Market Observatory: Convenience Stores Emerging as a Growth Channel for Wine
August 5, 2022
Take-out packaging, an expanding millennial customer base, and an increased focus on quality foodservice programs are all contributing to the emergence of convenience stores as a growth channel for wine, helping to shatter its former destination image for just low-budget and fortified offers. Convenience store wine sales rose 2% to $1.5 billion last year, following a 22% increase in 2020 and a 6% gain in 2019, according to NielsenIQ. table wine in the channel fell 3% in 2021, flavored wine, sparkling wines and wine-based cocktails posted high single-digit and double-digit growth.
Chad Fisher, vice president of The Wine Group, says that with longer hours of operation and closer proximity to where consumers live, convenience stores gain a competitive edge. “Wine trends in the convenience channel have overtaken grocery stores in 2021,” he says. “There is a lot of optimism that this will continue through 2022.”
Convenience stores are increasingly investing in wine as basket makers, note Fisher and other marketers. “Wine increases total transaction size, while improving the shopping experience,” said Herb Smith, vice president of customer development at E.&J. Cave Gallo. “In most cases, buying is impulsive and incremental,” adds Fisher, noting that many national and regional chains are promoting wine with improved merchandising strategies from those of the past.
In addition to its improved image, the typical convenience store shopper has changed in recent years. “According to our internal consumer insights, millennials make up 50% of the convenience store consumer base,” Smith says. “They buy wine frequently and usually shop twice a week. When they shop at a convenience store, they are motivated by three key elements: location, ease of purchase and hours of operation. »
Wine is a key contributor to total sales for Foxtrot, the omnichannel convenience store chain with 21 locations currently in Chicago, Dallas and Washington, DC, with more units planned. Alcoholic beverages account for 30% of total sales at Foxtrot, an e-commerce dependent concept, with wine accounting for two-thirds of that, according to the company’s director of adult beverages, Dylan Melvin. “Wine is a strong category for us,” says Melvin.
And at Kum & Go, the Iowa-based multistate convenience store chain, “wine is doing very well,” says alcohol category manager Christian Rogers. “We’ve seen very strong growth over the past few years,” driven by super premium wines, wine-based RTDs and wine packaged in TetraPaks, he explains. Kum & Go sells wine in 275 stores in ten states, typically marketed in a 3- to 6-foot space, as well as a dedicated cooler for the RTD category and cocktails. Market Watch has the whole story.—Terri Allan
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