A Six-Pack of Insights

Consumer data to drive product placement and promotions as suppliers and research firms battle ‘insights desert.'

By
Steve Holtz, Online News Director & Beverage Editor

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Whether you want to call it a blessing or just a lot of pressure, it’s generally agreed that beverages are the biggest draw for getting customers into a convenience store.

In fact, 58% of consumers reported buying a nonalcohol beverage on their most recent c-store visit, driving more traffic into the store than any other major category, according to consumer research specialists The NPD Group. And 64% of these purchases were packaged beverages.

But that’s just the tip of the consumerdata iceberg. In this report, CSP aims to provide statistics, data points and consumer insights to apply to your store(s) based on typical traffic, demographics and other factors.

Breaking It Down

For every “universal” suggestion to help sell more beverages, there are three, four, probably more ideas that are going to be specifi c to a region, a convenience-store chain or even a store.

“You clearly have a ton of traffi c that’s going directly back to the cold vault to buy a beverage, but there’s also a significant subset [of consumers] that’s coming in just to pay for gas or to buy something else that haven’t made that voyage back to the cold vault,” says Brad Higginbotham, director of customer advisory services for The Coca-Cola Co., Atlanta. “Making the beverages as easy to access as possible is key. We’ve said for years we want to be within an arm’s reach of desire for the shopper.”

Each of the vendors interviewed for this story devote considerable time and effort to collecting consumer-insights data, some of which they were willing to share, and others that they opted to keep close to the vest pending proprietary agreements.

The convenience retail channel “is an insights desert compared to other channels in the amount of data that’s available to us,” admits Scott Finlow, vice president, shopper and channel insights for PepsiCo, Purchase, N.Y. “So our approach is more direct investment in understanding the channel and to make those investments directly in partnership with our customers so that we can get real-time learnings.”

Consider it the result of the c-store industry once being the underappreciated mutt of retailing: It’s lovable, and always there when you need it, but it’s the first dog to get kicked to the curb in the fight for the dog bowl or, in this case, budgeting the funds to collect consumer insights.

Shopper Opportunities

But that’s changing as retailers, consultancies, researchers and suppliers realize the value of the c-store industry. “When we look at shopper behavior and what is driving shoppers to convenience and gasoline outlets vs. other choices that they have, beverage is the No. 1 reason that they’re going into a store,” says Jeff Jones, general manager for PepsiCo. “So what that means for our retail partners is: They need to think about the role that beverages can play in driving traffic to their outlets.”

Adds Manny Zayas, vice president, small format for St. Louis-based Anheuser-Busch InBev, “If you think about a convenience store, the nature of it, it’s used for 100 different occasions throughout the day. Whether you’re talking about folks on their way home from work, or they’re headed out to a party or some other event, it’s an important thing to be prepared to service a lot of different shopper opportunities.”

While such data can influence a retailer’s set, it is just as likely to direct one’s promotions.

“If you have a cleaner, brighter, welllaid- out store, both Bubba and the professional are going to go in there,” says Steve Seager, senior retail marketing manager for Nestle Waters North America Inc., Stamford, Conn. “But we did some research on how these various segments would respond to different kinds of promotional offers. So it gets to what else they purchase and how they purchase and why are they buying in a c-store.”

Higginbotham says Coca-Cola is doing the same. “We’re leveraging all those insights we have about the shopper, which channels they’re going to for which occasions and which need states, to then build out what is the right packaging and promotional strategy for each of those different channels.”

David Portalatin of NPD says promotions appeal to today’s “value-driven” consumers. “That doesn’t always mean the lowest available price,” he says. “Many consumers are looking for a ‘deal’ as a means to either get more (quantity) or trade up (quality). Consumers in c-stores are more likely than average to report buying a beverage on deal. Retailers can leverage this to increase basket size by offering bundles, two-for-one specials or incentives to upsize. They can also increase check size by offering attractive discounts on premium items.”

So just whom should you be marketing to? Read on for the appropriate insights, data and statistics. Each of the vendors cited in these pages encourages retailers to contact their representatives with requests for additional info as needed. 


General Beverage

Current C-Store Sales Trends

For most of 2011, packaged-beverage sales in convenience stores saw some trends continue and new ones emerge. Carbonated soft drinks, in general, continue to struggle, while iced tea continues to break out as a must-have subcategory. Meanwhile, sparkling bottled water is seeing double-digit growth.

The good news: The most volume growth came in subcategories that offer the largest margin (notably energy drinks and wine). And where there were declines in volume—small drops for both beer and carbonated soft drinks (CSDs)—there were still increases in dollar sales, thanks to price increases.   

Consumer Insights

Nonalcohol-beverage sales account for more than $16 billion, with c-stores leading all channels in sales of single-serve beverages.

Source: Nestle Waters North America/Mintel

The cold vault is the top-shopped section and key trip driver for a c-store:

  • 29% of c-store shoppers said they visit for the alcohol-beverage cooler.
  • 21% visit for the nonalcoholbeverage cooler.

Source: E & J Gallo Winery/SmartRevenue

Overwhelmingly, the decision about beverage type, brand, fl avor/ variety and size are all made before a shopper has entered the store.

Source: Dr Pepper Snapple Group/LG&P Research 

Beverage Categories That Skew Female

  • Bottled water
  • Iced tea
  • Juice
  • Other noncarbonated beverages

Beverage Categories That Skew Male

  • Beer
  • Energy drinks
  • Sports drinks

Source: The NPD Group 

58% Percentage of consumers who bought a nonalcohol beverage on their most recent c-store visit, driving more traffi c into the store than any other major category.

64% of these purchases were a can or bottled beverage.

27% were machinedispensed.

Source: The NPD Group

24% Percentage of c-store shoppers who report buying from the cold vault on impulse; 16% report the purchase was a deal or special price.

Source: The NPD Group

80% Percentage of all beverage buyers who specifi - cally planned to buy the beverage type they purchased before entering the store.

Source: Dr Pepper Snapple Group/LG&P Research

57% Percentage of all beverage buyers who said the beverage purchase was the “main reason” he or she visited a c-store that day.

Source: Dr Pepper Snapple Group/LG&P Research

2 Median number of times per month a c-store shopper buys a beverage.

Source: Nestle Waters North America/Ryan Partnership  


Beer

Current C-Store Sales Trends

Total cases of beer sold have slipped a bit, but dollar sales are up. Recession or not, a tip of the hat goes to those higher-margin craft beers and progressive adult beverages (think Four Loko), which may not deliver the volume but still pack a margin and market-basket punch. Of course, light beers and premium beers still rule the day, so don’t throw the baby out with the bath water. 

The Typical C-Store Beer Shopper is …

  • Single
  • Male
  • 21-34 years old
  • Blue collar
  • Earning less than $40,000 a year
  • Living in a metropolitan area
  • Hispanic

Three Shopper Motivations for Buying Beer in a C-store:

  • Can buy as needed, managing portion control and wallet.
  • Feels emotionally safe because the setting is familiar and nonjudgmental.
  • It’s simple; not overwhelmed by choices.

Beer Shopping ‘Occasions’:

Shed the Day: Transitioning from the “world of work” to “beer time.”

Bring the Beer: En route to a party or other social gathering.

Chilling at Home: Relaxing alone or with friends/family. Source: MillerCoors 

Consumer Insights

The alcohol-beverage cooler is most shopped from 6 to 8 p.m.

Source: E & J Gallo Winery/SmartRevenue

 The decision to buy beer is often made earlier in the day, while the decision on the brand and pack size is made closer to the point of purchase.

Beer-buyer trip frequency is 45% higher than the average c-store shopper.

Source: MillerCoors

Craft beers are defi nitely growing, but premium beers continue to be the lion’s share of the business. So it’s really important to think very carefully about how you select your mix and have the right offering.

 Source: Anheuser-Busch InBev 

$15.3 billion Total c-store dollar sales for 52 weeks ending Nov. 27, 2011, up 2.23% compared to the previous year.

761 million Total c-store case sales for 52 weeks ending Nov. 27, 2011, down 0.34% compared to the previous year. Source: SymphonyIRI Group 

50% Percentage of shoppers who think of a convenience store as a place to buy beer. Source: E & J Gallo Winery/Smart- Revenue

70%-80% Approximate percentage of c-store beer transactions that are considered rote exercises with a goal of “little inconvenience or emotional drama.” Source: MillerCoor 

$14.93 Average ring per c-store trip when craft beer is in the shopping basket. Source: Boston Beer/SymphonyIRI 32% Percentage of c-store consumers who buy beer at least once a week or more from a particular store. Source: E & J Gallo Winery/Smart- Revenue 

3 Median number of times per month a c-store shopper buys beer. Source: Nestle Waters North America/Ryan Partnership $11.49 Average ring per c-store trip when beer is in the shopping basket. Source: Boston Beer/SymphonyIRI 

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