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Convenience Channel
Overview1stQuarter 2008
HTBMarketing.com
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The Convenience Channel isImportant to the Beer Category and Beer is
Important to the Convenience Channel
Source: Convenience Store News May 28, 2007
ACNielsen*Does not include Wal-mart
Convenience71.9%
Food/Drug/Mass*28.1%
Off-Premise Beer Sales
20%
27%
18%
46%
36%
53%
0% 10% 20% 30% 40% 50% 60%
8+ TRIPS
5-7 TRIPS
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$569.4 $577.4
$0
$100
$200
$300
$400
$500
$600
2006 2007
Total Convenience Store Industry Sales
In 2007, Convenience Store Industry SalesIncreased $8 Billion Or 1.4%!
BILLIONS OF DOLLARS/PERCENT CHANGE
+15.0% +1.4%
20072006
Nielsen & NACS State of the Industry 2007
Imports
$3.4
$4.8
$0
$1
$2
$3
$4
$5
Total Convenience Store Industry Pre-Tax Profits
In 2007, Convenience Store Industry Pre-TaxProfits Decreased $1.4 Billion Or 29.2%!
BILLIONS OF DOLLARS/PERCENT CHANGE
-29.2%
20072006
-19.1%
Nielsen & NACS State of the Industry 2007
$7.6
$6.6
$0
$2
$4
$6
$8
2006 2007
Industry Credit Card Costs
2007 Convenience Store Industry Credit Card Costs($7.6) Were Greater Than Pre-Tax Profits ($3.4)!
BILLIONS OF DOLLARS/PERCENT CHANGE
+22.2%
+15.2%
20072006
Nielsen & NACS State of the Industry 2007
145,119 146,294
0
50,000
100,000
150,000
2006 2007
At End Of Year 2007, The Number Of Convenience StoresHad Increased By 1,175 Or .8% from 2006!
Nielsen & NACS State of the Industry 2007
Number of Convenience Stores
20072006
+3.2% +0.8%
Convenience Store Fact Sheet
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Premium is the Industry Segment Leader inC-Store, Supermarket, Drug and Liquor Channels
36.0
42.5
56.1
21.3
17.1
20.9
22.0
11.1
7.2
6.3
5.5
47.8
9.3
21.0
33.6
2.7
1.6
10.7
4.1
3.7
6.7
2.5
6.2
4.1Package Liq
Drug
Supermarket
C-Store
Premium Sub-Premium Imports Micro Specialty A/O
$ Share of Category
$ Sales % Change YA
$ Share of Category
$ Sales % Change YA
$ Share of Category
$ Sales % Change YA
$ Share of Category
$ Sales % Change YA 0.0 -4.1 -5.9 +11.3 +9.7 -4.9
+3.8 -4.6 +1.8 +10.3+21.8+1.7
Not available
+1.7 +2.5 +3.1 +13.4 +17.3 -2.0
BeerCategory
NA
+3.6
+2.1
-1.1
Sources: IRI InfoScan, 1st Quarter 2008 (13 Weeks Ending March 30, 2008) for TUS Supermarket, TUS Drug and TUS C-StoreIRI InfoScan RMA Sum of Total Liquor Stores, 1st Quarter 2008 (13 Weeks Ending March 30, 2008) for Package Liquor
1st Quarter 2008 Segments by Channel(13 Weeks Ending March 30, 2008)
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In-store
30%
Motor
Fuel
70%
Industry Sales MixIndustry Sales Mix
Source: Convenience Store News May 28, 2007
Gross Profit Dollar MixGross Profit Dollar Mix
In-store merchandise continues to make up over two-thirds of the industrysgross profit dol lars, on slightly less than one-third of the industry sales
Although Motor Fuel Generates Higher Sales,In-store Merchandise Generates More Gross Profit
Although Motor Fuel Generates Higher Sales,In-store Merchandise Generates More Gross Profit
Motor
Fuel
32%
In-store
68%
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Beer Is The Biggest Category
In The Cold Vault!
Dollar Sales
Average Sales per Store - Convenience Channel
Calendar 2006$243,372
$116,413
$16,598 $14,221 $13,812$13,142 $5,615 $1,947
$61,624
Total
Beverages
Beer Traditional
CSD
Bottled
Water
Juice/Juice
Drinks
Sports
Drinks
Alternative
Beverages/
Energy
Drinks
Iced Tea All Others
48%
25%
7% 6% 6% 5%2% 1%
Source: Convenience Store News May 28, 2007
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Malt Liquor
2.9%Non-Alcohol
0.1%
Non-Beer
3.3%
Micro
1.6%
Specialty
4.1%
Popular
9.6%
Budget
11.2%
Imports
11.1%
Premium56.1%
Premiums Remain The Bulk Of The Business,Representing Nearly 60% Of Category Dollar Sales
Source: IRI InfoScan (AllScan) Total U.S. C-Store, 1st Quarter 2008 (13 Weeks Ending March 30, 2008)
Price Segment Dollar ShareConvenience Channel 1st Quarter 2008
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$874,817,900
$393,790,500
$244,952,800
$233,876,200
$170,237,200
$122,071,700
$98,475,930
$89,285,460
$85,533,270
$66,594,720
$60,073,280
$57,411,280
$47,953,060
$47,743,560
$31,532,360$31,133,150
$29,247,630
$25,064,030
$23,515,200
$22,605,800
Bud Light
Budweiser
Miller Lite
Coors Light
Natural Light
Corona Extra
Busch
Busch Light
Heineken
Miller High Life
Keystone Light
Michelob ULTRA
Natural Ice
Icehouse
Modelo EspecialSteel Reserve
Bud Ice
Budweiser Select
Miller Genuine Draft
Michelob Light
The Top 20 BrandsAccount for 83.0% of
Category Dollar Sales inthe C-Store Channel
Source: IRI InfoScan (AllScan) Total U.S. C-Store, 1st Quarter 2008 (13 Weeks Ending March 30, 2008)
Dollar Sales
The Top 20 Brands in the C-Store Channel
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$138,584,500
$136,813,000
$131,062,800
$75,071,850
$66,308,670
$65,790,080
$65,627,530
$62,285,170
$56,194,950
$52,981,600
$48,446,940
$46,202,490
$45,328,860
$43,024,480
$42,044,350$41,087,790
$40,974,580
$39,476,760
$37,003,630
$36,810,920
Bud Light 12-Pack 12oz LNBTL
Bud Light 18-Pack 12oz CAN
Bud Light 12-Pack 12oz CAN
Bud Light 6-Pack 12oz LNBTL
Corona Extra 12-Pack 12oz LNBTL
Budweiser 12-Pack 12oz CAN
Bud Light Singles 24oz CAN
Bud Light 20-Pack 12oz LNBTL
Budweiser 18-Pack 12oz CAN
Natural Light 12-Pack 12oz CAN
Miller Lite 18-Pack 12oz CAN
Coors Light 18-Pack 12oz CAN
Budweiser Singles 24oz CAN
Bud Light 24-Pack 12oz CAN
Coors Light 12-Pack 12oz CANBudweiser 12-Pack 12oz LNBTL
Miller Lite 12-Pack 12oz CAN
Bud Light 18-Pack 12oz LNBTL
Bud Light 6-Pack 12oz CAN
Bud Light 30-Pack 12oz CAN
The Top 20 PackagesAccount for 38.3% ofCategory Dollar Salesin the C-Store Channel
Dollar Sales
Source: IRI InfoScan (AllScan) Total U.S. C-Store, 1st Quarter 2008 (13 Weeks Ending March 30, 2008)
The Top 20 Packages in the C-Store Channel
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Shopper and Consumer Insights
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Source: ABI Shopper Poll, 2003-2007YTD, Total US
Versus all Beer shoppers, loyal C-Store Beer shoppers skew male,younger (21-34), Blue Collar, lowerincome, and non-Anglo.
Convenience Store Beer ConsumerDemographic Profile
Males
Females
21-27
28-34
35-49
50+
Blue Collar
White Collar
Gray CollarStudent 21+
Other Collar
Under $15K
$15K-$34K
$35K-$49K
$50K-$79K$80K+
Anglo
African American
Latino
Asian
27%
30%
20%
34%
15%
36%
13%
30%3%
18%
11%
26%
17%
25%22%
13%
16%2%
70%
73%
All Beer Shoppers
Most Often BuyBeer in C-STORE
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The Number Of Core Beer Consumers IsExpected To Continue Growing,
Generating Greater Category SalesAfter bottoming out in the late 1990s, the core 21-27 year old beerconsumer demographic is projected to grow through the year 2010!
Source: 2000 U.S. Census
23
24
25
26
27
28
29
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10
Age 21Age 21 -- 2727
Population(M
illions)
Population(M
illions)
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Population Breakdown by Age Groups
20
30
40
50
60
70
80
90
100
110
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15
Million
21-27 28-34 35-49 50+
Projected Population by Age Group1990 - 2015
The Highest Growth Rate is Projected for Age 50+Source: U.S. Census
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C-Store Beer Trip Facts
36%
1%
0%
38%
1%
0%
62%61%
Quick Trip
Special Purpose
Fill In
Pantry Stocking
In C-Stores, address the need states of these shoppers & trips:Make Quick Trip shopping easy with the right flow and category adjacencies
Use merchandising and cross-promotions that will resonate with Quick Trip BeerShoppers (i.e. snacks, other beverages)
% of Beer Dollars
% of Beer Trips
C-Store Trips With Beer in Basket
Source: IRI Trip Typology Study 2007; A-B In-Store Intercepts, 2006
TRIP TYPE DEFINITIONS: Quick Trip 1-3 Items; Under $20: Special Purpose Trip around 5 items; $30-$50; specific purpose/occasion:Fill-In Trip 10-15 items; $50-$80, replenish: Pantry Stocking Trip over 15 items; over $80; large, planned trip
Quick Trips w/Beer:
60% are in the store just for Beer
64% pf trips are for short-term consumption at home
Cold Beer and convenient location drive the store choice
Bud Family (37%), Coors Light (6%) or Miller Lite (4%)
12-packs (32%), Singles (29%), 6-packs (25%)
Beer Trip Characteristics
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Beer Shoppers Are Beer ConsumersBeer Shoppers Are Beer Consumers
Who Are C-Store Shoppers?Who Are C-Store Shoppers?
The vast majority of beer shoppers are also beer consumers,C-Store beer shoppers are no exception
Source: ABI Shopper Poll, 2005-YTD 2007, Total US
7%
93%
DrugStore
6%
94%
LiquorStore
6%
94%
C-Store
9%
91%
Grocery
11%
89%
WarehouseClub
11%8%Shopper Non-Consumer
89%92%ShopperConsumer
MassMerch
AllChannels
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95%
83%
82%
81%
81%
68%
14%
4%
4%
3%
8%
4%
3%
16%
26%
83%
5%
16%
15%
15%
Convenience
Package Liquor
Grocery
All Channels
Mass Merchandise
Drug
Wholesale Club
Cold Warm - On Display Warm - Not On Display
Cold Vs. Warm Beer Purchasing Total Beer Shoppers By Channel
Source: ABI Shopper Poll, 2007, Total U.S.
The Beer Purchase Decision
Where available, beer shoppers overwhelmingly likely to purchase beer cold.This is especially true in the Convenience Channel with cold beer salesrepresenting 95% of total beer sales
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Beer Shopper Mindset by ChannelBeer Shopper Mindset by Channel
63%
49%
38%
20%
12%
11%
37%
51%
62%
80%
88%
89%
C-Store
Drug
All Channels
Grocery
Mass Merch
Club
Primary Reason Beer Primary Reason Other Items
70%
67%
62%
59%
56%
56%
22%
28%
29%
21%
22%
32%
8%
4%
9%
20%
22%
13%
Drug
C-Store
All Channels
Club
Mass Merch
Grocery
Pre-Planned Beer, Brand, and Size Decided Brand and/or Size In Store
Purchased Beer on Impulse
Retailers have a bigopportunity in Beergiven its destinationnature, especially in C-Stores and Drugstores.
The biggestopportunities for in-
store influence are inGrocery, Mass Merch,and Clubs.
Source: ABI Shopper Poll, 2003-2007YTD, Total U.S.
Reason for Going on Shopping Trip
Planned vs. Impulse Beer Purchasing
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Beer Shoppers Spend More Per Trip ThanTotal Convenience Shoppers
35%
24%
18%
9%
15%
9%
13%
14%
16%
48%
Less than
$2.00
$2.00 - $3.99
$4.00 - $5.99
$6.00 - $7.99
$8.00+
Total Shoppers
Beer Shoppers
64% of Convenience Beer Shoppers Spend $6.00 or More PerTrip, Compared to 24% of Other C-Store Shoppers!
Dollar Amount Spent on Items Inside the C-Store(excluding gas & automotive)
Source: Meyers C-Store Close-Up Study, 2006
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20%
27%
18%
46%
36%
53%
0% 10% 20% 30% 40% 50% 60%
8+ TRIPS
5-7 TRIPS
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Fridays and especially Saturdays are the key beer purchasing days across all channels
0%
5%
10%
15%
20%
25%
30%
35%
Sunday Monday Tuesday Wednesday Thursday Friday Saturday
All Channels Grocery C-Store Warehouse Club Liquor Store Mass Merch Drug Store
Beer Purchasing By Day Of WeekBeer Purchasing By Day Of Week
Source: ABI Shopper Poll, 2005-YTD 2007, Total US
Beer Purchasing Behavior
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C-Store beer purchases skew higher than the average of all Channel at 6pm
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
12:00
AM
1:00
AM
2:00
AM
3:00
AM
4:00
AM
5:00
AM
6:00
AM
7:00
AM
8:00
AM
9:00
AM
10:00
AM
11:00
AM
12:00
PM
1:00
PM
2:00
PM
3:00
PM
4:00
PM
5:00
PM
6:00
PM
7:00
PM
8:00
PM
9:00
PM
10:00
PM
11:00
PM
All Channels C-Store
Beer Purchasing By Time of DayBeer Purchasing By Time of Day
Source: ABI Shopper Poll, 2005-YTD 2007, Total US
Beer Purchasing Behavior
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48%
17%
17%
4%
2%
7%
6%
Grocery
Liquor Store
C-Store
Mass Merch
Wholesale Club
Drug Store
Other Channel
All Beer ShoppersLatino Beer Shoppers
Stores Where Latinos Most Often Buy Beer
Source: ABI Shopper Poll, 2004-2007, Total U.S.
Latino Beer shoppers skew more towards C-Stores for their beer purchasescompared to All Beer Shoppers!
Latino Beer Shopper InsightsLatino Beer Shopper Insights
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Latino shoppers take more timeshopping the beer section before or aftermaking a selection, whereas, Mainstream
shoppers are more likely to have a Grab& Go beer shopping style.
68%
44%
21%40%
7% 14%
Mainstream Beer Shoppers Latino Beer Shoppers
Selects beer but returns and makes a different selection
Selects beer and then further browses the section
Browses the section and then selects beer"Grab & Go" (selects at once & does not linger)
How Shoppers Select Beer
Latino Beer Shopping ProcessLatino Beer Shopping Process
Source: ABI Latino C-Store Beer Shopper Research
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Source: ABI Shopper Poll, 2004-2007, Total U.S.
44%
13%
31%33%
7%
9%
4%
2%
56%
Can
Bottle
Single
6-Pack12-Pack
18-Pack
20-Pack
24-Pack
Other Pack
All C-Store Beer Shoppers
Latino C-Store Beer Shoppers
Last Purchase Beer At C-Store: Package Size Comparison
Latino C-Store beer shopperscommonly purchase 6- or 12- packs
and are more likely than the average C-Store beer shopper to buy bott led beer.
Latino Shopper Purchasing BehaviorLatino Shopper Purchasing Behavior
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Summary
In-store merchandise is almost two-thirds of C-Store gross profit
dollars on slightly less than one-third of the industry sales
The top 10 categories in C-Stores account for 89% of in-store dollarsales
In beer selling stores, beer ranks #2 in product category sales and is
the largest selling item in the cold vault
C-Store beer shoppers are critical to driving traffic and buildingtransaction size, as beer shoppers spend more per trip than the
average C-Store shopper
Being in-stock, especially on weekends, is critically important to
reduce out-of-stocks and maintain customer satisfactionThe premium segment accounts for 56.2% of beer dollar sales in the
Convenience Channel