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CHICAGO — When it comes to the top 10 in-store categories for the convenience channel, packaged beverages and alcoholic beverages take the third and fourth spots, respectively. These two categories alone captured roughly 22 percent of all in-store sales in 2015, according to the latest Convenience Store News Industry Report.
These numbers demonstrate the importance of beverages to the convenience channel and all its players — retailers, distributors and manufacturers.
"Beverages are not just important for us [distributors], but also for the industry. In excess of 50 percent of the trips to a convenience store are beverage driven," said Jon Bratta, vice president of marketing for convenience distributor Core-Mark International Inc.
John Roach, vice president of merchandising for Eby-Brown Co. LLC, and Lance Smith, senior account manager at McLane Co. Inc. echoed this sentiment as the three sat down for a "Distributor's Super Panel" at the fifth-annual Convenience Store News Beverage & Beer Retailing Summit, which took place June 22-23 at the Hard Rock Hotel in downtown Chicago.
"Beverages are important to us because they are important to you," Smith stressed to the Summit's retailer attendees.
Driving beverage sales are better-for-you drinks such as water, premium juice and milk, according to Smith, and these three segments are succeeding at the expense of carbonated soft drinks.
Better-for-you offerings are also boosting growth within the individual subcategories, Bratta explained. For example, whole milk is doing well, but 2-percent milk is doing better.
"It's really no different with beverages than it is with the rest of the store," added Roach, describing the push toward better-for-you options.
While the cold vault is a key component within a c-store, it does come with challenges — notably, the proliferation of SKUs and changing consumer preferences.
"I think there are a lot of products, a lot of information, and a lot of innovation being thrown at retailers all the time," Roach said. "Getting through all the information is a tough thing."
SKU proliferation is a challenge on both sides of the supply equation, Bratta added. Distributors are faced with several questions: What are the right products? What is the purpose of these new SKUs coming to market? What is the marketing plan?
Having a marketing plan is a must, Roach agreed. "You can have a really great product, but without a marketing plan behind it, you can put in your store and it will sit there."
Increased regulations — such as Philadelphia's recently announced soda tax — are also becoming barriers to doing business. The regulatory environment was prevalent with cigarettes and tobacco for years, but now it is encroaching on beverages and food," Smith pointed out.
The good news is retailers do not have to go it alone, the distribution executives emphasized. Suppliers can play an important role in managing the cold vault.
"At the end of the day, retailers should drive it, but use their suppliers," Bratta advised. "What do [the suppliers] see? What is coming down the pike? What is selling?"
Other best practices offered by the panelists included:
- Never be out of stock;
- Partner with your distributor on promotional planning;
- Merchandise the category's offerings in the right spot inside the store; and
- Be on trend and be fast.
"If a customer cannot find that destination product, you will short-circuit that shopping trip," Bratta said.
This year's CSNews Beverage & Beer Retailing Summit was sponsored by Red Bull North America as the gold sponsor, and V8, Sparkling ICE, 99 Bottles and Jumex as silver sponsors.