portalatin of NPD says promotions appeal to today’s “value-driven”
consumers. “That doesn’t always mean
the lowest available price,” he says. “Many
consumers are looking for a ‘deal’ as a
means to either get more (quantity) or
trade up (quality). Consumers in c-stores
are more likely than average to report
buying a beverage on deal. Retailers can
leverage this to increase basket size by
offering bundles, two-for-one specials
or incentives to upsize. They can also
increase check size by offering attractive
discounts on premium items.”
So just whom should you be marketing
to? Read on for the appropriate insights,
data and statistics. Each of the vendors
cited in these pages encourages retailers to
contact their representatives with requests
for additional info as needed.
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F ebruary 2012
53
General Beverage
Current C-Store Sales Trends
For most of 2011, packaged-beverage sales in convenience stores saw some trends
continue and new ones emerge. Carbonated soft drinks, in general, continue to struggle,
while iced tea continues to break out as a must-have subcategory. Meanwhile, sparkling
bottled water is seeing double-digit growth.
The good news: The most volume growth came in subcategories that offer the
largest margin (notably energy drinks and wine). And where there were declines in
volume—small drops for both beer and carbonated soft drinks (CSDs)—there were
still increases in dollar sales, thanks to price increases.
Consumer Insights
Nonalcohol-beverage sales account
for more than $16 billion, with
c-stores leading all channels in
sales of single-serve beverages.
Source: Nestle Waters North America/Mintel
The cold vault is the
top-shopped section and key
trip driver for a c-store:
▶ 29% of c-store shoppers said
they visit for the alcohol-beverage
cooler.
▶ 21% visit for the nonalcoholbeverage cooler.
Source: E & J Gallo Winery/SmartRevenue
Overwhelmingly, the decision
about beverage type, brand, flavor/
variety and size are all made before
a shopper has entered the store.
Source: Dr Pepper Snapple Group/LG&P
Research
58%
24%
57%
Percentage of consumers
who bought a nonalcohol
beverage on their most
recent c-store visit,
driving more traffic into
the store than any other
major category.
Percentage of c-store
shoppers who report buying from the cold vault on
impulse; 16% report the
purchase was a deal or
special price.
Percentage of all beverage
buyers who said the beverage purchase was the
“main reason” he or she
visited a c-store that day.
▶ 64% of these
purchases were a can or
bottled beverage.
▶ 27% were machinedispensed.
Source: The NPD Group
Source: The NPD Group
80%
Percentage of all beverage buyers who specifically planned to buy the
beverage type they
purchased before entering the store.
Source: Dr Pepper Snapple
Group/LG&P Research
2
Beverage Categories
That Skew Female
▶ Bottled water
▶ Iced tea
▶ Juice
▶ Other noncarbonated
beverages
Beverage Categories
That Skew Male
▶ Beer
▶ Energy drinks
▶ Sports drinks
Source: The NPD Group
Median number of times
per month a c-store
shopper buys a beverage.
Source: Nestle Waters North
America/Ryan Partnership
Source: Dr Pepper Snapple
Group/LG&P Research
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55
Beer
Consumer Insights
The Typical C-Store Beer
Shopper is …
▶ Single
▶ Male
▶ 21-34 years old
▶ Blue collar
▶ Earning less than $40,000 a year
▶ Living in a metropolitan area
▶ Hispanic
Three Shopper Motivations
for Buying Beer in a C-store:
▶ Can buy as needed, managing
Current C-Store
Sales Trends
Total cases of beer sold have slipped a bit,
but dollar sales are up. Recession or not, a
tip of the hat goes to those higher-margin
craft beers and progressive adult beverages (think Four Loko), which may not
deliver the volume but still pack a margin
and market-basket punch. Of course,
light beers and premium beers still rule
the day, so don’t throw the baby out with
the bath water.
$15.3
billion
Total c-store dollar sales for
52 weeks ending Nov. 27,
2011, up 2.23% compared
to the previous year.
761
million
portion control and wallet.
▶ Feels emotionally safe because
the setting is familiar and
nonjudgmental.
▶ It’s simple; not overwhelmed
by choices.
Beer Shopping ‘Occasions’:
Shed the Day: Transitioning from the
“world of work” to “beer time.”
Bring the Beer: En route to a party
or other social gathering.
Chilling at Home: Relaxing alone or
with friends/family.
The decision to buy beer is often
made earlier in the day, while the
decision on the brand and pack
size is made closer to the point of
purchase.
Beer-buyer trip frequency is 45%
higher than the average c-store
shopper.
Source: MillerCoors
Craft beers are definitely growing,
but premium beers continue to be
the lion’s share of the business. So
it’s really important to think very
carefully about how you select your
mix and have the right offering.
Source: Anheuser-Busch InBev
50%
$14.93
3
Percentage of shoppers who
think of a convenience store
as a place to buy beer.
Average ring per c-store trip
when craft beer is in the
shopping basket.
Median number of times
per month a c-store shopper
buys beer.
Source: E & J Gallo Winery/SmartRevenue
Source: Boston Beer/SymphonyIRI
Source: Nestle Waters North
America/Ryan Partnership
70%-80%
Total c-store case sales for 52
weeks ending Nov. 27, 2011,
down 0.34% compared to
the previous year.
Source: SymphonyIRI Group
Source: MillerCoors
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Source: E & J Gallo Winery/SmartRevenue
Source: MillerCoors
Approximate percentage of
c-store beer transactions
that are considered rote
exercises with a goal of
“little inconvenience or
emotional drama.”
56
The alcohol-beverage cooler is most
shopped from 6 to 8 p.m.
F e br u a ry 2 0 1 2
32%
Percentage of c-store consumers who buy beer at
least once a week or more
from a particular store.
Source: E & J Gallo Winery/SmartRevenue
$11.49
Average ring per c-store trip
when beer is in the shopping basket.
Source: Boston Beer/SymphonyIRI
Bottled Water
Current C-Store Sales Trends
Bottled-water sales trends have turned based on health reports,
they’ve turned based on eco-friendly efforts, and they’ve turned
based on the economy. Results from 2011 sales suggest a return
to growth for the subcategory, with unit sales of PET still water
up a healthy 5% even as dollar sales dipped a smidge. On top
of that, sparkling-water sales grew double digits in c-stores,
most likely on Nestle Waters’ rollout of its regional brands in
sparkling formats.
Consumer Insights
Top reason consumers give for why they are drinking
more bottled water: health.
Top reason consumers give for why they are drinking less
bottled water: cost.
Source: Nestle Waters North America
Promotional Concepts Most Acted On:
▶ Discount price on bottled water with purchase of gasoline
▶ Discount price with purchase of two bottles of water
▶ Discount price on bottled water with purchase of
another beverage
▶ Discount price on bottled water with purchase of a
food item
Source: Nestle Waters North America/Ryan Partnership
Suggested Target Consumer for Pack Sizes:
20-ounce: 25- to 44-year-olds
700 ml. sport cap: Females 25-44 years old
1 liter: Males 25-44 years old
1.5 liter: 25- to 44-year-olds
1 gallon: Males 35 and older; outdoor workers
3 liters: Females 25-44 years old
24-pack: 35 and older; families
Source: Nestle Waters North America
$2.6 billion
88%
76%
Total c-store dollar sales of PET still water
for 52 weeks ending Nov. 27, 2011,
down 0.36% compared to the previous
year. (Sparkling/mineral waters were up
15.66% to $45 million.)
Percentage of c-store bottled-water buyers who plan their water purchase prior
to entering the store.
Percentage of bottled-water buyers who
said it is “important” that a c-store carry
their preferred package size.
1.8 billion
21%
Total c-store unit sales of PET still water
for 52 weeks ending Nov. 27, 2011,
up 5.1% compared to the previous
year. (Sparkling/mineral waters were up
14.33% to 30 million units.)
Percentage of bottled-water buyers who
had “no particular brand in mind” until
after entering the store.
Source: SymphonyIRI Group
58
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Source: Nestle Waters North America
Source: Dr Pepper Snapple Group/LG&P Research
20%
Percentage of bottled-water consumers who said they would not purchase
water in a c-store where their preferred
package size was not available.
Source: Nestle Waters North America
CSDs
Current C-Store Sales Trends
In an age when health and anti-obesity initiatives are the rule of thumb, carbonated
soft drinks remain challenged in c-stores and beyond. Still, through ambitious marketing and promotional campaigns by the major manufacturers, volume growth was
down only a bit (0.36%), while price increases bumped dollar sales up slightly (0.75%).
Top 5 ‘Benefits’ That
Drive CSD Sales:
▶ Cool and refreshing
▶ Good by itself, without any food
to go along with it
▶ Comforting to drink
▶ Can drink without feeling guilty
▶ A special treat
Source: Dr Pepper Snapple Group/LG&P
Research
Top 5 Other Products in the
Market Basket of PackagedCSD Purchasers:
Candy or gum 41%
Gasoline 39%
Lottery tickets 37%
Salty snacks 36%
Tobacco products 34%
Source: Dr Pepper Snapple Group/LG&P
Research
85%
Percentage of CSD buyers who specifically
planned to buy a CSD before entering
the store.
83%
Percentage of packaged-CSD buyers who
planned to purchase a specific CSD brand
before entering the store.
Source: Dr Pepper Snapple Group/LG&P Research
$8.7 billion
Most Coke-Friendly
Major Markets:
Most Pepsi-Friendly
Major Markets:
Los Angeles
Atlanta
Houston
Washington, D.C.
Miami
El Paso, Texas
Bakersfield/Delano, Calif.
Baton Rouge, La.
Memphis, Tenn.
Fresno, Calif.
Source: Buxton
Source: Buxton
Most Dr PepperFriendly Major
Markets:
Tulsa, Okla.
Nashville, Tenn.
Knoxville, Tenn.
Louisville, Ky.
Pittsburgh
Source: Buxton
60
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Total c-store dollar sales for 52 weeks ending Nov. 27, 2011, up 0.75% compared
to the previous year.
5.3 billion
Total c-store unit sales for 52 weeks ending
Nov. 27, 2011, down 0.36% compared to
the previous year.
Source: SymphonyIRI Group
Energy Drinks
Current C-Store Sales Trends
A few years ago, energy drinks took the c-store industry by
storm, offering an entirely new—and highly desirable—subcategory of beverages that attracted key c-store demographics and
high margins. More recently, sales growth began to slow as those
key consumers grew up, the recession took away discretionary
spending and energy shots stole the thunder. In 2011, sales
growth was easily in the double digits for both subcategories.
Consumer Insights
“Selection” is becoming more important for c-store shoppers and is notably important for energy-drink and teacategory buyers, meaning retailers wanting to grow these
categories may need to broaden the assortment.
Source: The NPD Group
79%
C-stores are by far the primary channel for energy drinks.
Percentage of energy-drink
The other main outlets for purchase are in bars, restaurants
buyers who specifically
and clubs. A growing number of consumers also purchase
planned to buy an energy
in grocery/mass/club stores for take-home packs.
drink before entering a
c-store.
Source: Red Bull
71%
Percentage of energy-drink
buyers who planned to
purchase a specific energydrink brand before entering
the store.
Source: Dr Pepper Snapple Group/
LG&P Research
$5.4
billion
Total c-store dollar sales for
52 weeks ending Nov. 27,
2011, up 16.40% compared
to the previous year. (Energy
shots were up 17.74% to
$887 million.)
2.2 billion
Total c-store unit sales for 52
weeks ending Nov. 27, 2011,
up 16.90% compared to the
previous year. (Energy shots
were up 16.17% to 282 mil-
14-39
lion units.)
Source: SymphonyIRI Group
Age range of the majority of
energy-drink buyers. Gender
split is around 70/30 for the
category.
65%
buyers who visit a c-store
▶ Nothing else
▶ Another energy drink
five to 20 times every four
Source: Red Bull
Percentage of energy-drink
weeks; 14% visit fewer than
five times, while 21% visit
more than 20 times.
Source: Red Bull
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Top 2 Other
Products in the
Market Basket
of Energy-Drink
Purchasers:
Iced Tea
Wine
Current C-Store Sales Trends
Current C-Store Sales Trends
19%
Consumer
Insights
Percentage of shoppers
Wine shoppers spend
who think of a c-store as a
more time in a c-store
place to buy wine, the same
than most other
percentage who thinks of a
category shoppers do,
c-store as a place to buy milk.
averaging 140 seconds
per visit.
Source: E & J Gallo Winery/
SmartRevenue
36%
Percentage of consumers who “never thought
$1.1
billion
Total c-store dollar sales for
52 weeks ending Nov. 27,
2011, up 2.55% compared
to the previous year.
72%
Percentage of iced-tea buyers who specifically planned
to buy an iced tea before
entering the store.
Source: Dr Pepper Snapple Group/
LG&P Research
910
million
$447
million
Total c-store dollar sales for
52 weeks ending Nov. 27,
2011, up 11.60% compared
to the previous year.
5.7
million
Total c-store unit sales for
Total c-store unit sales for 52
52 weeks ending Nov. 27,
weeks ending Nov. 27, 2011,
2011, up 5.1% compared
up 14.09% compared to the
to the previous year.
previous year.
Source: SymphonyIRI Group
Source: SymphonyIRI Group
64
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about purchasing wine” in
“general market” c-stores,
compared to 24% in “affluent stores.”
50%
Percentage of customers in
“affluent” c-stores who like
when the store provides
information about wines.
Percentage is 38% in “general market” c-stores.
Source: E & J Gallo Winery/SmartRevenue