Circana Predicts Modest Food, Beverage Growth in 2024 After 3-Year Decline

By: Chuck Ulie | November 8, 2023

Outlook expects beverage, deli categories to perform best

Expect modest food and beverage volume growth in 2024 after three consecutive years of volume declines, according to a new outlook report from Circana, the Chicago-based company that was formerly IRI and The NPD Group.

“Amid shifting consumer preferences and evolving market dynamics, our food and beverage outlook not only highlights key growth opportunities for 2024 but reveals a cautiously optimistic outlook as we emerge from a myriad of challenges that the industry has faced over the past several years,” said Sally Lyons Wyatt, executive vice president and practice leader at Circana. “With continued innovation and adaptability, retailers and manufacturers will be poised to position themselves for success in the coming year and beyond.”

The report points to a more favorable landscape as several headwinds that weighed down 2023 are expected to recede, Circana said.

High inflation is anticipated to ease considerably next year, and the impact of increased mobility on retail food and beverage consumption will likely be less pronounced,” the company said. “In addition, our research shows that several factors will impact food and beverage growth throughout 2024, including an improving macroeconomic environment and growing promotional investments.

Circana predicts the beverage and deli sectors will continue outperforming overall food and beverage unit sales in 2024. “One factor likely driving beverage growth is an increase in health-conscious consumers seeking more protein and energy options in their diet,” the company said. “Another likely factor fueling beverage sales increase is that it has had more innovation than other departments, which delivered excitement and encouraged category exploration.”

In the deli aisle, convenient grab-and-go options will likely continue driving sales as consumers prioritize meal options that address diverse needs, Circana continued.

“Shifting consumer preferences in other departments throughout the store will likely put pressure on unit growth,” Circana said. “To succeed in 2024, our research indicates that perimeter aisles will need to optimize turnkey options for on-the-go consumers.”

Meanwhile, in the frozen department, retailers should re-evaluate assortments in the store and online to ensure there’s a variety to meet consumers’ needs.

“Consumers will likely look to the center store for solutions that deliver convenience, quality and value,” Circana said.

Circana’s 2024 food and beverage outlook was developed using econometric demand models leveraging Circana’s Demand Forecasting Platform. It analyzed more than 100 variables to test hypotheses for each model, supported by a machine-learning algorithm and more than 500 random forest models to determine the most important causal factors. It finalized the models based on their best fit, significance levels and intuitive insights. And it developed forward-looking input variable assumptions using historical trends and insight from industry experts. This platform allows Circana to run scenarios and estimate future sales, breaking them down by their driving factors.

Source: CSP

McLane Earns Service Provider of the Year Award From 7-Eleven Franchisees

By: Greg Lindenberg | September 29, 2023

NCASEF recognizes distributor as a ‘committed and fully engaged’ vendor partner

McLane Co. Inc. has received the Service Provider of the Year award from the National Coalition of Associations of 7-Eleven Franchisees (NCASEF) at the group’s national trade show in Las Vegas. “This remarkable accolade is awarded to the partner exhibiting exceptional and unwavering service to 7-Eleven franchisees, franchise owners associations (FOAs) and the National Coalition in its entirety,” NCASEF said.

The coalition’s board members decided unanimously in favor of McLane, lauding the company as a “committed and fully engaged” vendor partner.

“I have had the distinct pleasure of working closely with McLane over the years,” said Sukhi Sandhu, chairman of NCASEF. “Their steadfast dedication and commitment to quality, efficiency and the success of our franchisees has made them an invaluable partner to us. We are proud to present McLane with this well-deserved award, and we look forward to shared success in the years to come.”

McLane has worked with 7-Eleven for 56 years and assists in servicing more than 9,200 7-Eleven locations spanning 38 states, NCASEF said. McLane completes nearly one million deliveries to 7-Elevens each year, carrying a wide range of products, from cold beverages, food and candy to health and beauty essentials.

“We are honored to receive this award and excited to continue growing our partnership with such an exceptional retailer,” said Vito Maurici, McLane’s customer experience officer. “Our trusted partnership with 7-Eleven is something we’re incredibly proud of at McLane. Our amazing team works hard to bring the best in service, quality, efficiency and customer care, and we thank our teammates who consistently go above and beyond to ensure our partners’ success.”

Irving, Texas-based 7-Eleven Inc. operates, franchises or licenses more than 13,000 7-Eleven convenience stores in the United States and Canada. In addition, it operates and franchises SpeedwayStripesLaredo Taco Company and Raise the Roost Chicken and Biscuits locations. The company is No. 1 on CSP’s2023 Top 202 ranking of U.S. convenience-store chains by store count.

NCASEF represents more than 7,400 7-Eleven franchised convenience stores in the United States. Founded in 1973, the Universal City, Texas-based coalition is made up of 41 separate independent franchise owner associations with more than 4,400 7-Eleven operators as members.

Founded in 1894, McLane is one of the largest distributors in America, serving convenience stores, mass merchants and chain restaurants. With headquarters in Temple, Texas, McLane has more than 80 distribution centers across the country, employs more than 25,000 teammates, and delivers to nearly every zip code in the United States. McLane is a wholly owned subsidiary of Berkshire Hathaway Inc., Omaha, Nebraska.

Source: CSP

How to Make Sparkling Beverages Shine in the Cold Vault

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

McLane Co.: Growing Foodservice and Building Relationships

By: Steve Holtz | September 15, 2023

Distributor is investing in new hires to energize its ‘Fresh’ offering

McLane Grocery President Chris Smith talks like he knows he’s on to something good when he discusses the new foodservice effort from the distributor.

“The education that I’ve gotten in terms of various types of cheeses and how far the cheese should actually extend when you pull it from your mouth on a piece of pizza … that has been pretty interesting,” he told CSP Daily News during an exclusive interview at the new McLane Engage tradeshow and conference. “I think everything related to our fresh offering is much improved.”

That “fresh offering” is McLane Fresh, a new foodservice program unveiled on the tradeshow floor in late August. It’s an expanded foodservice offering that includes a new coffee program, a new pizza program, hot sandwiches, and other grab-and-go options from McLane’s Central Eats brand.

“We have really doubled down our investments and capabilities related to McLane Fresh,” Smith said, referring to two new hires made this year.

Jon Cox came to McLane in March in the newly created role of vice president of retail foodservice. He was given the directive to create a framework in which the distributor could build a quality foodservice program.

“The directive was to answer some questions: What’s going to make us different five years from now?” Cox told CSP. “Why choose McLane?”

“We want to meet you on your foodservice journey wherever you are, whether that’s the roller grill or a full-service program.”

Just a matter of months into that five-year journey, Cox said the starting point was creating a point of entry, something McLane could build on and grow.

“McLane Fresh is an evolution of McLane Kitchen,” Cox said. “It’s the evolution of where the customer is going [and] where McLane is going.”

To help him get there, Cox invited former coworker Farley Kaiser to join the effort as senior director of culinary innovation. Cox and Kaiser had both previously worked for GetGo Café + Market. There, they connected on a common goal: to create consumer trust that they can “get great pizza or a sandwich.”

“If you do that at one store, it benefits all convenience stores,” Kaiser said, “And at McLane, we have the opportunity to do that in hundreds of c-stores.”

Key among that effort are the new coffee and pizza program, which come complete with new products and equipment, should a retailer need it.

The coffee program, dubbed CupZa! is built on bean-to-cup machines from Franke, as well as espresso, multiple cold-brew options, and brewed tea and lemonade.

The pizza—which will formally be christened during the NACS Show in October—launched in Dallas with two styles—four-cheese and pepperoni, with more to come.

In fact, Cox promises there’s more to come across the McLane Fresh portfolio.

“I’m excited about McLane Fresh,” he said. “McLane Fresh, as you see it here, came together in just 18 weeks of a five-year journey.”

To continue the process, Cox said he’s got additional roles to fill on his team.

“What I see five years from now [is] relationships,” he said. “We want to meet you on your foodservice journey wherever you are, whether that’s the roller grill or a full-service program.”

Smith says he’s eager to watch the progress.

“I do think that when we take a look five years from now, the things that we’re doing now are going to impact the business and our customers and our suppliers,” he said. “And it’s something that I think we’re really, really excited about.”

Based in Temple, Texas, McLane Co. Inc. is one of the largest distributors in America, serving convenience stores, mass merchants and chain restaurants.

Source: CSP

6 Unexpected Line Extensions Unveiled at McLane Engage

By: Steve Holtz | September 1, 2023

McLane Co.’s new Engage trade show offered a sneak peek at some of the new products and updates that will be unveiled in more detail during the NACS Show in October. And the volume of them suggests the supply chain-driven pauses in innovation caused by the pandemic are behind the industry.

Here’s a look at six product innovations that could drive convenience-store sales in the next year …

Reese’s Caramel Big Cup

Following on the success of Reese’s Peanut Butter Cups filled with Reese’s Puffs, potato chips and more, this year’s innovation from the Hershey Co. is the Caramel Big Cup. A formal rollout will come in time for the NACS Show in October. Also coming from Hershey Co., new variations on Kit Kat, Hershey’s and Cadbury chocolate bars, and Ice Breakers Ice Cubes gum.

Dave’s Killer Bread Organic Snack Bar

After giving organic whole-grain bread a cool makeover under the Dave’s Killer Bread brand, Flowers Food has extended the brand to a line of Organic Snack Bars, now sized for single-serve sales in 1.75-ounce packaging. The bars are available in three flavors: Cocoa Brownie Blitz, Oat-rageous Honey Almond and Trail Mix Crumble.

Deli Express XXL

E.A. Sween Co. has repackaged it Deli Express XXL line of sandwiches in kraft paper, making them ideal for merchandizing in a hot case or cold case. The line of 9-ounce-plus sandwiches is available in BBQ Rib, Chicken With Cheese and Char-Broil Burger With Cheese.

Chex Mix Remix

General Mills is putting a twist on Chex Mix with a new Remix line extension. Cheesy Pizza and Zesty Taco flavor profiles are coming to market nationwide late this summer. Meanwhile, the original Chex Mix brand gets a sweet turn with a new Muddy Buddies made with Funfetti frosting-coated Chex cereal.

Skippy P.B. Bites

Hormel Foods has partnered with the Girl Scouts of America to create three new flavors of its Skippy P.B. Bites based on popular girl Scout cookie flavors. Repackaged in stand-up pouches, the new flavors include Chocolate Peanut Butter, Coconut Caramel and Adventurefuls.

Spicy Meat Snacks

And on the heels of Jack Link’s success with its Doritos Spicy Sweet Chili beef jerky, watch for a variety of spicy takes on meat snacks. Among those being sampled during the McLane Engage trade show:

  • Jack Link’s Spicy Red Pepper Beef Jerky
  • Slim Jim Chile Limon
  • Country Archer Fuego Smoked Sausages

Kinder Chocolate

After years of primarily marketing Kinder products to children with toys and quirky packaging, Ferrero has released a more adult chocolate offering. Kinder Chocolate is a “milk-chocolate treat with chewy milky filling.” The new offer comes in 3.0-ounce and 1.8-ounce sizes of individual wrapped chocolate bars.

Source: CSP

4 Beverage Strategies Quenching the Thirst for Growth

By: Rachel Gignac | August 9, 2023

The dynamics of the convenience-store customer are back to pre-pandemic levels, with 84% of consumers visiting c-stores once a month and 63% once a week. And 60% enter the store nearly every time they purchase fuel, according to Technomic data.

Of those customers, 55% purchased packaged and prepared beverages once a week and 74% purchased them once a month.

There has also been an increase in female visitation to c-stores after the pandemic leveled out, said Donna Hood Crecca, principal at Technomic, Chicago, at CSP’s Outlook Leadership Conference in Rancho Palos Verdes, California.

Midyear 2023 data shows that energy drinks hold the top share of sales, at 35%. Carbonated soft drinks (25%), water (14%) and sports drinks (11%) are next in line. Volume did not increase as much due to inflation but spend is up, Crecca said.

“This is a category that’s just so vital to the health of the overall store, the total business, and we’re seeing consumers out and about again so that engagement and spend on beverages is definitely increasing,” she said.

Resist Channel Blurring

Competition is evolving, and it’s coming from a lot of sectors outside of the c-store industry, Crecca said.

Retail segments have increased their focus on single serve packaged beverages. Dollar stores, for example, are the fastest-growing channel within retail overall. Drug and grocery stores also offer cold beverages by the register.

Beyond dollar, drug and mass stores, other channels are going all-in on beverages.

“Wherever there’s an outlet next to a cash register, they’re probably going to put in a reach-in refrigerator for packaged beverages,” said Crecca.

Fast food locations are starting to have refrigerators for on-the-go packaged beverages. Even stores that aren’t beverage destinations, like Home Depot, are competition, she said.

“There was a time when convenience stores really owned single-serve beverages, but right now, we’ve got other types of retail that are gaining traction in this space, and you’ve got that channel blurring,” said Crecca.

The coffee/cafe segment overall was up 13.2% in sales last year, with Starbucks up 14.5% and Dunkin up 8.3% in total sales, all rebounding post-pandemic.

Don’t Knock the Drive Thru

Emerging quick-service drive thrus are a big disruptor, said Crecca, and they are becoming increasingly important. About 45% of consumers are more likely to visit a location with a drive thru for a beverage occasion, according to Technomic data. New stores are emerging that offer beverages as the main menu item.

Swig, a Saint George, Utah-based drive-thru soft drink quick-service restaurant (QSR), has 45 locations. The concept is a customizable combination of fountain soda, flavored syrup, cream and other toppings over pebble ice. It also offers energy soft drinks, refreshers, hot cocoa and snacks.

Swig’s sales were up 24% in 2022, and an 18% increase in unit count shows that the sales growth isn’t just from opening new locations.

Another chain entering the space is HTeaO, a Midland, Texas-based iced tea QSR that has 26 tea varieties, seasonal flavors, all-natural ingredients and its own water plant with a special filtration system. With 62 locations, 44 locations in the pipeline and franchise opportunities, “they are going to explode,” said Creed.

Even with the threat of these unique stores, “Convenience is the only channel that’s positioned to satisfy all consumer beverage need states,” said Crecca. “There’s an opportunity and an imperative here to strategically leverage both beverage formats so that you can be the beverage destination in your markets.”

Other channels can’t offer one-stop-shopping, she said. Lean in on that.

When a consumer chooses to go to a c-store, they still have an abundance of stores to choose from. Creed recommends reassessing how these priorities are being met: convenience location, cleanliness, organized, beverage taste, overall value, competitive price, quality of beverages and variety of beverages.

Respect All Engagement

With the highest level of engagement in both formats of c-store beverage offerings, Gen Z is particularly important to beverage sales.

“The competition is just that much more intense for them,” said Crecca.

Earning their beverage loyalty will drive growth in the future, she said. Larger cup sizes, quality ice and customization options will increase their value perception. While Gen Z’s packaged and foodservice beverage purchases are both driven by cravings, foodservice beverages are more often an impulse buy for a treat.

Gen Z’s personal beverage portfolio is the most diverse across the generations, and the age group gravitates toward more unique beverages and those with functional benefits. They value nourishment, promoting wellness and energizing products instead of the concept of taking food and drink away.

“It’s important to engage them now so you can sharpen your competitive edge and continue to grow your sales through the future,” said Crecca.

Hispanic/Latinos are also frequent visitors to convenience stores with 60% purchasing nonalcohol beverages at c-stores once a month or more. Hispanic consumers over index on purchasing refreshing, flavorful and cultural beverages, according to Technomic, including juice-infused water, horchata, lemonade, plant-based milks, hot teas, frozen drinks, iced coffee and flavored regular hot coffee.

“They have this interest in flavored carbonated soft drinks,” said Crecca. “Is there opportunity to increase what you’re offering there?”

The Hispanic population is increasing across the country, and Crecca suggests understanding how operating markets are changing. Make sure you’re relevant, she said, with additions like bilingual signage.

Leverage Beverage Programs

Creativity within a beverage program might look different for everyone.

Savannah, Georgia-based Parker’s highlights what it’s known for in its beverage subscription-chewy ice.

Consumers also see value in bundles, Crecca said, so offering three-fors or two-fors can work and give consumers chances to try new flavors. Another idea is pairing a beverage with a signature foodservice item.

Loyalty programs are evolving to more engaging app-driven programs, and this could be an opportunity to offer exclusivity.

“Can [consumers] get a sample of a new flavor that’s coming out before everybody else does? Is there something exclusive on the beverage front that you can offer as a loyalty component?” said Crecca.

Source: CSP

Trends and Data From the Sweets & Snacks Expo

By: Rachel Gignac | July 25, 2023

Sustenance for the year ahead

The Sweets & Snacks Expo in Chicago this May revealed trends in the form of merchandising strategies and innovative products. CSP found snack and candy companies combining flavors in new ways, expanding well-known products into new territories, mixing sweet and salty and more. Read on to find out what retailers can do to give consumers what they want.

Diversifying Sizes

In 2022, 48% of consumers said they were looking for snacks that came from multi- or variety packs, up eight points from the previous year, Sally Lyons Wyatt, executive vice president and practice leader at Chicago-based research firm Circana, said at the 2023 Sweets & Snacks Expo.

Multipacks’ higher price point may be more expensive up front but end up being cheaper when comparing price-per-serving to that of smaller sizes. If consumers can afford that initial expense, they are investing, said Wyatt. If not, smaller sizes need to be available for them because, for example, nonchocolate candy, potato chips and tortilla chips are telling a different story. In these categories, smaller sizes performed well.

“You need to have an entry point for consumers that cannot afford to buy the multipack,” said Wyatt. “Those entry points are what helped nonchocolate and potato chips [increase sales in smaller sizes].”

While novelty candy unit sales were up 29.1% in c-stores in 2022, according to Circana, the segment is also leveraging the strategy of reaching more shoppers. 

CandyRific, for example, is trying to reach more consumers with lower priced items, said Jeff Greenwald, east regional sales director at CandyRific, Louisville, Kentucky. The brand’s new mini backpacks—offered in Disney, Avengers and Sweet Squad varieties—are priced around $3.99, cheaper than its fans and dispensers.

“You need to have an entry point for consumers that cannot afford to buy the multipack.”

Winning Flavors

The four flavor profiles with the most growth in unit sales in 2022 were sweet, tangy, blends and spicy, according to Circana data.

“Hot and spicy, for over a decade, continues to be a hot commodity,” said Wyatt. “But what has happened is, with more consumers snacking throughout the day, their palates are looking for a variety of different flavors of snacks. So when you try to do something a little different, you have a blank canvas.”

Furthermore, while boomers are more likely to practice planned purchasing, millennials and Gen Z are more adventurous, said Anne-Marie Roerink, president of 210 Analytics, San Antonio, Texas, in a Sweets & Snacks Expo education session. Younger individuals enjoy trying candy in flavors that are new to them, from brands they weren’t previously aware of and from countries across the globe.

“With more consumers snacking throughout the day, their palates are looking for a variety of different flavors of snacks.”

Products Tell the Story

Within these new flavor trends, one took the spotlight: cinnamon.

Cinnamon-flavored and -dusted snacks spotted at the Expo include the new Kit Kat Churro from The Hershey Co., Hershey, Pennsylvania, and Cinnamon Dunkaroos from Minneapolis-based General Mills. The Hershey Co. also created Dot’s Homestyle Cinnamon Sugar Pretzels to combine salty and sweet flavor profiles in a new way. And Apple Cinnamon Chunk Nibbles, a nut-free crunchy snack mix featuring freeze-dried cinnamon apples and cinnamon crumbles from Troy, Michigan-based Chunk Nibbles, won best in show in the Most Innovative New Product Awards by the National Confectioners Association, the host of the Sweets & Snacks Expo. Packaged popcorn was another hit this year. Consumers have left freshly popped popcorn for the movie theatre and placed value on packaged popcorn since the pandemic began, vying to enjoy the cinema experience at home.

Nine out of 10 brands in the popcorn category saw sales increase in 2022, according to Snac International’s 2023 State of the Industry Report. Seven out of 10 experienced a double-digit hike, ringing in an overall 13.1% growth for the $1.7 billion market.

Drizzled popcorn was around every corner, with Reese’s Popcorn from Hershey, featuring peanut butter and chocolate drizzle. Snax-Sational’s Cookie, Candy and Cereal Pop affixes classic treats, such as Oreo, Chips Ahoy!, M&M’s, Twix, Snickers, Sour Patch Kids, Nutter Butter, Cocoa Pebbles and Fruity Pebbles atop the salty snack. Drizzilicious, a drizzled popcorn brand made by Snack Innovations Inc., Piscataway, New Jersey, is expanding the offerings in this space by launching two new flavors, Cookies & Cream and Chocolate Chip.

Nonchocolate chewy candy was down 1.4% in convenience-store unit sales in 2022, according to Circana year-end data.

One of the only four brands with growth in the space was Ferrara’s SweeTarts, up 6.5%. During the trade show, Ferrara debuted its new Sweetarts Mega Ropes, chewy candy ropes with a tart filling.

Other bite-and-tear, rope-shaped gummy snacks include Mike and Ike Filled Ropes, Hot Tamales Filled Licorice Ropes and Peeps Filled Ropes, all from Just Born, Bethlehem, Pennsylvania.

The Shopping Experience

Products that lend well to at-home merchandising have become attractive.

“People want to have experiences that they used to have outside of the home, inside of the home,” said Leigh O’Donnell, head of shopper and category insights and solutions at London-based market research firm Kantar at the trade show.

The Reese’s pantry pack, for example, is a pack of individually wrapped Reese’s made with several access points, ideal for easy access in the refrigerator, countertops or pantry.

Ferrara debuted flexible packaging for its SweeTarts Ropes that can be displayed horizontally or vertically.

Source: CSP

4 Stand-Out Tactics in General Merchandise

By: Rachel Gignac | June 16, 2023

Tech accessories, wellness products and more trends in the category

Looking beyond the data, retailers as well as suppliers agree on certain trends, strategies and seasonal opportunities in the general merchandise category. Read on to find out what they are from experts at Pilot Co.Parkland USA and more.

Switch Into Summer Mode

With more travel and outdoor activities starting up with the changing of the seasons, Pilot focuses on products that go hand-in-hand with what people are doing.

Sunglasses, sunscreen, umbrellas and other outdoor-related items perform well as people start to venture outdoors after winter, says Reising.

With so many products to keep track of, “it’s important for retailers to make sure they have a program supported by field service representatives to keep the right styles and products in stock to meet consumer demand,” says Hayley Fry, senior director of marketing at Lil’ Drug Store Products.

Reps visit stores at regular intervals to organize and clean up displays, check in on product assortments and place orders for low inventory items for each individual store based on what is selling well, Reising says.

Multiply Merchandising

Having secondary, temporary displays is essential for keeping popular items in stock during their peak season and raising awareness among consumers that the products are available, says Reising.

“Sunglasses, for example, can have their permanent racks, as well as temporary displays on the counter during the summer months,” he says. “This is also a great vehicle for trendier styles. We are launching a temporary display with the trendy, retro ‘90s-style glasses that are popular with younger consumers this summer.”

Parkland utilizes spinner racks for “those in-and-out items that change seasonally,” Sullenger says.

General merchandise supply has had “huge improvements in international shipping compared to the past few years,” says Fry. “Supply continues to be a concern, but manufacturers everywhere are finally starting to catch up. Over the counter drug manufacturers have invested in a more robust supply chain, and we see a much more positive outlook in the second half of 2023.”

“Having secondary, temporary displays is essential for keeping popular items in stock during their peak season.”

Work on Wellness

Consumers are becoming increasingly proactive about their health, says Fry, of Lil’ Drug Store Products, but wellness products are being underserved in the convenience channel.

Lil’ Drug Store Products has excitement toward Olly—a gummy vitamin brand that aims to help with the mental health struggles of young people.

“We’re working with them to bring on-the-go sized packs of their top products to c-store, with supplements for sleep, stress and immunity in convenient sizes and c-store friendly price points,” Fry says.

Similarly, Sullenger has seen growth in supplements for energy, rather than a pure vitamin supplement.

Source: CSP

Convenience Leads Tobacco Sellers, But Other Channels Poised to Pick Up Volume

By: Christine Lavelle | June 13, 2023

Dollar stores show legs with cigarettes, mass merchandisers grow cigars sales

When it comes to satisfying a nicotine craving, convenience stores are still the leading sellers by a wide margin, but data analysts say other channels may be capturing some shoppers and poised to pick up some additional volume.

“We’re seeing some tobacco growth in dollar stores, and it appears to us that dollar stores have refined their product selection to appeal to shoppers most interested in the low-priced items in the category, such as deep-discount cigarettes and the deep-discount moist categories,” said Don Burke, senior vice president of Pittsburgh-based Management Sciences Associates, a data analysis firm that tracks manufacturer shipments.

He also sees consumers challenged by inflation and higher gasoline prices, turning to tobacco outlets that typically sell products at a lower price.

“But convenience-gas continues to do OK because there are so many convenience stores and it’s easy to pop into one to purchase tobacco,” he said.

Smokers Seeking Alternatives

Modern oral nicotine (MON) is a potential growth opportunity for tobacco outlets, Burke said, as many have not yet added the segment. When c-stores were adding modern-oral products, the increased distribution drove category growth at a remarkable rate. Those numbers have attenuated.

“Today, when we look at same-store modern-oral performance in the convenience channel, there continues to be solid growth, although typically more in the single-digit range,” he said. “When you’re building distribution in a trade channel, there is often very strong growth levels.” Burke concludes it is likely the companies that manufacture MON products will begin to build distribution in other trade channels to again achieve strong gains in their business.

Many smokers have been seeking alternatives for years, and it’s no surprise that other tobacco products (OTP) are getting traction.

“Both retailers and the tobacco industry are facing similar moments of disruption,” said Sam Dashiell, senior specialist, U.S. communications for New York-based Philip Morris International. “Today, there are a growing number of new alternatives on store shelves and more innovations on the way for America’s 31 million adult smokers—from nicotine pouches to e-vapor and others—that are better options than continuing to smoke.”

Billy Colemire, director of marketing for Stinker Stores, agrees. “The bright spot for us is OTP,” he said. Traditional tobacco and cigarette sales have continued to decline, he said, with high gasoline prices being an added blow for consumers. “People have less disposable income, and we lost some customers to smoke shops,” he said.

The 110-store Stinker Stores chain based in Boise, Idaho, has seen a lot of success with flavored vapes, as well as higher margins by working with brands that are not part of major tobacco companies. In May 2022, he said, “we launched a lot of new flavored vapes working through some brands that you don’t usually see in a lot of convenience stores.”

By partnering with national distributor C-Store Master of Huntsville, Alabama, the chain can pivot quickly as flavor preferences change. “Something that was hot last quarter might not be as hot next quarter,” he said. Using C-Store Master’s scan-based inventory system, the retailer can avoid tying up capital in inventory or distribution tracking.  

“We’re starting to see a lot of customers shift more into that flavored-vape space because they know you can get more puffs out of that compared to those traditional sticks,” Colemire said. His newest stores also have space for a 15-foot back bar, so he can dedicate a 3-foot section separate from Big Tobacco contracts.

Colemire said his goal was to sell $1 million worth of products in the first year across all stores. “And we’re closing in on $2 million in sales with a month and a half to the year mark,” he said. “So, we’re outpacing what we thought we would do.”

‘Cigarettes Just Keep Shrinking’

Missy Holley is also seeing growth in vapor, as well as nicotine pouches. “It’s a hard industry right now, for sure,” she said. “Cigarettes just keep shrinking and almost everything else keeps growing.”

The tobacco category manager of Fort Wayne, Indiana-based Lassus Bros. said she isn’t concerned about competition from other channels in her market. Dollar stores, especially, she said “are just a whole different customer.” And as Burke notes, the sheer number of convenience stores vs. other channels keeps c-stores top of mind with tobacco consumers.

“We’re up 7% in vapor and almost 12% in other tobacco products,” Holley said, with cigarette packs down 12% over prior year. She said cigarette sales have not returned to pre-pandemic levels, and “I don’t know that we ever will.” But vapor sales have more than doubled at her stores since 2019, and other products are up 50% versus 2019. Still, she said, cigarette sales are four times those two categories together.

In his remarks during Altria’s Investor Day in March, Scott Myers, president and chief executive officer Altria Group Distribution Co., Richmond, Virginia, offered reinforcement of the dominance of convenience stores in the tobacco category.  

There are approximately 25 million tobacco transactions at retail each day, he said, and “75% of tobacco consumers purchase their products at a single preferred store, with most transactions taking place in convenience stores.” His comments to investors did not single out any other channel of trade.

In developing his strategy for vape products, Colemire said most retailers are afraid the FDA or local entities could enact a complete flavor ban.  

“Everybody was almost paralyzed with fear of getting stuck with a bunch of products,” he said. He told his team at Stinker they would find a different distribution strategy and put that burden on someone else.

That move has allowed Colemire to turn the tables on other retail channels.

“That’s allowed us to move into spaces that other competitors have in our market,” he said. “And if anything, we’re more in the smoke-shop radar. They took our traditional tobacco business, and now we’re starting to take some of their flavored-vape business.”

Source: CSP

How Emotion Rules Snacking

By: Rachel Gignac | June 12, 2023

Study considers micro-evaluations inside the brain, such as mood, what others will think and healthy eating

A new study revealed that Reese’s, Lay’s and Hershey’s were among the top snacking brands based on psychological measurements of the top 50 snacks, taking into account consumer behavior, trajectory and emotional response while purchasing snacks. Reflected in the top brands, top performers included chocolate, chips and cookies, while bottom performers were meat snacks, mixed nuts and pretzels.

The study was performed by Alpha-Diver, a Cincinnati, Ohio-based market research firm that applies neuroscience to understand marketplace behavior and the Food Institute, a Pine Brook, New Jersey-based news source that provides insights on the food industry.

With food purchases at every location, micro-transactions happen inside consumers’ brains, such as questioning mood, who they will be snacking with, what others will think of the snack choice and interest level in healthy eating. The Snack 50 ranking took these decisions into account.

“It’s the industry’s first measure of the psychological drivers of real-world consumer behavior [as it relates to snacking],” said Hunter Thurman, president of Alpha-Diver.

Collectively, the list covered more than $50 billion in snacking sales last year, 12 categories and a neuroscience workup based on more than 100 psychological metrics. The average test-taking consumer was 45 years old, and the average household income was $50,000.

The top 10 snack brands are:

Nearly half of American consumers snack three times or more every day, a figure up 8% in the past two years, according to Circana Group, a Chicago-based market research firm, and reported by The Wall Street Journal, New York. Last year, U.S. snack sales soared to over $180 billion, up 11% from the previous year.

The report showed that retailers are catering to snackers with large-volume boxes of snacks at 24-36 per box. Cereal companies are selling Saturday morning favorites as single-serve pouches, combining Fruity Pebbles, say, with popcorn. Salty is tangoing with sweet, spicy butting in with savory.

Thurman described four mental lenses his company uses to help assess why and how people snack the way they do. The drivers are Rational (“this snack will be good for me”); Experiential (“I want to try this snack”); Tribal (“This is how we snack”); and Instinctual (“This snack speaks to me”). The top snack brands within these categories are:

  • Rational: Nutrigrain, SkinnyPOP, Snack Factory
  • Experiential: Cape Cod, Starburst, Sour Patch Kids
  • Tribal: Lay’s, Aldi, Great Value
  • Instinctual: Sour Patch, Jack Link’s, Slim Jim

The top three snacking brands with rising momentum were all private-label brands: Aplenty, Favorite Day and Happy Belly.

Thurman claimed that private-label brands suffer from a misperception that their quality is inferior and private-label purchases constitute economic and flavorful compromises. Instead, the market is proving the opposite true, and purchases are more emotional, he said.

“If these brands offer ‘safe choice’ equity for consumers, how do you argue with that?” Thurman said. “Instead, brands should be asking ‘what is the opportunity to innovate and capture new markets?’”

Here are more top brands, considering additional reasons for purchasing.

  • Price: Jack Link’s, Blue Diamond Almonds, Planters
  • Time: Aldi, Happy Belly, Aplenty
  • Social: Great Value, Popcorners, Favorite Day
  • Physical: APlenty, Snickers, Dot’s Pretzels
  • Emotional: Oreo, Kirkland, Airheads

“Context is king and queen; context matters,” Thurman said. “Think about yourself and your life, whether you’re at work, at home with friends and family, or on a weekend. You’re not a different person, but there are three different contexts, and what drives your decisions varies wildly. The same is true with snacks.”

Source: CSP

C-Store Foodservice on Positive Trajectory, Expert Says

By: Chuck Ulie | June 9, 2023

Consumer demand outside home is huge; retailers must stay up on challenges, dynamics and trends of overall industry.

Foodservice is poised for growth.                    

These words of hope were from Donna Hood Crecca, principal at CSP sister research firm Technomic, who spoke at the CSP C-Store Foodservice Forum on June 7 in Rosemont, Illinois.

“This category is unique in your stores,” Crecca said. “It satisfies different needs.”

As a whole, the foodservice industry has recovered from the pandemic, though inflationary factors are still a consideration. “There is momentum, and consumers are engaging with foodservice,” Crecca said. “The industry is on a good trajectory.”

Crecca said Techonmic projects that overall foodservice sales this year for the first time will top $1 trillion, of which convenience stores account for 3%. Despite this small share, c-stores are considered a growth channel for foodservice. And because c-store foodservice is part of a large industry, retailers must stay informed of the trends, dynamics and challenges.

“Consumer demand away from home is huge,” she said. “It’s a solution, part of their lifestyle, and they’re willing to spend. The industry is resilient.”

“Consumer demand away from home is huge.”

That resiliency was seen in 2022, when c-store foodservice category sales exceeded pre-pandemic levels and outperformed the growth rate of quick-service restaurants, which had “an advantage of a well-developed drive-through and delivery systems,” she said.

However, despite the growth, 79% of c-store foodservice operators agree that competition from other types of operators—fast food, fast casual coffee cafes and grocery store foodservice—is increasing.

To be victors in this battle, c-stores must develop a winning strategy, which Crecca said involves understanding consumers and being relevant to their needs, then meeting or exceeding their expectations with a differentiated, well-executed offering that drives value.

“It’s a tall order,” Crecca said.

Know Customer

Part of tackling this challenge is knowing who today’s c-store customer is. One stat she presented is that 53% of c-store customers buy prepared food offerings, with millennials buying the most. In addition, customers are increasingly diverse, with white (non-Hispanic/Latino) down from 56% in 2017 to 48% in second-quarter 2023. Meanwhile, Hispanic/Latino, Black/African American, and Asian all are buying more frequently.

In commuting, nearly seven in 10 are traveling to work at least a few days weekly, and six in 10 enter a c-store every or nearly every time they visit for fuel/charge.

“Food and beverages are the number-one thing they buy when they come in the store,” Crecca said. And when customers do enter a location, the top factor in whether they make a foodservice purchase is store cleanliness. “This is the only channel where cleanliness is number one. If bathrooms are not clean, you just cut in about half the likelihood they’ll buy foodservice.”

“Consumers are really looking for value.”

When customers do buy food c-store food, 61% say it’s primarily eaten in their car, which makes packaging crucial to winning the occasion, Crecca said; however, despite this popularity, don’t dismiss the importance of “fork and knife” items like mac and cheese, salads and bowls because the dinner daypart is growing.

Regarding inflation, 34% of c-store foodservice buyers in 2023’s second quarter were ordering less per visit, and 40% were seeking deals and promotions and/or using coupons more often. This second stat is up from 31% in fourth-quarter 2022.

Seeking Value

“Consumers are really looking for value,” which can be delivered via combo meals, a fuel discount with a purchase, and receiving loyalty points with a purchase, Crecca said.

Another way to attract customers is by offering healthy foodservice items. Crecca said 33% of all consumers, and 42% of 18- to 34-year-olds, surveyed earlier this year said that in the past year their interest in buying healthy items from c-stores has grown.

“Showcasing ‘fresh’ is going to be most effective in heightening the health perception of foodservice items,” Crecca said, noting high protein, low or no sugar, unprocessed and high fiber as key attributes in foodservice, and no artificial ingredients, high protein, low/no sugar and immunity-boosting being key to beverages.

Elsewhere, Crecca said:

  • 18% of consumers overall, and 28% of Gen Zers and 24% of millennials, have changed the types of restaurants they patronize due to higher menu prices. “Convenience is in a prime position to steal a share of stomach from QSRs,” Crecca said
  • Quality coffee is the gateway to boosting foodservice sales. Among consumers who report increased engagement with c-store foodservice, nearly half are visiting coffee- or beverage-focused restaurants less often and are shifting those purchases to c-stores. This is a hike of 17 percentage points from 2019
  • 58% of those surveyed said c-stores can compete with restaurants on freshness, quality and value to win the breakfast daypart, and 55% said c-store breakfast items are a better value than at restaurants
  • 42% of c-store foodservice patrons say the availability of a drive-thru would increase their visitation, but only 15% of c-stores offer one
  • 22% of all c-store consumers, and 30% of those 18 to 34, say frictionless payment options would increase patronage. “Our data finds 23% of c-store operators plan to install such systems in the next two years,” Crecca said

Consumer expectations of c-store foodservice offerings are elevated, but so are perceptions, Crecca said.

“Innovate menu items with fresh and better-for-you to resonate,” she said. “Optimize the menu. You need the right number of the right items, and that requires a lot of analysis of what the consumer is most likely to buy.”

Source: CSP

Shopping With Your Eyes: Keys to Successful Merchandising Strategies

June 1, 2023

Sponsored content is from our partner Kellogg’s

When it comes to establishing effective strategies that increase basket sizes and store sales, merchandising should be at the top of your list. By offering popular snacks throughout your shopper’s purchasing journey, creating bundling options, placing the right products in the right places, and promoting those products across the c-store environment, you can enhance your shopper’s in-store experience and position your store for success.

1. Embrace your shopper’s purchasing journey

The idea is simple – you are more likely to increase sales by placing and promoting your products where your shoppers shop. And, knowing that the average c-store visit lasts 3 minutes, you only have so much time to guide shoppers to snacks they really want1. But, where do your shoppers actually look for their favorite snacks?

Outside the aisle

When thinking through a shopper’s purchasing journey, there are only three guaranteed touchpoints: entering the store, checking out, and leaving. This leads to high amounts of traffic in general store areas, but only 25% of shoppers venture out of these high-traffic areas and walk down the aisles to find their favorite snacks.2

This means that strategically placed merchandising around the perimeter of the store, like end-caps and wire basket racks, can drive incremental sales and impulse purchases through visibility alone.

At checkout

The ability to increase basket sizes does not end once a shopper decides to check out. Since the majority of c-store snacking purchases are impulsive, capturing a shopper at checkout is a prime opportunity to encourage a shopper to add another item to their purchase.3

By placing core snack items along and below the checkout counter, you can reinforce snacks that shoppers may have missed during their initial trips around your store and provide a compelling reason to follow through with their purchase as they reach for their favorite snacks.

2. Bundling increases purchase opportunities

You can continue to drive their basket size with bundling opportunities that offer popular pairings for their favorite snacks.

There are few different ways to approach bundling. Some of the most popular bundling strategies include mix-and-match bundles, where shoppers choose from a limited selection of snacks for a set price, cross-sell bundles, where a complementary product is sold as an add-on to a popular item, and BOGO bundles, where shoppers can get multiple products for the price of one.4

Bundling creates opportunities to drive cross-category sales, as many shoppers will look for additional snacks and products that complement their primary purchases. Kellogg’s® Rice Krispies Treats® and Pop-Tarts® offer great pairings across categories, since 20% of baskets that include Rice Krispies Treats® also include single serve snacks and chips, while 14% of baskets that include Pop-Tarts® also include packaged bakery items.5

And, since over a quarter of shoppers say that bundling opportunities play an important role in selecting their c-store of choice, proper bundling has the potential to drive new customers to your store.2

3. Shelf placement matters

As shoppers continue their journeys throughout your store, they might venture down your snack aisles. During this point in their journey, you, as the retailer, can influence their final purchasing decisions based on where you choose to place craveable items.

There’s a popular saying, “eye-level is buy level” – basically meaning that shoppers will reach for the items they can see. They tend to avoid searching for items that are placed too low to the ground given the extra effort to scan the shelf, and are much more likely to buy ones directly in their eyesight.6

In order to maximize aisle sales, you should prioritize items you know will turn more in this prime location. For example, Pringles® is kept top-of-mind for shoppers – as the #1 salty snack on social media7 and the share growth leader (+0.8pts) in c-stores8 – so you’re likely to see more growth by featuring a top brand like this on-shelf at eye-level.

Proper shelf placement can be the difference between increasing shoppers’ basket sizes or allowing them to pass through empty handed.

Understanding how your shoppers move through your store can go a long way in capturing their attention. By employing merchandising strategies, you can intercept shoppers along their purchasing journeys, promote core snack items, and drive sales throughout your store.

For more information on merchandising strategies and tools, please visit KelloggsAwayFromHome.com or contact your Kellogg’s® Sales Representative.

Sources: CSP

  1. Video Mining, Shopper confidence chasing away C-store “blues”, Sept 2021  
  2. NACs SOTI Report 2021
  3. Chain Storage Age, Physical Stores Dominate Impulse Purchases, Oct 2022
  4. Zoho, Product Bunding Strategy, Advantages & Examples, 2022
  5. Circana, Customer X, L26W w/e 1.15.23
  6. Mobile Insight, Eye Level is Buy Level: Importance of Store Product Placement, 2020
  7. Fanpagelist.com
  8. Nielsen Total Convenience L52Wks Ending 10.8.22

Declining Delivery Demand Could Bode Well for C-Stores

Inflationary pressures cut into delivery fees, tips

By: Ann Meyer | May 18, 2023

Don’t underestimate the economy’s effects when trying to predict what consumers will value.

The shift to online ordering that took off during the COID-19 period is likely to have staying power, but demand for delivery is starting to decline as consumers place more orders for takeout food in part to save money, as tipping is down.

These two insights are explained in retail-tech firm Paytronix’ just-released “Online-Ordering Report: 2023,” which pulls together data from the retail-tech company’s work with restaurants and convenience stores, particularly those with foodservice operations.

The insights don’t surprise Gray Taylor, executive director of Conexxus, an Alexandria, Virginia-based technology-focused nonprofit business organization serving the convenience-store and fueling industries by providing technology standards, innovation and advocacy.

Many of the items convenience stores sell aren’t pricey enough to justify paying $6 for delivery, Taylor told CSP Daily News. The trend away from delivery should be good news for convenience retailers, who are strategically located to provide convenience to a community and passersby.

As more people get back to life as usual after COVID, they’re more likely to be out and about and shopping at convenience stores, so they less likely to need delivery, Taylor said.

Many consumers also won’t want to pay for delivery in an inflationary period when most items also cost more. Paytronix’ research shows the customer segment fueling the upward spending and generous tips in 2022 was older than many marketers were aiming at. Baby Boomers over 65 place delivery orders more frequently and give larger tips than younger adults, who might be feeling inflation’s pinch, the report suggested.

Young adults also are less likely to plan ahead than older adults. Less than 10% of Gen Z and Younger Millennials placed orders in advance, Paytronix said, compared with 17% of Baby Boomers. With the COVID-19 period declared over, demand for delivery from convenience stores is expected to decline, Taylor said.

A point of differentiation might become more important for convenience-store operators as new competitors emerge with the growth of electric-vehicle charging. While convenience stores are entering the EV charging space, this won’t stop other retailers and local governments from also offering charging ports. Home charging also is expected to rise.  

To remain top of mind as EVs gain market share, convenience stores will have to strengthen their brands in a new way, suggests a report from St. Louis-based retail tech firm Rovertown, which works with Newton, Massachusetts-based Paytronix and other loyalty-program providers serving the convenience-store industry.

Historically, consumers have been willing to pay more for national brands, like Starbucks or Domino’s Pizza, both of which have proven brick-and-mortar retailers can be in the forefront of mobile and online ordering, notes the Rovertown report, “Convenience Store of the Future.”

The drop in fuel demand that convenience stores felt in 2020 is an indicator of what could happen if EV transportation picks up momentum and the convenience industry isn’t prepared to meet the growing demand for EV charging, Rovertown said. The headwinds c-stores faced from lower fuel demand during the COVID-19 shutdown “should impress upon retailers the necessity of creating a convenience retailing model that’s capable of driving traffic to the store with or without fuel pumps,” according to Rovertown. Businesses must give consumers a compelling reason to visit them online.

For many convenience stores with kitchens, the reason might be new menu items.

Both Rovertown and Paytronix are optimistic that demand for online ordering will grow in the convenience industry. Digital orders rose from 9% of total orders in November 2019 to 31% in November 2022, according to Paytronix.

But consumers are cutting back where they can. As inflation pushes up the prices of individual items, guests chose not to significantly change their order basket sizes, Paytronix said.

The average item price rose about 15% from $11.30 in January 2021 to $12.61 at the end of 2022, while the average subtotal rose by about 13% to $37.87 over the same period, suggesting consumers aren’t drastically decreasing order sizes to compensate for higher prices, Paytronix said.

They’re having to spend more because products cost more, and they are trimming their budgets in other areas, such as on delivery charges and tips.

Inflation has resulted in less frequent trips to convenience retailers and restaurants as consumers wait longer between visits, Paytronix said.“The rising costs of dining at a favorite restaurant or grabbing a coffee at the closest convenience store has a cascading effect on a number of other, related categories. Most predictably, the number of days between orders increases as guests visit their favorite brands less often,” Paytronix said. “In addition, they cut their gratuities, a reversal from the rising tips of the pandemic era.”

Source: CSP

Foodservice 2023: 1 Eye on Innovation, 1 on Customers

Understanding guest experience key for food, dispensed beverage success

By: Chuck Ulie | April 19, 2023

It seemed more like old times in foodservice and dispensed beverages in 2022.

Talks with finalists for CSP’s 2023 Category Manager of the Year Awards showed optimism and desire for innovation.

“We’re seeing more and more guests transfer over to the food world, whether it’s cold-case items or our prepared items,” said CMOY winner Savannah Johnson, manager, category-food at Knoxville, Tennessee-based Pilot Co. “Based on trends we’re seeing, customers are going to gravitate toward those areas a bit more than they have in the last few years.”

This means customers are buying more of Pilot’s hot foods, soup, pizza and grill items—and cold foods such as fresh sandwiches, salads and fruit, Johnson said.

“But selections also consist of pre-packaged items, so Lunchables, pickles, things like that,” she said, adding that this is the most exciting time to be in the food industry.

And the key to success, Johnson said, is understanding the guest experience in food and beverage.

“Consumers have evolved so much over the last few years, changing the dining experience in the convenience world by positioning food and beverage as a primary traffic driver for the future,” Johnson said. “A greater emphasis on food and beverage this year allows us to be more creative on new [limited time offers] and guest comfort food.”

Pilot Co. has been intentional about making food the star of the show through its “food forward” concept.

“We position food and beverage up front and in view so it’s the first thing you experience when you walk in a store,” she said.

Breakfast was one of the brighter spots at Pilot in 2022, exceeding expectations, Johnson said, with offerings like the Honey Maple Chicken Waffler LTO, expanding on Pilot’s successful 2021 chicken sandwich campaign.

Hot Case Happenings

Donna Hood Crecca, principal at CSP sister research firm Technomic, said she’s seeing a post-pandemic return to innovation and menu development among foodservice-forward retailers.

“One area of innovation is around the hot case,” Crecca said, adding that Technomic data shows one-fifth of operators in late 2022 increased the number of SKUs in the warm grab-and-go case, compared to pre-coronavirus pandemic. In addition, about two-fifths increased SKUs on the roller grill.

There’s also innovation in dispensed beverages, particularly coffee, spurred by retailers feeling the need to differentiate offerings in an increasingly competitive landscape, she said. “Coffee is really competitive right now, c-store to c-store and also with coffee cafes and fast-food restaurants,” she said. “They have to innovate to differentiate—and meet the needs of their specific consumer.”

Drew Whitefield, category manager, hot and iced coffee, at Irving, Texas-based 7-Eleven, said he’s working on several new coffees for 2023.

“They are well balanced and taste great,” Whitefield said. “Two I’m really excited about are a new Central American blend coming this summer and a Caramel Macchiato later this year.”

Whitefield echoed Crecca’s comment about meeting customers’ tastes, saying he watches flavor trends and looks for innovative and craveable ideas to keep customers returning. Later this year, 7-Eleven will roll out Pinky’s Strawberry White Chocolate—and bring back its fall staple, Pumpkin Spice.

At GPM Investments, dispensed beverages category manager CMOY winner Jim Rastetter is excited about the Richmond, Virginia-based chain continuing to expand bean-to-cup coffee after launching it in more than 550 stores in 2022. In addition, the chain, whose brands include Fas Mart, Shore Stop, Scotchman, BreadBox and Young’s, is looking forward to more innovation in frozen dispensed, he said.

GPM has a partnership with Frazil, Salt Lake City, Utah, which continues to innovate with items like new frozen energy drinks, Rastetter said.

Rastetter said the industry experienced sharp declines during the pandemic in the dispensed category, and it has taken time for customers to return. “Fortunately, it looks like 2023 is going to be a great year and customers appear excited to get back out and shop their favorite beverage,” he said.

Crazy for Customization

Charleston, South Carolina-based Parkland USA, owner of On the Run c-stores, aims to lure customers into stores by adding flavor shots to boost the customization possibilities in hot and cold dispensed drinks, said Jarrod Morrill, category manager for foodservice and dispensed beverages.

Technomic data supports this strategy, with a recent survey showing 64% of c-store customers expect a coffee counter where drinks can be made to order today, with the remaining 36% expecting this in a couple of years.

Trends Morrill is watching include keeping an eye on soda-fountain shops such as Fizz and Swig. In markets where Parkland has c-stores, particularly locations with drive-thrus, they have begun offering similar offerings to compete.

In addition, Morrill said frozen dispensed has performed well in the last year. “Frazil has done well for us,” he said. “It’s quite easy to roll out and consumers love it.”

Another way of differentiating and spurring excitement is promoting recipe hacks, which Whitefield said help customers create new tastes from existing flavors in stores, such as the popular Coffee with Cream and Lavender Honey Syrup. Hacks coming later this year include Espresso Soda and Turtle Mocha.

Wills Group-owned Dash In stores, La Plata, Maryland, is going beyond a new recipe and introducing a new menu and format at its c-stores, said Ben Lucky, senior category manager, foodservice. The new format debuted at the company’s first third-generation c-store, which opened March 3 in Chantilly, Virginia. The format will expand from there.

“We’re going to be doing griddle-pressed burgers, fried in-house miniature donuts and our own in-house potato chips we’ll fry and season in front of the guests,” Lucky said. Four seasonings will be used, he said, including an Old Bay flavor, popular in the Mid-Atlantic area.

“We’re trying to change the foodservice landscape,” said Lucky, noting another new item resembling a taco he calls “a rib of tortilla.”

“You can turn your head a little bit sideways, and the ingredients aren’t going to be falling out,” he said.

For breakfast, Dash In has Impossible breakfast sausage items at the Chantilly location. They’re also selling Impossible burgers.

Plant-Based Possibilities

These offerings align with a recent Technomic report revealing 37% of c-store customers expect plant-based alternative proteins be available today at their favorite c-store, with 63% expecting them in a couple of years.

On the beverage side of things, Lucky said there are new in-house Refresco beverages, non-carbonated beverages in bubbler machines. “We worked with some designers out of Chicago to come up with our own flavor profiles,” he said. “One might be a strawberry hibiscus tea.”

Dash In also is introducing six versions of yuzu, a cold, non-carbonated beverage “new to the American palette but not unfamiliar to most people around the world, especially in both Latin America and Asia,” Lucky said. “It’s a somewhat peachy, pear-y kind of a flavor with citrus notes.”

Kate Weisman also has been watching trending flavors. “There are more hot-and-spicy flavors, kind of a con queso flavor profile,” said the category manager for roller grill, fruit and floral and franchise brands at EG America, Westborough, Massachusetts, whose brands include Cumberland Farms, Certified Oil, Fastrac and Kwik Shop.

In addition to flavors, EG America, like the third-generation Dash In’s new menu, is in middle of rebranding its entire food category offerings, Weisman said. Called Farmhouse Kitchen, it features a new color palette on packaging for sandwiches, roller-grill items, bakery, pizza and more. It’ll also be on window signs, Weisman said.

When it comes to the roller grill, she said she loves this mature category.

“I can shake it up,” she said. “It’s kind of the same old thing that’s always on there, so I love the fact that I can put new products. If they win, they win. If they fail, at least I tried.”

Weisman also is playing to the trend of people snacking more and eating fewer full meals. She currently is testing what customers are more apt to choose for a grab-and-go option: two roller bites in a sleeve in the hot slide marketed more as a snack versus the items available individually on the roller grill. She’s looking forward to seeing the data to see which is more popular.

Technomic data supports the attention given to warm self-serve formats. Compared to pre-pandemic, operators in a recent survey reported a net increase in the number of items they offer via these formats: 37% said they offer a greater number of roller-grill items versus 14% offering a smaller selection; 40% said they offer a similar selection, and 9% said they didn’t offer roller-grill before the pandemic.

“I’m looking forward to all the innovation in 2023,” Weisman said. “I’ve recently heard from all my vendors about how they’re ready to try new things. I’m looking forward to seeing how some of our more fun, out-there LTOs perform.”

Source: CSP

General Merchandise 2023: Counter Culture

The impulse to change drives general merchandise management

By: Greg Lindenberg | April 19, 2023

With a resume that includes stints with Juul Labs, PepsiCo, The Coca-Cola Co. and Keurig Dr Pepper, Aubrey Thornock, a senior category manager for Maverik Inc., is well-versed in consumer packaged goods (CPG) marketing and retailing in convenience stores, from both sides of the equation—supplier and seller.

At the Salt Lake City-based chain of nearly 400 stores in 12 western and southwestern states, for more than two years she Thornock been responsible for identifying and capitalizing on emerging market trends and revenue opportunities in categories including cigarettes, tobacco and kratom. She works closely with vendor partners and category captains to execute formal schematics for her categories.

In general merchandise, which Thornock says offers “continuous change,” one physical area of the store that is always challenging is the counter.

Thornock works with Maverik’s merchandising and space planning team “to create a unique shopping experience at each register with the impulse purchase items, currently spread out across the counter, into one display at each register,” she says.

In terms of selecting product assortment, she and her teams at Maverik “must be proactive in most cases to ensure the least amount of disruption to our flow of operations.”

Products include lighters, energy shots and other general merchandise items that reside on the counters.

She is also completely redoing the cigarette and tobacco fixtures to maximize space within the fixture for a consistent flow of categories, she says.

Among Thornock’s goals for 2023 is to align the variety of store layouts Maverik has with consistent planograms for a much easier shopping experience for the customer when shopping in her categories, she says. “This has allowed me to provide adequate space to the categories that are growing and bring in additional items that we were not previously able to carry due to space constraints,” she says.

Merch Madness

C-store retailers continue to capitalize on the cache of their own brands and through local partnerships. 7-Eleven, Stewart’s Shops and Jacksons Food Stores are among the chains with recent rollouts.

Irving, Texas-based 7-Eleven in December debuted an assortment of festive holiday apparel and merchandise as part of the 7Collection online store, including branded holiday sweaters, knitted beanies, sherpa blankets, stockings, Oh Thank Heaven script necklaces and a clock.

Ballston Spa, New York-based Stewart’s Shops has launched an online shop offering merchandise such as branded sweatshirts, retro T-shirts, PopSockets, dog bandanas, dog leashes, pint koozies, a set of pint glasses and color-changing cups. Other items include a bejeweled vacuum tumbler, short-sleeve baby onesie, winter hat, socks and dog leash. Following the debut of an online Christmas ornament in 2022, the retailer will also offer multiple limited-time-only merchandise drops throughout the year.

Meridian, Idaho-based Jacksons Food Stores has begun selling exclusive, officially licensed, professionally designed, printed and packaged college football trading cards. Featured teams include Boise State’s Broncos, University of Washington’s Huskies and University of Oregon’s Ducks. Each pack contains 14 cards and retails for $12.99. One out of every 10 packs also includes a limited-edition, autographed card.

Source: CSP

2023 Beverage Report: Liquid Leaders

By: Chuck Ulie  | March 20, 2023

Remarkable price increases driven by inflation were the name of the game in beverages in 2022, helping categories that were soft in volume, such as carbonated soft drinks (CSDs), to grow in revenue. Entering the year, inflationary pressures drove price increases to levels two times that of those in the previous two years.

Here’s a look at where the major segments of the category stand today.

The Big Picture

Remarkable price increases driven by inflation were the name of the game in beverages in 2022, helping categories that were soft in volume, such as carbonated soft drinks (CSDs), to grow in revenue, said Gary Hemphill.

The managing director and chief operating office of the Beverage Marketing Corp., Wintersville, Ohio, said another reason for higher prices is there are fewer price promotions, which in CSDs particularly have been used historically as an effective way to move volume. However, as the cost of ingredients and labor have increased, companies have cut back on price promotions, “which averages out to even higher prices still,” Hemphill said.

Entering 2022, inflationary pressures drove price increases to levels two times that of those in 2020 and 2021, said Sally Lyons Wyatt, executive vice president and practice leader for Chicago-based IRI.

“In ’20 and ’21, the average was around a 6% price increase,” she said. “In ’22, pricing for packaged beverages jumped to 13% per unit on average. That level of price increase slowed down our unit volume demand and we’re seeing unit sales turn more negative for the first time in three years.”

For example, energy drinks, aseptic juices and plant-based milk were among the few nonalcohol segments that showed unit growth in 2022 in convenience stores, according to IRI. In alcohol, spirits showed unit growth while beer, table wine and sparkling wine/champagne sunk. When it comes to dollar sales; however, most segments grew.

The mass market, tried-and-true categories—like CSDs, milk and juice —are struggling in the overall beverage market, Hemphill said. Those segments have taken a backseat to segments like bottled water, energy drinks, sports drinks and RTD coffee, he said.

“We’re continuing to see overall market improvement coming out of COVID,” Hemphill said. “It’s more limited with c-stores.”

Drilling Down

Bill Nolan, a partner with the Phoenix-based Business Accelerator Team, said unit growth in certain cold vault subcategories is very good news considering a declining c-store customer count versus pre-COVID conditions. Customers are down, he said, due to the pandemic’s stay-at-home effect and inflation belt-tightening.

“For the last two years, if you’re holding flat on your customer count, you’re doing better than most,” said Nolan, who worked for 30 years at Irving, Texas-based 7-Eleven in management and for eight years as vice president of marketing at Family Express, Valparaiso, Indiana . “The fact that the cold box is still generating sales and unit increases in a few of the key subcategories amongst this customer count decline is a very good thing. It shows the cold box continues to be one of the industry’s core strengths.”

Keeping the cold vault organized with today’s proliferation of flavors has been a challenge of late for Jeff Taylor, director of stores, Last Minit Mart, New Castle, Pennsylvania, which has six locations. Taylor said with manufacturers trying to cater to everybody, displaying the array of flavors becomes tricky.

More flavors to display means fewer facings in the cold vault for each flavor, which requires restocking more often. And while he wants to offer customers variety, innovation and new flavors, when a flavor is less than 1% of sales, he might let it fade away.

Typically, he said, a retailer wants to turn inventory at least monthly. “If you have $100,000 in sales, you don’t want inventory of retail value more than $100,000 in your store,” he said. However, the wide flavor variety means Taylor must carry a higher value of inventory compared to sales, meaning he isn’t getting the turns he would like.

Carbonated Soft Drinks Lag

Fewer people going out during the pandemic affected c-stores, Hemphill said, leading to a big drop in CSD sales in 2020, the 16th straight year of declines. In 2021, “People started going back into convenience stores, so the overall performance improved, but it’s a little bit artificial” because it had plummeted so badly in 2020, Hemphill said.

In 2022, CSDs grew 7.6% in dollar sales but fell 2.7% in unit sales, according to IRI. The increase in 2021, the first in 17 years, was helped by restaurants reopening, he adds.

The unit-sales decline in CSD sales is for two reasons, he said: consumers seeking a healthier refreshment and variety. “Because some of these smaller niche categories are growing, people are sometimes choosing those over carbonated soft drinks,” he said.

Lyons Wyatt said consumers are shifting from traditional pack types—12-ounce (still the largest share), 12-packs and 2-liter—to the 7.5-ounce mini cans and 16.9 half-liter 6-pack configurations, which have sustained the highest compounded annual growth rate. “Trends show that the club-pack offerings are providing better value to consumers, and they’re really doing better than the old-fashioned ones,” she said.

Bottled Water Healthy

Bottled water is a remarkable category, Hemphill said, that segments a variety of ways. Of most interest to c-stores is the single-serve clear plastic bottle of still water, which is about 70% of the total bottled water category on volume and is the biggest growth driver.

“It started to slow because it’s so big, and pricing is going up there, too, which could be impacting the growth of the category,” he adds. “But we continue to see healthy performance there because it’s a very well-positioned product.”

Sparkling water, which showed double-digit growth for several years, has hit a wall, Hemphill said. “That (slowdown) is maybe the biggest surprise in bottled water,” he said.

Energy Drinks Vibrant

Energy drinks are the best-performing category for two reasons, Lyons Wyatt said. First, prices haven’t risen as much compared with other categories, and second, it’s popular with the “home-centric life we have, and people going back to work are looking for a little boost.”

Regarding prices, Lyons Wyatt said she has seen not only energy but any category holding prices steady “getting a lot of bang for their buck” from consumers seeking savings.

Lyons Wyatt adds that she’s seeing more category blurring. “There’s this move toward physical and mental health supplement with C4, which is energy and hydration, and the Starbucks Baya, which is coffee fruit-based energy,” she said. “There’s Bang, which has creatine. And they’ve all launched successful innovations that still have energy and stimulation but with performance-based attributes.”

Hemphill adds that about half of energy drink volume is via c-store sales, a “vital channel” for this category. “As goes the performance of c-stores, so goes the performance a lot of times of energy drinks,” he said.

Recently, however, Hemphill said more competitors have entered the market, some championing healthier, premium products.

“While there is innovation, the tried-and-true brands have introduced line extensions that have also helped,” Hemphill said.

Monster and Red Bull dominate, with Rockstar a distant third but also a significant player, he said.

Sports Drinks Sustain

This category is experiencing a similar dynamic to energy: fairly concentrated with leaders—Gatorade, Powerade—at the top but new players like Body Armor entering the market, Hemphill said. “Because of innovation and newcomers, and strong demand just for sports drinks, you’re seeing fairly healthy performance there,” he said.

Milk and Juice Challenged

Milk and juice have underperformed in recent years.

“Milk is a challenging category because you have a lot of competition with the dairy alternatives like almond milk and oat milk and others,” Hemphill said. “On the juice side, the difficulty has been the high sugar and caloric content of the products…. Also, juice was an expensive product that’s gotten only more expensive.”

Nolan said grocery stores are taking over the milk industry because of the cost of goods. “But (c-stores) still have to stay in stock and be ready for it,” he said.

CBD Drinks Vary

CBD drinks are a “challenging environment,” Hemphill said. “It’s a bit of a patchwork situation because most of the regulatory rules and laws are taking place at the state level.”

“I think the marketplace is waiting for more clarity federally before we see it developed in a bigger way,” he added. “There’s an opportunity there, but it tends to be niche, and it tends to vary widely depending on the state you’re in.”

CSP sister research firm Technomic shows CBD beverage market penetration tripling from the 2018’s fourth quarter to 2022’s third quarter, from 0.1% to 0.3%. In addition, cannabis beverages are projected to grow in the U.S. from $1.2 billion in 2023 to $5.9 billion by 2033, according to Future Market Insights Inc., Newark, Delaware.

Alcohol Evolves

Hard seltzers and ready-to-drink alcohol cocktails are what’s growing in alcohol, Hemphill said.

Hard seltzers, however, have slowed in 2022 and have taken “a bit of backseat to other alcohol alternatives like spirit cocktails.”

Jon Berg, vice president of beverage alcohol thought leadership at NielsenIQ, Chicago, said there’s been a “seismic shift” in the ready-to-drink segment. “And whether it’s a new flavor or a functional beverage difference, all of those things really hit a fever pitch during 2022,” he said, adding the intense shortening of product life cycles has been the biggest issue.

A shortened life cycle can be due to distribution issues or lack of shelf space, he adds. Another reason is many suppliers test a new product in a select location, then roll it out wider or pull it back to “retool and come up with a different idea,” he said.

On the heels of RTD growth is the non-alcohol trend, Berg adds: “That has been really interesting to watch and see who has gravitated to those products.”

In recent years, spirits have done a “premiumization escalation,” Berg adds, and tequila is the most important growth area in RTD alcohol. Tequila, he said, “lends itself to (premiumization) because it has blanco, anejo, reposado variants, which come through aging, and consumers are gravitating toward that.

However, a retailer must be licensed to sell tequila, a significant restriction, Berg said.

Wine under $10, meanwhile, has encountered the biggest headwinds, Berg adds. “A lot of those shoppers who were buying inexpensive wine are now either buying ready-to-drink products or going back to craft beer as part of their repertoire,” he said.

To stay competitive in beverages, c-stores should determine if they have the right product mix for immediate consumption and bigger sizes for the take-home consumer, Lyons Wyatt said. Consider promotions and deals to boost sales—and ensure consumers are informed. “Use digital signage, some of the apps, things like that,” she said.

Brought to you by Javo Beverage Company

Source: CSP