Before its finances went south and its equipment was liquidated and its new Virginia Beach brewery was sold at a drastic discount, Green Flash Brewing Co. had a plan. And despite the eventual, negative outcome from this year that saw the business end distribution to the East Coast and sell to an investment firm, it was actually a pretty good one.
Led by GFB Blonde Ale, the brewery would work toward getting placements in about 1,000 convenience stores across California, Virginia, and Texas. Supermarkets may be commonly seen as prime battle grounds for the “Big vs. Small and Independent” war that rages on around the country, but with about 155,000 convenience stores from coast-to-coast, it’s only recently that brewers of all sizes have started to embrace the opportunities that arise when consumers are looking to do quick, impulsive shopping or filling up their gas tank. Traditionally, convenience stores account for about a third of U.S. beer sales.
“It’s a competitive world, and we’re trying to find a way to make our business successful,” Mike Hinkley, founder and CEO of Green Flash, told SevenFifty Daily. “When we’re putting our cans in these stores, we’re not replacing another Green Flash brand to make it work. We’re taking on brand-new shelf space.”
Halfway through 2018, Beer Marketer’s Insights noted how convenience stores (often referred to as “c-stores,” for short) comprised the biggest channel for beer sales, overall staying flat in volume sales while grocery dropped 1.1%. Pulling even year-to-year doesn’t sound amazing, but the broad trends follow what’s happening elsewhere in beer: Anheuser-Busch InBev and MillerCoors have seen their volume drop in c-stores while “above premium” grew 8.3% in the roughly six-month timeframe to start the year.
Shopping at c-stores is nothing new for Americans, but it’s rapidly growing in ways that are matching new cultural changes, especially for younger drinkers. From one perspective, the importance of this chain has been telegraphed for years, as more people see urban living as a viable opportunity, a type of space known for smaller shopping options over the large, big box, or grocery stores of suburbs. Walmart and Target have explored ways to succeed with miniaturized versions of their stores in recent years, seeing the shift in populations and behavior.
According to Nielsen, convenience stores were the second-fastest growing channel in the U.S. by number of locations in the year period from February 2017 to 2018, adding about 2,000 stores. Even more impressive is the connection to where Millennials buy beer. Through another survey question, Nielsen found that c-stores far over-indexed in terms of purchase location for alcohol, ranking as the #2 option behind only night clubs and bars for "younger Millennials" (21-29 years old) and #1 for "older Millennials" (30-39).
Convenience sales also strongly reflect the breakdown of how people of all ages are spending on particular brands. Long the home of Bud, Miller, and Coors, about half to two-thirds of IRI-tracked sales for the largest names in beer take place in c-stores. Midway through August, ranges went from with Miller Lite and Coors Light (both 51%) to Bud Light and Budweiser (both 61%) to Natural Light (63%) and Busch (64%). Flavored Malt Beverages have always done well in convenience, and in the case of Boston Beer's Twisted Tea, it's a big reason why the Samuel Adams family of beers has struggled. The alcoholic tea line sells around 80% of its IRI-tracked volume in convenience stores and could sell more volume than Sam Adams brands in all IRI stores for a second-straight year in 2018, boosted by this space.
But don’t assume it’s all about Megabrew.
Numbers tracked by IRI in their convenience channel category show big results for a variety of craft brands, including New Glarus Spotted Cow (~6,000 BBLs), Stone IPA (~7,700), Rhinegeist Truth IPA (~9,300) and Bell's Two Hearted (~14,000). These are numbers that represent more volume production than most single breweries in America make in one year. Sierra Nevada sold almost 84,000 BBLs worth of Pale Ale in convenience stores in 2017 and is already around 60,000 this year, making that single brand in this single channel the size of a regional brewery.
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“I think having an assortment of craft is absolutely the right thing. It’s just a matter of making sure you have the right assortment and you can be localized enough with an assortment,” Jason Homola, director of category management at Wawa, told Convenience Store Decisions this summer. “We’ve over-spaced in craft if you look at it as a percentage of sales, but that was done intentionally to make a stance that we are going to carry local brands as well as craft breweries.”
Two things have helped literally create space for craft when it comes to c-stores. With greater push for cans as a common package, brewers have embraced sizes beyond 12-ounces of aluminum, a staple in c-stores. Earlier this year, GBH reported that 16-ounce and 19.2-ounce cans were two of the fastest-growing formats in IRI sales, particularly boosted because of the eye for a "single serve" grab-and-go option provided via convenience. Founders, Lagunitas, New Belgium, and plenty of others have explored the formats as single-buy options. One company in Florida even signed an exclusive partnership with Circle K stores to stock a house beer in 730 stores, selling 16-ounce cans in four-packs for $7.99, or a pair of single-serve cans for $4.29.
“We all saw an opportunity in the craft beer space with few, but not many, national brands out there,” company partner Don Shaver told GBH at the time, referring to open opportunity in c-stores. “In terms of being able to get high-quality product in distribution quickly, we saw an opportunity to leverage relationships we had in the retail community, as well as our knowledge of co-manufacturing and co-brewing.”
Mike Clifford, category manager for New York's Clifford Fuel, told Convenience Store Decisions craft single cans grew 36% in volume through August this year and has found success by featuring in-state brands like Saranac, Ommegang, and Good Nature. These latter brands might not provide the single-serve option that has been so hot, but are seen as a natural fit within a growing collection of “beer caves” that now exist in these stores—walk-in cooler areas that have become so trendy with c-stores that chains announce their presence via press release or through news coverage.
Sheetz, QuikTrip, Rutter’s, and more have all highlighted the new addition. “For us, it’s another way to deliver on our mission to be the ultimate one-stop-shop,” Sheetz public relations manager Nick Ruffner told Lehigh Valley Business this summer.
"Our beer caves allow us to deliver even more convenience in our stores, and customers are delighted when we can introduce beer caves into their respective counties and stores," Rutter's vice president of marketing, Robert Perkins, told Convenience Store News.
It’s representative of the broader category at play, and perhaps something that many beer enthusiasts overlook: most beer buyers aren’t wandering the aisles of privately-owned bottle shops checking date codes. They’re popping into the closest location that provides alcohol sales and not thinking too hard beyond price, impression of flavor and, wouldn’t you know it, convenience.
—Bryan Roth