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ST. LOUIS — Nearly three-quarters of convenience store customers come through the door looking for something to drink and that translates into almost 30 percent of inside sales.
The beverage categories — including packaged, alcoholic and dispensed beverages — however are not immune to shifting consumer trends and preferences, as attendees of the 2015 Convenience Store News Beverage Retailing Summit learned on day two of the event held in St Louis.
Key beverage themes, according to Bonnie Herzog, managing director of beverage, tobacco and convenience store research at Wells Fargo Securities LLC, include the continued move toward better-for-you and healthier products, a broad shift away from carbonated soft drinks (CSDs) — especially the downturn in diet — and the growth of bottled water and functional beverages.
Notably, she pointed out, bottled water has driven the majority of incremental growth in beverages, and energy drinks are the No. 2 non-CSD segment in retail sales. That aside, CSDs are still the largest beverage segment.
As Wells Fargo Securities' latest Beverage Buzz survey found, convenience store retailers have reason to be optimistic. According to the survey respondents, beverage sales were up about 5 percent over the Memorial Day holiday vs. last year's holiday weekend. In addition, so far in the second quarter, c-store beverage sales are up approximately 6 percent.
And things may only get better. Retailers predict a 9-percent increase in customer traffic this summer and broadly this should be good for the beverage categories, Herzog explained.
The key to continued success in beverages will be capitalizing on dayparts, according to Dean Zurliene, senior director, category leadership at Anheuser-Busch Inc.
As he explained, dayparting is not necessarily new. McDonald's is moving toward all-day breakfast, and Dunkin' Donuts and Starbucks are going after customers' lunch money. More and more, channel blurring is apparent in the retail industry and in the convenience channel specifically.
There are four major dayparts, which are like four different stores in four walls, according to Zurliene, with the c-store operating differently during each. As a share of daily revenue, breakfast accounts for 28.4 percent, lunch for 19.4 percent, rush hour for 39.1 percent and late night for 13.1 percent.
However, share of profitability paints a different picture. The most profitable dayparts are lunch and rush hour, with late night and breakfast turning up at the other end of the spectrum, he explained.
Capitalizing on the dayparts will require retailers tapping into the top categories in each daypart.