By: Chuck Ulie | September 21, 2023

‘There’s a lot of runway for that category as we think about household penetration and what that looks like for the consumers’

Energy is the alpha dog in sparkling beverages, but how this beverage is shelved and promoted—and what other drinks surround it and how—is key to overall success of this category, convenience-store retailers and industry experts say.

Energy continues to be a successful category that outperforms, says Corey Nicely, a category manager at Pilot Co., Knoxville, Tennessee, which has 641 locations. “There’s a lot of runway for that category as we think about household penetration and what that looks like for the consumers going forward.”

Nicely says there have been many energy brands that have paved the way for new entrants in the category. While some brands have come and gone, “it’ll be a category we continue to partner with heavily as we go into 2024.”

At Loop Neighborhood Market, Fremont, California, which has 132 stores, category manager Marat Yeshchin says energy is 40% of his chain’s package-beverage business.

Scott Love, principal, retail client services at Chicago-based Circana, puts into perspective the popularity of energy drinks in c-stores. It’s the biggest category in convenience but “not even close to No. 1” in other outlets. “On a dollar basis, 34% of the sales of non-alcohol beverages go to energy drinks,” he says.

Allocating Space

So, when it comes to planning sparkling-beverage space in the cold vault, retailers must be cognizant of energy’s muscle. Love says that because energy takes one-third of sales, it should get one-third of the space.

After that space-to-sales allocation is in place, Love says retailers must be sure to “brand block,” or keep all brands together on shelves versus organizing in terms of flavor, for example.

“Within energy drinks, you want all the Monster-branded products together,” he says.

Red Bull and Monster are the drivers of the energy-drink business and have a very high loyalty, Love says, and retailers want to ensure customers can find those brands.

“As consumer preferences are frequently changing, it’s important for retailers to reconsider cold vault strategy frequently as well.”

“There are a couple things unique about c-stores,” he says. “One, there’s much more immediate consumption of the product, and your decision or shopping time is significantly condensed versus other channels.

“It has to be easy to find, and it has to be in the right location,” he says.

However, c-stores also must leave room for other sparkling beverages, such as carbonated soft drinks, sparkling waters and sports drinks—and for new innovations.

“Innovation’s really important,” Love says, adding that while new products must be brought in, retailers should not cut too deep into key brands to make space and “potentially miss more sales.”

Considering Categories

This juggling act involves examining more than just space-to-sales data because if that is all that was required, “Your entire cooler would be energy drinks and carbonated soft drinks, end of story,” says Jaron Friedman, head of sales for Toronto-based sparkling water brand Clearly Canadian. “We encourage retailers to really look at the different categories outside of just the top two or three and allocate space based on the opportunity categories and what’s growing in other channels outside of convenience.”

When looking at individual categories, retailers shouldn’t hold brands in smaller subsets to the same sales standards as areas like carbonated soft drinks. This is because every category and subcategory has a different threshold of what makes sense for units per store per week, Friedman says, adding it’s important to offer customers variety in the cold vault to appeal to multiple cross sections of consumers.

Key brands are always top of mind for Nicely, who says when Pilot creates its planograms each year, it looks at new items, categories doing well and those needing help.

“But our main strategy is to make sure we have our core items in stock all the time,” she says. “Red Bull, Monster, Coke, Pepsi, Dr Pepper, those key brands. We look at days of supply to make sure that that aligns with how fast items are going out.”

“There are different terms and conditions to who gets case stacks and who doesn’t.”

Mike Jones of S&S Petroleum, agrees. “Be in stock and well-fronted and faced,” the category manager of the 91-store Mukilteo, Washington-based chain says. “Carbonated soft drink consumers are more brand loyal, and if their brand is not there, they most likely will not buy something else in that category.”

Pilot reduced SKUs heavily during COVID-19 due to supply-chain issues but now is trying to add new items that might “be a positive win for us,” Nicely says. “We will continue to focus on a mix of existing and emerging brands in the energy category as it has been our biggest win the last few years.”

When determining what new items to add, Yeshchin says Loop Neighborhood studies internal sales data plus industry magazines, websites and sales and trend data from partner vendors.

“And sometimes, honestly, it’s a gut instinct to whether something is going to move or not,” he says.

Ultimately, the first step in building a successful cold vault strategy is understanding the consumer, says Carlton Austin, director of convenience retail strategy at Atlanta-based Coca-Cola. “Coca-Cola partners with retailers to test and evaluate beverage sets based on consumer preferences for each brand, package, price point and more,” Austin says. “As consumer preferences are frequently changing, it’s important for retailers to reconsider cold vault strategy frequently as well.”

Figuring Out Flow

When determining the flow to all the doors of a cold vault, Yeshchin says it begins with the big dog, energy, which starts in the far-left door because people read left to right. Next to energy is coffee, “also a type of energy and still in the sugar category.” After that are carbonated soft drinks, then hydration—“where the sugar content kind of dissolves”—and then water. Water is followed by miscellaneous categories such as enhanced water, juice and tea, “the subcategories that provide minimal volume in all of our sets,” he says. “So, the flow goes based on unit movement.”

Anything around the handle is the vault’s most premier space, he says, and where he puts the best-selling SKUs. “You want your best units right by the handle because the consumer just wants to get in and get out.”

This location is also the one where manufacturers will pay for the most. “That is a space that you’ll actually get paid for as far as space funding goes,” Yeshchin says.

There also are times where Yeshchin might put a new SKU near the handle if he thinks it’ll be a success. “For us this year, this was Prime Hydration,” which debuted in January 2022, he says. Meanwhile, Loop also added Prime Energy, which is now its third-largest energy SKU. “This caught us off guard.”

When placing core items, Jones, however, doesn’t think cold-vault position has much impact. “If a customer comes in to buy a Mountain Dew, it does not matter where it sits. They will find it. That said, I do think an innovation item should be placed on the handle and not the hinge,” he says, adding that bottlers tend to disagree and always want their core items on the handle.

34% – The percentage of non-alcohol beverage sales that go to energy drinks, the biggest category in convenience stores, according to Circana

Austin says some argue that because well-known brands already have high recognition and demand, they may not need to be placed on these eye-level, “strike zone” shelves. “Instead, there’s an opportunity to utilize the strike zone for showcasing innovation and new offerings, making them more noticeable in the cold vault,” he says.

An opposing view suggests placing the hottest brand in the strike zone can attract consumers’ attention and drive them to the cold vault in search of a specific product, he adds. “Both approaches can be effective, and it’s important to collaborate with the retailer to determine the best strategy that aligns with their specific goals and target audience.”

A recent study by Coca-Cola found cooler doors act as a visual barrier, limiting horizontal viewing and causing shoppers to navigate the cold vault using a two-step process. “First, they evaluate and select their preferred category door,” Austin says. “Second, shoppers browse and navigate their brand selection vertically within the cold vault door they’ve chosen.”

Planning Planograms

When discussing planograms (POGs) with vendors, Weigel’s c-stores always use its scan data, not shipment data, says Nick Triantafellou of Weigel’s Stores, Powell, Tennessee, which has 73 stores. “Everyone has access to the same data. That way we are all making decisions together based on the same thing.”

Triantafellou, the director of marketing and merchandising, adds that he never focuses on a contract to build his cold-vault POGs. “Contract finalization should always come after we have made the right decisions for our customers, stores and our categories,” he says. “If we make the right decisions based on those, then everyone’s business will grow, and we won’t be forced to make bad decisions in our sets.”

When it comes to six-packs and 12/15 packs, Weigel’s strategy is to draw take-home consumers with attractive pricing that usually results in unit sales better than area grocery stores, he says.

Weigel’s goal in attracting the take-home customer is to build baskets and loyalty. “We see a 70%-plus loyalty penetration rate on our MyWeigel’s Rewards program with our aggressive loyalty pricing on six- and 15-packs,” Triantafellou says. “This will help exponentially grow our fresh foods and CPG (consumer-packaged goods) programs as consumers pick up other products while in our doors. I strongly believe the loyalty consumer is the most important consumer to be driving into our stores.”

“It has to be easy to find, and it has to be in the right location.”

Outside the cold vault, Triantafellou adds that Weigel’s uses case stacks on the c-store floor to highlight loyalty-program items they are promoting with a vendor partner. “There are different terms and conditions to who gets case stacks and who doesn’t, but we typically use them for promotional purposes or to combat traditionally heavy selling seasons of a particular brand by having extra inventory on the floor,” he says.

Whether it’s in the cold vault or on the c-store floor, the most proactive retailers are those who look outside of the c-store world but don’t stray too far from their consumer base.

“If your core consumer base isn’t going to buy probiotic sodas, don’t invest shelf space in probiotic sodas,” Friedman says. “Find the items that are as close to the current assortment you have that’ll work well with your consumer base, and then those are the items you really want to make your big bets on.”

If a lot of teens enter a store, “Then you want to have products that appeal to that age group or that socioeconomic demographic,” he says. “And if they’re not, then you’re going to want to know what makes sense.”

Source: CSP