Packaged beverages: Beverage boom

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CHICAGO— When it comes to dealing with alcohol, what’s not to love? That’s the view of John Herbert, senior category manager for Truenorth Energy, Brecksville, Ohio. “Beer, wine and spirits have always been fast, traffic-driving and can help set the tone for your customer experience,” he says. “I love watching trends and working on plan-grams to make sure our product selection is effective and stays ahead of the next hard seltzer or big innovation.”

The category has seen its share of innovations this year, particularly in ready-to-drink (RTD) cocktails. And there is also excitement in non-alcohol.

The growth of energy drinks and enhanced beverages has packaged beverage category managers on their toes, especially as they grapple with stock-outs.

Here is an overview of this CSP Category Manager of the Year (CMOY) finalists and winners had their say on what’s happening in packaged beverages and alcohol.

When it comes to soft drinks, energy drinks stood out in terms of growth in 2021.

“The one growth trend that has been mind-blowing is energy drinks. It was on fire,” says Angela Oliver, category manager for the Coastal Carolinas business unit of Circle K, part of Alimentation Couche-Tard Inc., based in Laval, Quebec. “Our growth drivers have been energy, isotonics, enhanced beverages and our 20-ounce soft drinks for immediate consumption. Best-for-you growth trends are something I continue to monitor and research products that will support them.

Energy drink sales at convenience stores totaled $11.3 billion in 2021, according to analytics data from IRI, Chicago. This represents a growth of 13.7% in sales in dollars compared to the previous year. Units are also up with growth of 11.2%.

Jack Lewis, winner of this year’s Category Manager of the Year (CMOY) for packaged beverages and senior category manager at GPM Investments, based in Richmond, Virginia, said that in 2021 he changed the way he displayed energy in the coolers of the chain.

“We started creating a new section in our coolers called the performance energy section, where we started developing more performance waters and energy drinks, and from there we really started to see big increases energy drink sales,” Lewis said.

He also has an innovation shelf on top of the performance door, where he puts new brands every quarter to give them a chance to see what they can do. When innovation slowed during the pandemic, the same items stuck around for half the year, he said. It starts again though.

Energy drinks Red Bull and Monster also saw strong sales when the country was locked down by COVID-19, he says. Lewis says this is its third year of double-digit growth in the energy segment.

However, it is not always easy to find the brands that will stick.

“We keep riding on the energy bandwagon as it continues to grow year after year with new options and trying to guess which ones are going to be the ones to hit and which ones are the unfortunate flash in the pan that comes and goes. every year,” says Michael “MJ” Simons, senior beverage category manager for MAPCO, Franklin, Tenn.

Another segment where category managers have seen growth is bottled water. Bottled water sales increased 18.8% and unit sales increased 13.3% at convenience stores in 2021, according to IRI.

Lewis says of the house brand to premium waters, most of the last year it has increased bottled water sales by 30% to 40%.

One of the ways the pandemic has changed the category, Simons says, is that consumers are looking for more functional and healthier options. Water is essential to satisfy this tendency.

Supply chain issues are another effect of the pandemic that convenience store category managers are still grappling with.

“It would be nice to walk into the stores and see a cold room as you drew it on paper with a schematic plan-gram and see what it actually looks like day in and day out,” says Simons. “You have to keep nurturing, changing and adapting. That’s definitely the frustrating part right now.

While stock-outs are an ongoing issue, Oliver says things have gotten better.

“The pandemic has affected foot traffic in our stores, as well as our store staff, which has challenged us to keep our stores stocked,” she says. “Supply chain disruptions have affected most of our packaged beverage products at some point over the past two years. We have seen further declines in our 2 liters to go as this package supports social events which have eased with the pandemic.

Oliver introduced new brands to fill brand gaps Circle K couldn’t get, expanded space to brands that were in stock, and purchased inventory ahead of the planned product disruption to help maintain inventory.

“That’s what I work to solve daily and improve,” she says.

During the pandemic, consumers have found convenience stores to be a good place to buy alcohol, says Bob Gulley, senior category manager for Circle K’s Rocky Mountain business unit. of wine or liquor, there are opportunities for liquor convenience stores.

“People are starting to use convenience stores more and more for these kinds of purchases,” says Gulley. “We have captured more of the different shopping occasions. We still have beer and [consumers] buy bigger packages, but now they buy wine and spirits and things like that. So we did a really good job of capturing that customer and keeping it. »

Overall, alcohol sales at convenience stores increased 2.7% in dollars and 0.6% in unit sales in 2021, according to IRI.

Like any other convenience store category, however, alcohol has its challenges. Supply shortages have affected alcohol, like soft drinks. And inflation is something Gulley will watch going forward.

“[With] people who have less money [and] fuel prices are rising, will people start moving to a more affordable category of alcohol? Gulley said.

Flexibility was key to keeping the cold room well stocked. Gulley will meet with partner suppliers to find out what different products they can offer and what is available in warehouses.

“It really comes down to the communication between the suppliers, the wholesalers in my operations and saying, ‘OK, you’re out of this, but what can we move to, what can we bring and can we get more out of this? product ?’ says Gulley. “So having those connections really makes a big difference when you’re trying to succeed in the midst of supply chain issues.”

There are, of course, some positives in the category, ready-to-drink (RTD) cocktails and hard seltzers included.

One of the most exciting things happening in alcohol is the urgency of RTD cocktails, says Herbert of Truenorth Energy. Brands such as High Noon and Monaco came out a few years ago, and now there are plenty of new entrants.

“Whether it’s new brands like Onda Tequila or established spirits brands like Jameson, Bacardi and others entering the space, it all points to a new consumer of spirits that we didn’t necessarily have access to before.” , says Herbert.

Momentum starts to slow on hard seltzers, Herbert says. It observes where the volume is moving and which subcategories, brands and innovations will move to fill that void.

National data shows that seltzers, or seltzer beer-centric as the IRI defines the segment, continue to grow, however. It grossed more than $2.1 billion at convenience stores in 2021 and grew nearly 26% in dollar sales and 21% in case sales, according to IRI.

“It’s no surprise that we keep a close eye on seltzers and RTD/canned cocktail trends,” says Michael Varallo, assortment manager for Wawa, Wawa, Pennsylvania, and this year’s CMOY winner for beverages. alcoholic. “I think the RTD segment will be important in convenience stores given the ultimate convenience and drinkability of items. Also, with seltzers, staying on top of trends will be essential to ensure your space is properly allocated and this segment begins to stabilize.

To stay on top of COVID trends and challenges, Gulley lives by the motto “if you’re not first, you’re last”. His goal for the category in 2022 is to strive to provide customers with the best products and to help the Circle K operations team work and find good tactics to implement.

“Our slogan is ‘Make life easier for our customers.’ This includes our employees. [we’re trying to come] with programs that really strive to be easy for our consumers to understand and easy for our employees to implement,” says Gulley.

Click here to view the full Category Management Handbook report.

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