2022 Midyear Report Card–A Mixed Bag

The current challenges facing the c-store industry — from inflation to supply chain issues to high gas prices — are impacting key product categories in varied ways.

After weathering a difficult 2020 as consumers stayed home during the worst of the COVID-19 pandemic, convenience store sales began to rebound in the first half of 2021 and by the time the calendar was ready to turn the page to a new year, almost all of the industry’s key product categories were on the upswing. According to the exclusive Convenience Store News 2022 Midyear Report Card, the story for this year so far is a bit different, with some categories still seeing positive momentum, but others feeling the negative effects of inflation, supply chain issues, continued staffing challenges, and high gas prices.

THE STATE OF CIGARETTES

During the first six months of 2022, both cigarette dollar sales and unit volume were down vs. a year ago. Sales were down 3.9%, while units were down more than double that (8.6%).

In 2021, total convenience store industry sales of cigarettes were flat, rising just 0.3%, while unit volume in the category declined by 6%, the largest drop in five years.

THE STATE OF OTP

In 2021, other tobacco products (OTP) had a better year overall than cigarettes. The first half of 2022 presented a similar scene for this category, with total industry OTP sales up 4.4% vs. a year ago, while units were down 1.8% for the same period.

The smokeless tobacco and pipes segments were the first-half standouts in the OTP category, posting both sales and unit volume increases. The e-cigarettes and papers segments also posted sales increases, but saw unit volume declines.

THE STATE OF PACKAGED BEVERAGES

The packaged beverages category had a good year across the board in 2021, following mixed results the previous year. The first six months of 2022, however, brought a unit volume decline of 1.3%. Dollar sales were still on the rise, albeit at a slower pace of 6.5% growth.

Energy drinks and enhanced water were the category standouts for the first half of this year, being the only segments to post both sales and unit volume increases. Sports drinks had the biggest percentage increase in sales, but saw a slight 0.1% decline in units.

THE STATE OF BEER

Sales of beer and malt beverages contracted in 2021 following strong pandemic-related growth the previous year. The contraction seems to be continuing, but leveling off somewhat, based on the numbers for the first half of this year.

Segment-wise, imported beer, super premium beer and flavored malt beverages are faring well in the beer category, posting first-half growth in both dollar sales and unit volume.

THE STATE OF CANDY

2021 marked a high point for the candy category’s total c-store industry sales and unit growth over the last five years. The first six months of 2022 brought sustained sales growth of 10.8% vs. a year ago. However, unit volume returned to negative territory, dropping 0.1%.

All segments of the candy category posted increases in dollar sales for the January-June 2022 period. Three segments also posted unit volume increases: candy rolls/mints/drops, gum, and bagged or repackaged peg candy. The rest of the segments saw a drop in units.

THE STATE OF SALTY SNACKS

Similar to candy, the salty snacks category also posted its highest c-store industry sales and unit growth in five years in 2021. The category is performing even better so far in 2022. First-half sales jumped 14.1% vs. a year ago, with unit volume rising 3.4%.

With the exception of two subcategories, all other segments of the salty snacks category posted first-half growth in both dollar sales and unit volume. The nuts/seeds and mixed salty snacks segments grew in dollar sales, but posted unit declines.

THE STATE OF GROCERY

Edible grocery dollars and units in the convenience channel grew in 2021, but that growth slowed compared to the height of the pandemic in 2020. The first six months of 2022, however, brought a resurgence to this category, perhaps fueled by consumers seeking to make fewer shopping trips to offset record-breaking gas prices.

C-store industry sales of nonedible grocery items were also strong during the first six months of this year, with sales increasing 7.8% vs. a year ago, and unit volume increasing 5.2%.

THE STATE OF GENERAL MERCHANDISE

Looking at the first six months of 2022, general merchandise is off to a shaky start in the c-store industry this year, with both dollar sales and unit volume declining. First-half unit volume was down 6.7% vs. a year ago, and sales were down 4.3%.

Only one segment of the category saw growth across both sales and units during the first half of this year: hardware/ tools/housewares. Most other segments were down in both metrics.

THE STATE OF HEALTH & BEAUTY CARE

Last year, the health and beauty care (HBC) category experienced its largest c-store industry sales growth in five years. The first half of 2022 brought continued HBC sales growth. Unit volume, however, retreated back into negative territory.

Segment-wise, the first-half standouts in the HBC category were vitamins/supplements, cosmetics, and other internal over-the-counter medications. These segments produced growth in both dollar sales and unit volume during the first six months of this year.

The exclusive Convenience Store News 2022 Midyear Report Card, compiled in partnership with NielsenIQ, looks at dollar sales and unit volume metrics for January through June 2022 to evaluate which product categories are gaining vs. losing amidst today’s challenges.

Larger Basket Sizes Drive In-Store Sales Despite Lower Trip Count

The average weekly sales per store for all nonfuel products in Q1 was on par with the same period in 2021 when gas prices were much lower.

STATE COLLEGE, Pa. — A new report found that convenience store sales were buoyed by nonfuel trips.

Despite record-high gas prices, inside sales at convenience stores have remained stable, according to VideoMining’s C-Store Shopper Insights (CSI) Tracker. The average weekly sales per store for all nonfuel products in the first quarter of 2022 was $53,704, which is on par with the same period in 2021 when gas prices were much lower. 

However, c-store traffic is still below pre-pandemic levels. In-store traffic for the first quarter of this year was down 17 percent relative to the first quarter of 2019, while the total store sales was up 2 percent for the same period.

Nonfuel Trips Drive Sales 

When it comes to consumers shopping for just essentials, convenience stores have benefited from not being too dependent on fuel customers for in-store sales.

The CSI Tracker found that a majority of the in-store sales in the channel came from customers who were not on a fuel trip. Nonfuel customers accounted for 72 percent of all in-store sales in 2021. This number varied based on the store location, but was as high as 80 percent for some well-run stores with wide foodservice options.

The company also noted that the pain at the pump will likely not help improve pump-to-store conversions. In the fourth quarter of 2021, the conversion rate for fuel customers was only 26 percent with 74 out of 100 fuel customers driving away without making any in-store purchases.

Shifting Trip Missions

C-store visits are highly mission-driven, with each trip usually serving a primary need. In order to help retail operators understand consumers’ primary c-store trips and how it has evolved over the years, VideoMining’s CSI Tracker program utilizes nine trip missions:

  • Refreshment
  • Snacking
  • Tobacco
  • Caffeine Boost
  • Meal Building 
  • Alcohol
  • Lottery
  • Grocery Shopping
  • Non-Food

VideoMining’s CSI Tracker program grouped all c-store trips based on the trip missions to analyze how the share of each trip mission has changed over time, especially over the long term. 

Using the trip mission framework, CSI Tracker compares the recent period, Q1 2022, with a corresponding pre-COVID times such as Q1 2019, to identify some key behavioral shifts beyond the pandemic.

Growth is Fueled by Alcohol Trips

According to the insights, the alcoholic beverage category is a highlight for retailers. The Alcohol trip mission had a solid gain of 15 percent in its share of store trips, with other trip missions like Refreshment, Meal Building and Snacking all posting strong gains in the comparison across three years (first quarter of 2022 vs. first quarter of 2019). 

Tobacco was among the trip missions that declined.

Some of these shifts in trip missions are based on emerging long-term trends — beyond the impact of pandemic — affected by consumer demands, store transformations, and new product innovations. For example, some of the alcohol trip growth can be attributed to sustained demand for Beyond Beer or Ready-to-Drink alcoholic beverages, which have become popular with younger consumers, including women, according to VideoMining.

Attracting More Convenience Trips

The combined effect of shifts in trip missions was an overall increase in the number of units purchased on each trip — increasing 8 percent from Q1 2019 to Q1 2022. As a result, the 23.4-percent increase in basket size across the same period was not based purely on inflation, VideoMining said.

According to the company, travel appetite and gas prices will have some impact on the channel, and convenience retailers can continue to do well if they attract diverse trip missions with targeted innovations and marketing rather than just focusing on the pump-to-store conversions.

Pennsylvania-based VideoMining helps retailers and consumer packaged goods manufacturers optimize retail performance and shopper experience by decoding in-store behavior using anonymous sensing and artificial intelligence.

Source: Convenience Store News

Welcoming Customers Back to Dispensed Beverages

By: Renee Covino

Hot, cold and frozen drink offerings at c-stores are adapting to meet the times.

NATIONAL REPORT — Have you hung a “Welcome Back” sign above your coffee bar, fountain drink station, and frozen slushie machines? These areas may have been hard-hit for many convenience stores that suspended self-serve beverages to prevent the spread of the novel coronavirus last year, but the time is ripe for renewal.

“Dispensed beverages are a valued offering to our customers. It continues to represent a healthy portion of overall transactions,” said Jim Rastetter, category manager of hot and cold dispensed beverage at Richmond, Va.-based GPM Investments LLC. The wholly owned subsidiary of Arko Corp. has grown through acquisitions to roughly 2,950 locations comprised of approximately 1,350 company-operated stores and 1,600 dealer sites spread across 33 states and Washington, D.C.

“We must adapt by staying engaged with customer expectations in this area,” he told Convenience Store News. “We expect 2021 to be an exciting year for dispensed beverages, and we are ready to welcome consumers back into the category.”

The Rules for Renewal

Industry experts say these are the key factors for the rebirth of dispensed beverages: 

  • Standardized sanitary procedures;
  • Single-serve condiments;
  • A contactless drink selection experience through interface or phone;
  • Touchless technology in water, ice and lid dispensers;
  • Valve guards/shields that fit over existing machines;
  • All-day programs, including fresh coffee;
  • A wide flavor assortment, inclusive of limited-time offers;
  • Additional blends in place of syrups;
  • Sustainable coffee blends;
  • Offering nugget or chewy ice;
  • A frozen flavor mashup menu; 
  • All plastic cups, eliminating foam;
  • Hologram displays above machines to generate excitement; and
  • A more premium experience overall.

One of the greatest customer expectations now is a sanitary beverage bar across the board, according to Rastetter. “Having a standard procedure in dispensed beverage program areas that is visible to customers is the greatest way to instill confidence,” he advised. “Routine monitoring and cleaning of the beverage bar is critical.”

This includes wiping down surfaces, keeping equipment in good working order, and keeping areas clear of clutter — together, they are the best way to prevent contamination.

“The presentation of the program and cleanliness of these stations will continue to be paramount past COVID,” echoed Emily Wood Bowron, vice president of strategic marketing for Moody, Ala.-based Red Diamond Coffee & Tea.

Other ways she sees the category evolving are providing single-serve condiment options, such as single-shot creamers and individual sugar sticks or packets; and offering an even greater variety of choices.  

“Variety and options are taking a front-seat more than ever,” Wood Bowron said. “Customers want to get exactly what they want, how they want it, when they want it, so capitalizing on customizable options is not only great for customer engagement, but it also will help promote repeat visits.”


Customers expect diversification and choice at dispensed beverage stations and coffee bars, added Rastetter. Offering engaging limited-time offers and unique flavors is important, and so is the shift from cubed ice to nugget or chewy ice. “Consumers have begun to expect this popular ice when pouring a drink,” he relayed.


Meeting customer demand for dispensed beverages these days may also mean having a choice of flavored iced teas at 10 a.m. and a fresh coffee option at 3 p.m. Making sure all dispensed beverages in the program are always fresh and of a high quality will engender trust and continued exploration outside of standard dayparts, according to Wood Bowron. “Breakfast, in particular, has become an all-day event, and consumers still look for healthier alternatives to soda,” she noted.

Rastetter agrees that dispensed beverages should be treated as an all-day program by c-store operators. “Cold and frozen beverages continue to have strong sales during lunchtime and into the evening,” he reported, pointing out that offering fresh coffee all day is easier than ever with the introduction of bean to cup. “These programs are easy for c-stores to execute and complement many of the snack items we sell.”

The fewer steps a customer must take to mix the perfect beverage, the better.

“Instead of just offering a regular and a decaf coffee with multiple syrups, consider adding a flavored coffee like hazelnut and another limited offering to the lineup, so customers touch fewer surfaces and deal with fewer handles and levers to create a flavored beverage,” Wood Bowron offered.

In tandem with the demand for a high cleanliness level, touchless and contact-free technology is on the rise and more available from varying machine suppliers.

For instance, Coca-Cola Freestyle launched a “pour by phone” contactless experience powered by Amazon Web Services. A series of signals and steps take place in the cloud, verifying that each phone is connected to the right machine, with only in-stock beverages shown as flavor options. Pours then start and stop with the touch of a button on the phone screen, resulting in a “magical experience for the user,” according to a company spokesperson. By the end of 2020, all U.S. Freestyle machines were equipped with this touchless technology.

Source: Convenience Store News

How to Grow the Candy Category in 2021

By: Danielle Romano | Managing Editor

WASHINGTON, D.C. — A tumultuous 2020 shook up the food retail space as the global COVID-19 pandemic dictated where and how consumers engaged with food and beverage.

During the National Confectioners Association’s (NCA) annual State of the Industry Conference, held virtually on March 9, the trade organization delivered insights on how the coronavirus prompted changes in shopping behavior, such as fewer trips, larger baskets, store switching, and record online shopping.

“This is our chocolate and candy industry family reunion. After all, COVID-19 kept us apart, but chocolate and candy kept us together,” NCA President and CEO John Downs said in his keynote speech. “We are competitors on the shelves, but united in finding solutions. In this time of chaos, we exceeded our customers’ expectations. This past year has been accelerated resilience for all of us, and resilience is the word I use to describe our industry. When the going gets tough, the tough eat gummy bears.”

The virtual conference served as a backdrop for the release of NCA’s Sweet Insights: 2021 State of Treating report, which is based on consumer studies conducted by NCA and 210 Analytics in September and December 2020 among 1,500-plus shoppers aged 18-75.

Presented by Anne-Marie Roerink, founder of 210 Analytics, the 2021 State of Treating report revealed that despite the changes brought on by the COVID-19 pandemic, 2020 confectionery sales topped $36.7 billion, with chocolate experiencing 4.2 percent growth and non-chocolate confectionery experiencing 2.9 percent growth. 

Adjusting to a new normal, 61 percent of consumers said they changed their confectionery purchases. This was reported by 47 percent of baby boomers, 68 percent of millennials, 57 percent of Gen Xers and 76 percent of Gen Zers. When it came to how these consumers shifted their confectionery purchases, 44 percent said they bought different pack sizes, 40 percent bought different items, 41 percent bought different brands, and 36 percent bought at different stores.

Household penetration, at 98.4 percent, was unchanged in 2020. However, as consumers waited more days in between store visits, product trips were down 6.3 percent. Consumers, though, loosened their wallet strings with spending per trip jumping 7.6 percent.

Because of the shelter-in-place mandates put into effect early on in the pandemic, convenience stores benefitted from consumer mobility and saw a 1.7 percent increase in chocolate sales and a 4.4 percent increase in non-chocolate sales last year.

Growing the Category in 2021

After sharing the findings of the 2021 State of Treating report, Roerink provided State of the Industry Conference attendees with strategies on how to grow the confectionery category this year.

Her 2021 hit list includes:

  • Compete in e-commerce by delivering a true omnichannel experience;
  • Leverage and grow cross-merchandising and purchasing;
  • Underscore candy’s role in emotional well-being;
  • Proactively plan for economic pressure;
  • Reinforce new behaviors and capitalize on new buyers;
  • Build brand awareness and affinity;
  • Retool the front end of stores; and
  • Be transparent because sustainability drives interest and dollars.

The full 2021 State of Treating report is available here.

Based in Washington, D.C., NCA is the trade organization that promotes the unique role of chocolate, candy, gum and mints in a happy, balanced lifestyle and the companies that make these special treats. Through advocacy and regulatory guidance, communications, industry insights, and retail and supply chain engagement, NCA helps create an environment that enables candy makers to thrive. Its membership is made up of manufacturer, broker and supplier companies.

Source: Convenience Store News

Americans Are Consuming More Breakfast Foods During the Pandemic

MINNEAPOLIS — Consumers are eating more breakfast foods than normal during the COVID-19 pandemic and taking this trend beyond the morning daypart.

According to a recent nationwide online survey conducted by The Harris Poll and commissioned by General Mills Foodservice, nearly one quarter of Americans report eating more breakfast foods during the COVID-19 pandemic than they normally would (24 percent).

Among the top five favorite breakfast items are eggs (72 percent), cereal and pancakes (both 51 percent), bakery items such as doughnuts (36 percent), cinnamon rolls (34 percent) and muffins (33 percent).

Additionally, nearly four in five Americans (79 percent) have eaten breakfast foods outside of the traditional breakfast meal in the past year.

“The recent poll shows that people are eating more breakfast foods during the pandemic and enjoying them for lunch, dinner and even dessert,” said Mark Harmon, a consumer insights analyst for General Mills Foodservice. “We also learned that consumers are eager to return to restaurants to enjoy their favorite breakfast and brunch foods, signaling that breakfast could be all the buzz on spring and summer menus.”

According to the poll, consumers who are eating more breakfast foods during the pandemic over the past year are doing so because they feel they have more freedom in what and when they eat since they have more time in their schedule (52 percent), they’ve been craving their favorite breakfast foods (37 percent), they want to eat something fun that brings them joy (33 percent) or breakfast favorites remind them of childhood (24 percent).

Other findings include:

  • Consumers have a deep affection for breakfast, with three in five Americans (62 percent) saying breakfast is their favorite meal of the day and more than half (56 percent) saying they love breakfast food more now than they did a year ago.
  • More than three-quarters of respondents (79 percent) have eaten breakfast foods for meals other than breakfast in the past year with more than half (59 percent) saying they have eaten breakfast foods for dinner, 49 percent have enjoyed breakfast foods for lunch and 20 percent have eaten breakfast items for dessert.
  • Three-quarters of Americans look forward to eating breakfast/brunch at their favorite restaurant once the pandemic is over with more than one third (36 percent) saying they would like to be able to purchase breakfast/brunch meal kits (e.g., biscuits and gravy, pancakes) or ”take and bake” breakfast items (e.g., cinnamon rolls, muffins) to cook and bake at home from their favorite restaurant.
  • Sixty-six percent said they love creative twists on breakfast menu items.

“Consumers’ love of breakfast is strong, giving chefs and foodservice operations the chance to reimagine breakfast,” said Harmon. “For instance, consumers may not have breakfast for dinner in their regular rotation of eating, but they may be tempted to splurge on it for a memorable experience.”

General Mills Foodservice and Pillsbury, its premier baking brand for foodservice professionals, offers these tips to retailers to boost breakfast business:

  • Serve breakfast all-day with a special menu of morning favorites or a signature breakfast item-of-the-day.
  • Celebrate “brinner” with a limited-time offer or buy-one-get-one-free breakfast menu.
  • Get creative with menu items that feature a breakfast flair, such as a grilled cheese doughnut, savory doughnuts or pancakes, waffles as a sandwich carrier.
  • “Plus up” traditional breakfast foods and give them a new twist, such as biscuit avocado toast, smoky mac & cheese waffles, cinnamon roll waffles or Fiesta French toast.
  • Introduce a menu of “bresserts” or dessert items made from traditional breakfast items, like cinnamon roll cobbler, strawberry scone shortcake, cereal-flavored ice cream waffles sandwiches, birthday cake pancakes.
  • Offer tempting “take and bake” options for breakfast foods.
  • Bundle breakfast foods together for a family brunch meal kit, including biscuits and gravy, pancakes with sausage or bacon and fresh fruit, breakfast sandwiches and yogurt parfaits.

The Harris Poll commissioned by General Mills Foodservice was conducted online from Feb. 11-16 among 2,038 U.S. adults ages 18 and older.

Headquartered in Minneapolis, General Mills Convenience & Foodservice serves the convenience, foodservice and bakery industries. Its distinguished brand portfolio includes Big G Cereals, Yoplait, Nature Valley, Gold Medal, Pillsbury, Chex Mix, Bugles, Gardetto’s and Annie’s.

Source: Convenience Store News