The economy may be slowing, customers may be spending less, but beer sales remain solid at convenience stores. A recent report by AC Nielsen shows beer sales are least affected by the current poor economy. The Brewers Association concurred, finding in the first half of 2008 that craft beer sales rose 11% over 2007.
Neither statistic surprised Tim Cote, vice president of marketing for Beaverton, Ore.-based Plaid Pantries Inc.
“Beer generally performs well in a slowing economy, in part because of the trade-out between restaurants and taverns to c-stores, as customers look to spend less,” Cote said. “But while there’s definitely some trending to lower-end products marketed at lower prices in our market, it’s mostly coming at the expense of the premium category.”
Economizing on mainstream beer purchases appears to be fast becoming a national pastime, but sales of more expensive brews are rising anyway.
“As a whole, I would say that beer sales are flat because of the economy, and there’s a definite movement away from premium to less expensive beer,” said Tom LeFevers, director of merchandising for Speedway SuperAmerica, the Enon, Ohio, operator of more than 1,600 stores. “However, we’re also seeing much more interest in craft than we used to.”
LeFevers thinks craft is a great niche opportunity for c-stores going forward. “I see two types of beer drinkers on a daily basis,” he said. “One is buying as much beer as they used to, but buying cheaper beer. The other may be buying less beer, but they’re buying better beers like crafts.”
Despite their willingness to pay, today’s consumers are increasingly price-sensitive. The increased efficiency of some competitors can also make customer retention more challenging.
“Right now the customer is being a little unforgiving if they think our pricing is out of line,” Cote said. “And we really don’t have a lot of ability to command a premium when compared to a Walgreens or Rite-Aid, as we may have had in the past. And, if they keep getting better at carrying the beer and wine category, they’ll progressively become a bigger threat to our stores.”
Customers don’t have to wait in line much at drugstores, said Dan Roane, category manager of alcoholic beverages for Circle K’s southeastern stores. If you’re going there for the pharmacy, they don’t seem particularly efficient, but if you’re going there to grab something, you can get in and out quickly because the rest of the store is rather quiet.
While beer is one of the core categories in convenience stores, CSD’s 2009 Brand Preference Study revealed that suppliers could be doing a better job helping chains stay ahead of their competitors with promotions and point-of-purchase displays. Of the 81 beer buyers that participated in the study, 19% reported no sales presentations from beer suppliers. In fact, 73% of buyers reported less than five presentations from the nine beer companies serving the market.
Buyers participating in the brand study selected Anheuser-Busch Cos. Inc., MillerCoors and Heineken USA as the top performers. Honorable mentions were Mike’s Hard Lemonade, Samuel Adams and Corona.