Raising the Bar

The c-store industry embraces wine and liquor as sales rise due to the pandemic

By Kathleen Furore

IT’S BEEN A SPIRITED YEAR for wine and liquor in the convenience channel.

In February, Savannah, Ga.-based Parker’s debuted Parker’s Spirits, the company’s first-ever liquor-focused banner. The new store, adjacent to an existing Parker’s convenience store in Pooler, Ga., stocks premier wines, craft beers, collectible bourbons, and other packaged beverages.

In April, Casey’s General Stores Inc., headquartered in Ankeny, Iowa, developed a single barrel bourbon in partnership with Buffalo Trace Distillery. Available in 375-milliliter bottles, it is part of the retailer’s plan to innovate around its beer, wine and spirits offerings.

In mid-June, Irving, Texas-based 7 Eleven Inc. added to its private brands portfolio with the launch of Plot + Point chardonnay and pinot grigio, packaged in Tetra Pak containers. And just two months later, the company teamed up with Minibar Delivery to deliver beer and wine — national brands, as well as 7-Eleven’s own portfolio. The collaboration kicked off in Florida, Texas and Virginia, with plans to expand to additional markets later this year.

“Over the past year, wine and liquor have been strong categories for 7-Eleven stores,” reports Julie Trapp-Clark, director of alcohol for 7-Eleven. “Ready-to-drink (RTD) beverages and innovative alcohol flavors are driving growth in the category and bringing new customers into our stores.”

A Dive Into the Data

While hard seltzers, beer and RTD malt beverages have been getting much buzz during the pandemic, wine and liquor have proven resilient in the convenience channel. According to the 2021 Convenience Store News Industry Report, average sales per store in the category increased by 32 percent last year. Wine and liquor’s share of overall in-store sales at U.S. convenience stores rose from 1.55 percent in 2019 to 1.97 percent in 2020.

Single-serve wine products are up more than 20 percent at 7-Eleven Inc.

Online alcohol marketplace Drizly, a company that partners with retailers (including c-stores), has seen an uptick in wine sales as well. Wine accounts for 37-percent share on Drizly.

Within the wine category, champagne and sparkling wine have seen significant gains, now making up 23-percent share of the wine category compared to 17 percent during the same time period in 2020, reports Liz Paquette, Drizly’s head of consumer insights.

The liquor category has fared even better, Drizly’s data shows.

“This year, liquor accounts for 44-percent share, up from 41 percent during the same time period in 2020,” says Paquette, who notes that tequila, in particular, has gained share over the past year. In the Drizly marketplace, tequila share grew from 13 percent in the first quarter of 2021 to 16 percent in the second quarter.

“Spirits in c-stores have fared extremely well over the past year, with dollar sales growth over 20 percent,” echoes Jay Hornback, national account manager and convenience retail lead at Beam Suntory, producer of premium liquor brands such as Jim Bean.

“Some of the trends we have noticed were how the tequila and cognac segments both grew dollar sales much faster than the total spirits category in c-stores,” noted Hornback. “Despite losing some traditional foot traffic during the pandemic, c-stores were able to pick up customers who opted for a faster shopper experience vs. traditional big-box retailers.”

From the start of the pandemic, in-store traffic at c-stores was down about 25 percent since there was no need for consumers to purchase gas on a frequent basis, according to Herb Smith, vice president of customer development for E. & J. Gallo Winery. Overall sales were impacted, but once mandates were eased by cities, in-store traffic began increasing, followed by an uptick in sales.

“The spirit category in the channel continues to outpace the rest of the market with double-digit growth trends,” Smith told Convenience Store News.

How to Drive Sales

With wine and liquor sales on the rise, just how should c-store operators eager to profit approach this business?

It might seem obvious, but for those already committed to wine and liquor, communication is key, according to industry insiders.

“I realize beer sales may represent 65 to 85 percent of total alcohol sales in the store, but letting consumers know that you actually carry spirits is the first step,” Hornback stressed. “Retailers also should do a better job of letting consumers know what they offer — whether through signage, their mobile app, or even a menu-type poster at the register.”

Operators also should not forget to fine-tune their wine and liquor displays.

“I have been in many stores where the product is partially hidden, hard to locate, or not well-lit from a distance,” said Hornback, pointing out that this can inhibit the kind of cross-shopping that will boost sales.

Case in point: A customer might come in for a 12-pack of beer, but could be tempted by a 200-milliliter bottle of a spirit if they see it. “Those are extra sales retailers should try to pursue to increase their gross sales,” Hornback advises.

A wide selection of products also can help c-stores capture purchases, Paquette notes.

“Typically, we see customers order from one retailer that has all the products they are looking for, rather than split their order across retailers,” she said. “By stocking top-sellers across all categories, convenience stores can become more competitive with other retailers in their area.”

A convenience store’s product mix should depend on the size of the store overall, and the space it has to promote wine and liquor specifically, according to Hornback.

“For traditional bottled spirits, leading with core selling brands is always the safest bet, as c-stores don’t have the space to satisfy the demand that large-format grocery and liquor stores have,” he explained. With spirit-based RTDs trending, he suggests also adding an associated branded spirit — a move that could mean a larger sale.

The tight, competitive cooler space resulting from the popularity of RTDs is another consideration. “I would look at creating dedicated space based on the size of the cooler to start promoting singles, four-packs and eight-packs,” he said. “Typically, the price is higher. But as we are currently seeing in the data, consumers are showing strong trial and repeat purchase, especially those who are loyal to the master spirit.”

“We do not anticipate the customer demand for wine and liquor to decrease soon.”

On the wine side, Smith recommends making space for a 3-foot to 4-foot ambient wine department in a high-traffic location within the store, plus a full door of cold wine to capture “wine dollars” while customers are inside the store.

Like Hornback, Smith points to the popularity of RTD products and how that can inform a retailer’s decision on what to carry.

“While better-for-you wines are becoming more popular, the ready-to-drink category has really penetrated the c-store channel by offering consumers multiple formats,” Smith said. “Consumers often want to enjoy a single glass of wine, so the 750-milliliter package can sometimes be a barrier. Single-serve packaging formats — such as cans, 375-milliliter half-bottles, 3-liter boxes, and RTD — are incredibly important as we look to win new friends for wine and provide consumers with more dynamic options.”

At 7-Eleven, single-serve wine products are up more than 20 percent, and they continue to grow in popularity, according to Trapp-Clark.

A Promising Future

2021 has been good to liquor and wine sales so far. But are those sales, like much of what’s happened since the pandemic’s onset, an anomaly?

Industry pros don’t think so.

“The future is bright,” Smith predicts. “This channel is only one of two channels where wine is outpacing grocery. The other is the dollar channel.”

Trapp-Clark has an equally positive outlook.

“We do not anticipate the customer demand for wine and liquor to decrease soon,” she says. “These continue to be extremely strong categories for us, and we are constantly working to expand our product assortment, with vendor partners and through our private brand portfolio.”

That’s a smart approach, according to Hornback, who believes the future is brightest for those c-stores that ultimately won’t rely on gas sales to thrive.

“The future of convenience will be much different than a lot of us grew up with. Many retailers have mentioned they want to be a destination for consumers who are shopping at the store and by chance need gas,” he explained. “If you drive a Tesla, what will it take for you to stop at a c-store on your way home from work?”

Wine and liquor might be the answer.

“As c-stores evolve and become more competitive with traditional liquor or grocery stores, planning ahead and providing drink solutions — especially for key holidays and events — could help increase impulse sales and gross dollars,” Hornback concluded. CSN

Rewarding Wine & Liquor Customers

When the COVID-19 pandemic began, 7-Eleven Inc. saw growth in wine and liquor as its customers were enjoying their favorite alcoholic beverages at home instead of at a restaurant or bar.

Julie Trapp-Clark, the chain’s director of alcohol, said the company wanted to reward its loyal customers for shopping with 7-Eleven. So, in select states, the retailer added promotions and bonus offers on wine and liquor through its 7Rewards loyalty program in the 7-Eleven app.

This initiative is ongoing, and is producing positive results.

“Giving customers the opportunity to rack up loyalty points or score discounts on their favorite wine and liquor products continues to drive brand loyalty and repeat trips,” Trapp-Clark said.