Cold Vault Considerations

COLD VAULT

CONSIDERATIONS

Consistent sellers and an ever-changing variety of flavor choices make the cold vault a hot spot in convenience stores.

Marilyn Odesser-Torpey • Associate Editor

Cold vault beverage sales at Nouria Energy’s retail stores are strong in both unit and dollar sales year to date, reported Kevin Platt, senior category manager for the chain’s 150 stores in Maine, New Hampshire, Massachusetts, Connecticut and Rhode Island.

Anticipating fewer out-of-stocks than in 2021 and a signifi cant increase in consumers taking to the highway for road trips and staycations, he expects cold vault sales to continue to rise through the summer.

Consumers looking for a quick pick-me-up are keeping the momentum in the energy drink category going. This segment leads all the beverage segments in both unit and dollar growth year to date, Platt said.

Energy drinks, carbonated soft drinks and sparkling water are doing well at Plaid Pantry stores, as well as mystery, sour and branded candy flavors. In the Pacific Northwest, kombuchas and yurba mate teas are strong sellers.

“Constantly changing flavor profiles including candy flavors such as sour, Skittles and Starburst keep the energy category interesting,” Platt said.

He noted that bottled water is the second largest dollar segment for Nouria, and the most profitable given the lower costs versus energy drinks. He pointed out that premium water continues to drive double-digit growth in the segment.

In the refrigerated juice segment, brands in the premium segment have seen the fastest growth in dollar sales, Platt said. He attributed much of this dollar sales hike to price increases in the category this year.

Single-serve carbonated soft drinks have seen a slight increase in unit sales and a moderate rise in dollar sales, he stated. Like juices, the stronger dollar sales in this segment reflect the retail price increases this year.

Iced tea dollars and units sold are down at Nouria, primarily due to continued out-of-stock issues and price hikes, he said. “The combination of these two factors has resulted in consumers choosing to quench their thirst with water, particularly enhanced waters, instead,” Platt noted.

He pointed out that at his stores, the ready-to-drink (RTD) cold-brew coffee has not taken off as it has in other retail channels.

In the cold vault, a variety of flavors and sugar-free offerings attract consumers. Platt pointed out that the current top cold vault flavor trends are candy flavors, berry, peach and apricot.

Platt is watching the cannabidol (CBD) drink segment which, he said, “is starting to catch on in other parts of the country and headed our way.” “Because (CBD drinks) are still new to New England and are set at higher retail prices than other drinks, consumers here need to be educated on the benefits of CBD products in order for them to give them a try,” he explained.

HEALTHY OPTIONS, NEW FLAVORS TEMPT CUSTOMERS

Energy drink sales have been “awesome” throughout the pandemic and continue to grow at an “amazing” pace at Plaid Pantry convenience stores, reported Mike Nelson, senior category manager for the 106-store chain in Washington and Oregon. “Brands that consumers perceive are healthier for

you are the ones that have been experiencing good momentum,” he said.

Flavor wise, Nelson sees consumers being tempted by the mystery or rainbow flavors some energy drinks are offering. Sour candy and branded candy flavors such as Starburst have also generated traction for the segment.

Prior to last year, carbonated soft drinks had been on the decline at Plaid Pantry but, Nelson noted, they came back strong last year and continue to do well this year. Dollar increases outpaced unit movement, which Nelson chalks up to higher retail prices. “Limited-time, seasonal or periodic flavor offerings, especially in the energy drink and carbonated soft drink segments, help keep customers engaged with beverage brands,” he said.

Sparkling water had a stellar sales year in 2021, but now it is bottled still water that leads the segment, he stated. In the RTD tea segment, traditional iced tea has struggled for the past few years, but kombuchas and yurba mate teas are “incredibly strong” in the Pacific Northwest, he said.

Although juice sales had been declining over the past several years, the segment had a growth spurt last year, but is starting to come back down, he said. He added that the stores struggled last year in the RTD iced coffee segment, mostly because of supply chain issues, but he’s hoping that this year those issues will be resolved, and sales will climb. CSD

fast facts:

• Energy drink sales show consistent momentum.

• Candy-inspired flavors are on trend.

• CBD products are on the horizon.

PEG BAG CANDY, GUM AND G CANDY, GUM AND NON-CHOCOLATE NON-CHOCOLATE SALES SOAR SOAR

Gum and peg bag candy, especially sour and fruit-flavored varieties, are seeing and fruit-flavored varieties, are seeing strong sales growth at c-stores. strong sales growth at c-stores.

Kevin McIntyre • Editorial Assistant

As summer arrives and more customers return and more customers return to their pre-pandemic routines, candy sales at to their pre-pandemic routines, candy sales at convenience stores are reaping the rewards. convenience stores are reaping the rewards.

Candy dollar sales in every subcategory are trending upward, from gum and mints to chocolate and confection. According to NielsenIQ gum and mints to chocolate and confection. According to NielsenIQ Total Convenience data, confection, gum and mints sales growth is outpacing Total Convenience data, confection, gum and mints sales growth is outpacing that of chocolate, with confection and gum each increasing by over 15% for the 52 that of chocolate, with confection and gum each increasing by over 15% for the 52 weeks ending April 30, 2022.

Still, chocolate remains the most popular segment in the category, with $2.95 billion in Still, chocolate remains the most popular segment in the category, with $2.95 billion in sales for the period. That is an increase of 7.6% compared to the previous year. sales for the period. That is an increase of 7.6% compared to the previous year.

In this same period, retailers have seen a 15.5% increase in confection sales, a 15.3% rise in gum In this same period, retailers have seen a 15.5% increase in confection sales, a 15.3% rise in gum sales and a 13.5% uptick in mint sales. sales and a 13.5% uptick in mint sales.

Overall, dollar sales for the candy, gum and mint category as a whole are trending upward at a high rate, with a total positive change of 11.8% for c-store retailers across the U.S. Many of these trends, especially in the case of gum and mints, can be attributed to an increasing number of people around the country returning to their pre-pandemic lifestyles. Still, the trend in this category is staying consistent with fruit fl avors increasing and mint fl avors decreasing.

PEG BAGS SEE GROWTH

“In our candy year to date, units are up 5%,” said Raul Buenrostro, director of retail marketing at Friendly Express. “Mints seem to continue on the decline year over year. Our biggest growth has come out of the peg (bag) candy and gum. The gum category could primarily be driven by the workforce going back to their offi ces.” Friendly Express, with 35 stores in Georgia, has seen an increase in candy sales despite supply chain issues and manufacturer fi ll rates suffering. “At the start of the year, most manufacturers had fi ll rates below 70% for the fi rst three months of the year in key items,” said Buenrostro. “That affected the overall growth of the category.” To combat the supply chain issues, however, retailers like Friendly Express have increased and expanded upon peg bag candy sets, which is something that was not being pushed in the past, noted Buenrostro. Despite the setbacks that many retailers have seen in the past few hectic years, candy sales remain consistently in the positive, leaving retailers optimistic.

“Based on our unit movement, it seems that despite going through this infl ation period, the customer will continue to indulge in a candy bar or two,” said Buenrostro.

Non-Chocolate Sales See Rapid Growth

Confection (15.5%), gum (15.3%) and mint (13.5%) sales growth outpaced that of chocolate (7.6%) for the 52 weeks ending April 30, 2022, per NielsenIQ. But chocolate still leads the category with $2.95 billion in sales for the period.

Category Dollar Sales 1-Year % Change Candy, Gum, Mints $6.54 B 11.8%

Chocolate $2.95 B 7.6%

Confection $2.51 B

Gum $760 M

Mints $210 M

Source: NielsenIQ Total U.S. Convenience data for the 52 weeks ending Apr. 30, 2022 15.5%

15.3%

13.5%

fast facts:

• Fruit flavors, sour flavors, movie-themed products and king-sized items are trending.

• Some retailers have increased peg bag candy sets to offset supply issues.

HIGHER MARGINS

Other retailers are seeing increases in categories such as king-sized products, which are currently outpacing single-serve units in sales.

Rotten Robbie, which operates 36 stores in northern California, has seen this trend, especially with nonchocolate peg bag candy and sour-flavored products.

“Sales should be up in retail, but (we are) selling fewer units since vendors are not offering many promotions and most shippers were cancelled for c-stores,” said Jodi Leibowitz, category manager at Rotten Robbie. “I anticipate moving through fewer units, but at higher margins.”

Another subcategory that is trending upward is themed candy sets, especially movie-themed products. According to Leibowitz, as movies continue to come out in the coming months, category managers are sending branding items to stores to sell throughout the summer. In addition to themed candy packs, retailers can also take advantage of localized products that are curated to each store’s consumers. “A big move we made is adding a local independent Hispanic candy line,” said Leibowitz. “The margins are great, and it is a great seller and a way to localize the candy selections in our higher Hispanic locations.” C-store retailers that have thrived from innovative, new products in the category have been hopeful of new products to market in the future. During the past two years, supply chain and manufacturing problems throughout the industry have hindered production of many new products. Nevertheless, candy sales continue to rise in multiple categories, leaving retailers optimistic for strong summer sales. CSD

Chocolate remains the most popular segment in the category, with king-sized products outpacing single-serve units in sales, both with chocolate and non-chocolate segments.

SUMMER SNACK SALES HEAT UP

Snack sales trend upward as retailers appeal to customers with promotions, healthy options and popular brands.

Howard Riell • Contributing Editor

The great Nat King Cole

might have been speaking directly to c-store operators back in 1963 when he sang, “Roll out those lazy, hazy, crazy days of summer. Those days of soda and pretzels and beer.”

Indeed, summer is the time for snacking. But knowing which salty, sweet and healthy snacks to stock and how to best promote and merchandise them remains a key task for c-store retailers.

Salty snacks have historically sold well during the summer months, as vacations and summertime activities call for convenient, grab-and-go foods. At the same time, product knowledge and education about healthy eating have changed and contributed considerably to the growth of the category.

Salty snack sales in the c-store channel totaled $6.3 billion, a gain of 14.4%, during the 52-week period ending May 15, 2022, according to IRI. Potato chips accounted for $1.9 billion in sales, up 13.7%. Tortilla/tostada chips racked up sales of more than $1.3 billion dollars, a 17.6% rise.

fast facts:

SUMMER TRENDS

The Sweets & Snacks Expo in May found recent trends include more extreme fl avors, so look for snack items to turn up the heat. Watch for fresh twists on classic favorites and more options in terms of package sizes and product types to fi t every snack occasion.

“Popular snacks for summer are any that tie into outdoor activities like

• Salty snack sales in the c-store channel totaled $6.3 billion, a gain of 14.4%, for the 52 weeks ending May 15, 2022, per IRI.

baseball,” said Tim Young, category manager for candy, snacks and edible grocery for Bardstown, Ky.based Newcomb Oil Co. LLC, which operates more than 80 Five Star Food Marts in Kentucky, Indiana and Tennessee. “In seeds and nuts, popular brands are David’s and Bigs, and the fl avors range from original to ranch and dill pickle,” he said. Young added that he and his colleagues are also seeing the meat snack category continue to grow, as the supply of sticks has improved quite a bit over the course of the last year. “Great summer snack brands are Combos, Cheez-It, Bugles and Pringles, to name a few,” Young said. “We are still seeing growth from protein items like Quest Protein Chips and Protein Poppers. Jerky is strong, and we are working on more bundle offers or ties to fuel with loyalty.” Health does play a factor in customer purchase decisions, Young has found, though not as much as many might think. “People are still loyal to their tradi• Trends to watch include extreme fl avors, twists on classic favorites and more options in terms of package sizes and product types. and more options in terms of package sizes and product types. tional brands, but we continue to look for healthier options for them to try,” he said. he said.

ON THE GO

“All salty snacks such as chips, popcorn, puff snacks and more do well at AAFES stores during the summer months,” reported Dragana Ilic, buyer III for the Army & Air Force Exchange Service (AAFES), which operates 589 Express convenience stores and 122 main stores. “Nuts and trail mixes are also very popular as a healthy, on-thego snacking option.”

Doritos are traditionally a best-seller, while Wonderful Pistachios and Power Up Trail Mix do well as healthy options, Ilic noted. “Hippeas are very popular as a healthy puff snack.”

Many consumers lead on-the-go lifestyles that demand portable and ready-to-eat healthy foods.

“They are more inclined to try new fl avors and pay premium prices for premium ingredients,” Ilic noted.

Flavor preferences vary by location, Ilic noted. For example, Hispanic fl avors tend to do better at Express stores in the South.

Customers are also paying more attention to labels, nutrition and healthy eating overall. As a result, better-for-you snacks have been trending at Express stores. Natural, organic, gluten-free or vegan snacks have all seen continued growth.

As consumers have become more health-conscious, Express stores have stocked more better-for-you snacks with added protein and plant-based ingredients, Ilic said.

Promotions are also driving purchases in the category. In June, AAFES featured a chips promotion for $1 off when shoppers purchased a roller grill item and single-serve bag of chips. The July and August promotion offers a free dispensed beverage with the purchase of a Doritos big bag.

Snacks are traditionally merchandised in high-traffi c areas, endcaps and fl oor displays. Two-fer offers continue to do well, Ilic reported.

“Secondary and shipper displays have also provided a reliable lift in sales,” Illic said. CSDsales,” Illic said.