Focusing on ‘Beyond Beer’ in the Cold Vault

CHICAGO —Beer, wine and packaged beverages are driving merchandise growth in 2021, Chris Rapanick, director of business development with NACS, said at the 2021 NACS Show in Chicago.

Beer sales in convenience stores are up 18.3%, wine is up 23.4% and packaged beverages are up 19.4%, according to NACS CSX data through July 2021.

One area within alcohol showing growth is ‘beyond beer,’ which includes beverages like hard seltzer, hard cider, flavored malt beverages and ready-to-drink alcohol.

Rapanick; Todd Bollig, senior director of category management and shopper insights with The Boston Beer Co.; and Lauren Quaglia, national channel manager for convenience with the Boston Beer Co., shared what was doing well in pack bev and how retailers can capitalize on growth in beyond beer and effectively add it to their cold vaults.

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Packaged beverages have posted positive sales growth 10 out of the last 10 State of the Industry reports, Rapanick said. Cold vault sales make up about as much of inside sales as cigarettes, he said, about 28% according to SOI 2020 data.

Beer made up about 9.3% of sales in 2020, and the expansion of the category is changing the way shoppers think about c-stores, said Rapanick.

“It’s really changing the customer’s view of convenience,” Rapanick said. “You’re seeing a lot of folks come in to get that flavored malt beverage that didn’t usually shop [c-stores] before because they didn’t buy just traditional beer.”  

Taking a closer look, flavored malt, craft, super premium and imports all showed growth when comparing January through July of 2019 versus 2021, Rapanick said.

Almost 45% of c-store shoppers are buying beyond beer somewhere. The challenge is that 80% of them are buying it somewhere else, Quaglia said.

“They’re not buying it in convenience,” she said. “So you have the shopper, but they’re leaving your stores and they’re going generally to mass or food to buy beyond beer.”

The obstacle is c-store’s assortment is not meeting its consumer’s needs and wants, Quaglia said.

When a traditional beer shopper enters a c-store, the first thing they think is about what brand of beer they want to buy—whether that’s a Corona, Bud Light or Sam Adams. Then they consider size and segment, she said.

“The biggest difference in the beyond beer shopper, is they’re thinking about segment first,” said Quaglia. “So before they get to your store they’re thinking, ‘Do I want cider? Do I want an FMB [flavored malt beverage]? Do I want a hard seltzer?’ They’re really thinking about segment first and foremost, then it’s brand then it’s pack size.”

This makes grouping by segments important, she said. The solution is also to be flexible with sets and to quickly adapt because the optimal assortment with these types of beverages is evolving and changing.

When looking at how to organize the cold vault, retailers should consider looking where the products are in the segment life cycle. The chart Bollig presented showed canned cocktails being in the introduction phase; nonalcohol beer, hard seltzers, FMBs and super premium in the growth phase; import, craft and cider in the maturity phase; and premium and value in the decline phase.

For something like canned cocktails in the introduction phase, Bollig recommended looking at key leaders that are performing well already since it’s still new.

Non-alcohol beer, hard seltzers, FMB and super premium are all in the growth phase and should be prioritized. To make room for these segments, retailers should look at what they can pull from the premium and value segments since that space is declining, he said.

When it comes to the flow of the cold vault, hard seltzers should be first to the left since those are an impulse buy, Bollig said, and 41% of hard seltzer purchases are driven by impulse. Next he recommends placing traditional FMB, cider, emerging ready-to-drink (RTD), craft, import, super premium, premium and value beers.

Reducing underperforming segments and cutting underperforming items is key to make room for innovation and continue segment growth, he said. If a drink is not performing well in 28 days to 13 weeks, it’s time to pull it, Bollig said.