Consumer pocketbooks are stretched thin thanks to inflation. Nonetheless, many adult beverage devotees remain bullish on higher-priced options—ones infused with premium, craft, organic and even functional ingredients.
Despite price points skewing higher for premium selections against mainstream options, consumers still feel compelled to treat themselves with these small luxuries.
“For a while, we’ve seen a shift occur from traditional spirits and mainstream beer into premium spirit-seltzer-centric and pre-mixed cocktails, a primary driver of growth for the segment,” said Scott Scanlon, executive vice president, alcoholic beverages, for Chicago-based market research company Circana, noting that both sub-segments have grown c-store dollars by more than 50% over the past year.
Thanks to price elasticity that accompanies adult beverages (versus some other store categories), c-store retailers have a chance to expand dollar/unit growth if they can pinpoint price, promotion and display strategies—and do so weekly rather than seasonally.
New Arrivals Attract Attention
New arrivals, both premium and mainstream, are attracting attention. Round Barn Distillery elevated the canned cocktail space with Lemon Elderflower Vodka Soda, crafted with DiVine Vodka, which is promoted as delivering a clean taste with floral notes of elderflower and a lemony kick.
“These cocktails offer a superior taste and quality that stand out, while still being low in calories and perfect for any summer occasion,” said Matthew Moersch, CEO and owner of Moersch Hospitality Group, which owns the brand.
New innovations are coming from several directions. Scanlon of Circana said one trend is hard teas and hard lemonades serving as a major growth driver. In 2023, the pipeline of these offerings was far less abundant. “The trend is not a huge surprise as teas and lemonades are broadly popular,” sparking consumers to cross over and sample adult beverage versions, he said.
Debuting recently, Lipton Hard Iced Tea is a non-carbonated variety made with real Lipton brewed tea, natural flavors and premium, triple-filtered malt. Available in 24-ounce cans, Lipton Hard Iced Tea Citrus Green Tea contains 5% alcohol by volume. Surfside’s line of iced tea and vodka canned cocktails expanded to include an Iced Tea & Vodka Lemonade variety eight-pack. Retailers attest to the lift hard teas and lemonades have provided within their adult beverage sets.
Denise Molnar, co-owner of Tioga Gas Mart, Lee Vining, California, said that in 2023, hard teas and hard lemonade brands were nearly non-existent. In 2024, both have taken off, led by Ashland Hard Seltzer and Happy Dad Hard Seltzer, which has more than 1.5 million followers on social media.
“These hard tea and lemonade varieties have grown and seemed to have come out of the blue,” Molnar said.
Data Deep Dive
The consolidated adult beverage category is ripe with innovation, from traditional, mainstream options to higher-end ones.
Getting inside Circana’s numbers, total domestic beer (a $13.9 billion c-store market) lost 3.5% in dollar sales, with imports growing 9.5%. Flavored malt beverages (FMBs) saw a 13.9% uptick, while non-alcohol beer rose a whopping 23.2%, according to Circana data reflecting total U.S. c-store activity for a 52-week period ending July 14.
C-store spirits grew 16.8% during that period—led by pre-mixed cocktails (52.7%), spirit seltzer-centric options (53.7%) and tequila (22.2%). Total c-store wine fell 1.3%, beer-centric seltzers lost 7.7% while domestic premium beer was down 6.1% for dollar sales, Circana reports.
Adult beverage consumers tend to latch on to various archetypes, and in some cases the brands selected are secondary priorities. To some, it starts with premium ingredients. Others seek exotic flavors, while others must have “the brand” for its cache, or it’s a dealbreaker.
“We have had a great deal of success with ranch water, led by Cutwater Spirits,” said Molnar of Tioga Gas Mart. Within the consolidated beer segment, Molnar cites hazy IPAs as a variety pulling down the lion’s share of growth within craft beer and all beer.
“They are selling like crazy—all the others, including fruity, are not doing as well,” she said.
When it comes to flavored malt, seltzers and canned cocktails, larger brands have failed to pull their weight, yielding to smaller name brands.
“They sit on the shelf with the exception of High Noon SKUs, which pretty much sell themselves,” she said.
Scanlon of Circana believes compelling innovation has motivated the leaders in respective segmentations to step up their game, starting with High Noon from E. & J. Gallo Winery.
Capitalizing on the hard tea/lemonade expansion trend, the pace-setting brand debuted High Noon Vodka Iced Tea, a premium non-carbonated drink made with real vodka and real iced tea. Available in variety eight-packs of 355-millimeter cans, it contains 90 calories per serving, no sugar added and is gluten-free.
“Hard tea was one of consumers’ most frequent [ready-to-drink] category purchased in 2023, which created an opportunity to provide a premium alternative with real vodka and real iced tea,” said Britt West, executive vice president/general manager at E.& J. Gallo Winery. “We’ve taken a beloved classic and elevated it to new heights.”
Packaging Trends
Another format growing in popularity is single-serve packages, designed so consumers can try new products. It’s growing briskly in support of FMBs and spirits, allowing consumers to sample one or two SKUs before deciding to buy in bulk at four-, eight- and variety packs.
With sales of 50-milliliter singles growing, Tito’s Handmade Vodka introduced a 50-milliter four-pack to its lineup of vodka products. Its adult beverages are available in such pack sizes as 1-liter, 1.75-liter, 750-, 375-, 200- and now a 50-milliliter four-pack.
Scanlon said not many emerging brands have ascended to the degree that Tito’s and High Noon have. But two he cited were BuzzBallz (No. 6 canned spirits cocktail in c-stores) and BeatBox Party Punch (No. 7 SKU in c-stores).
About the former: “BuzzBallz is ascending more each quarter. It’s a higher alcohol-by-volume variety, and the ball-shaped format is intriguing to consumers,” said Scanlon, adding that BuzzBallz is tantamount to the way boxed wine helped consumers perceive wine in a new package-format way.
How to Sustain Growth
There’s certainly a lot of buzz, but a change in adult beverage buying regularity could be in for a letdown if inflationary times prevail. It’s up to retailers and their supplier-partners to regularly communicate overall value, particularly of higher-priced offerings, so consumers continue to make them a go-to option.
“One key to sustaining growth is that when people have jobs [even lower-paying ones],” they give themselves permission to buy adult beverages, including premium offers, said Scanlon.
Establishing a well-crafted in-store merchandising game plan is job No. 1 for retailers in support of spirits-based ready-to-drink cocktails, flavored malt beverages, craft beer, canned and bottled wines and non-alcohol drinks, which is having a banner year.
“C-stores are efficient at creating excitement to drive seasonal and events-based merchandising,” said Scanlon. Indeed, events such as March Madness and holidays such as Fourth of July often have retailer efforts on auto pilot to driving dollars and units. However, when the holiday ends, then what?
Scanlon said adult beverage buying frequency drops after holidays and events, and that’s becoming more pronounced each year. One theory: people tend to buy in bulk during these promotional cycles, reducing the need to shop for a while—a trend similar to pantry-loading.
Scanlon notes that when holiday/event promotions cease, consumers also slow down purchases as price points regulate to everyday levels. Premium varieties become less doable for those on stretched budgets. The key: c-stores need to work harder and smarter to keep momentum going post-event. They can do so by communicating value.
C-stores also have a golden opportunity to cultivate single-serve adult beverage selling opportunities.
“Consumers need to see the single serve can as being cold and ready for them,” Scanlon said. “When there’s trial of a single or two, it can potentially lead to trading up to a variety pack. The pre-mixed RTD spirits segment is set up well to drive single-package sales.”
That’s because pre-mixed cocktails allow consumers to avoid the effort of pre-mixing their own concoctions. But sampling drives trial here.
Molnar of Tioga Gas Mart, located in the shadow of Yosemite National Park, said single cans of spirit-centric and pre-mixed cocktails are actually the most popular type that her store stocks in a five-cooler department.
“When we sell variety packs, it’s mainly beer seltzers such as White Claw and Truly. With spirit-centric brands, customers are still familiarizing themselves with them around the flavor and taste,” she said. “Single cans help accomplish that better.”
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