The Plus Side of Channel Blurring

Published in CSP Daily News

Larger package sizes get legs in convenience stores

By  Steve Holtz, Online News Director & Beverage Editor

Sally Lyons-Wyatt

CHICAGO -- The Sweets & Snacks Expo 2012 kicked off with great news for the convenience store industry, and traces of similar small victories cropped up throughout the three-day conference and trade show in Chicago.

"Grocery, convenience and drug stores are all doing well on dollar" sales of candy and snacks, said Sally Lyons-Wyatt of SymphonyIRI Group during a keynote session titled "State of the Confectionery & Snack Industry. "But look at volume: The winners are absolutely clear that convenience and drug are winning from the CPG (consumer packaged goods) standpoint, as well as snacks."

SymphonyIRI statistics show dollar sales of CPG grew 2.5%, 4.1% and 3.4% in the grocery, drug and convenience channels, respectively, in 2011 vs. the previous year. Dollar sales of snack products grew 3.3%, 5.7% and 6.3%, respectively.

In terms of volume sales, however, grocery actually saw declines of 1.5% for both CPG and snacks, while drug and convenience saw CPG volumes grow 3.2% and 9.6%, and snack volumes inch up 1.2% and 0.9%.

It was a sign that the tables may be turning on the channel blurring often cited as drug stores, grocers and mass merchandisers taking pages from the convenience-store handbook to provide quick service and grab-and-go products. Instead, c-stores are finding opportunities to pilfer customers from other channels.

"Consumers are trending away from that once-a-week or pantry stock up trip, and their actually starting to do more fill-in or quick trips," Lyons-Wyatt said. "When they do that, they're not buying all at once. They're making little purchases at these retailers."

Out on the trade-show floor, Larry Lupo, vice president of sales with total responsibility for the c-store channel and national retail at Mars Inc., called the trend a move toward "future consumption" in convenience stores.

"C-store retailers have done a good job of training their consumer to buy items that are $3.99, $4.99 or $5.99," he told CSP Daily News. "That means these future-consumption items--a 7-ounce resealable pouch, for example--that in the past realistically would only have sold in a grocery store are now being picked up within a convenience store because of the display the retailers are using."

It's an impulse move toward larger package sizes that adds up to a larger ring at the checkout.

"Very few people walk into a c-store looking to buy a future-consumption item," Lupo said. "I think they walk by, they see it, and they purchase it [on impulse]."

This year's Sweets & Snacks Expo sold out the trade-show floor with 568 exhibitors, according to Susan Whiteside, vice president of communications at the National Confectioners Association, which produces on the expo.

"In any given year, about 30% of [candy and snack] sales are from products introduced in the past 24 months," she said. "So new products are really important to the candy industry, but that also means 70% of sales come from established or core products. So we can't forget those."

Click here to see a selection of new products unveiled at the Sweets & Snacks Expo 2012, and watch for a rundown of trends from the show floor in the June issue of CSP magazine.

By Steve Holtz, Online News Director & Beverage Editor
View More Articles By Steve Holtz