On Budgets and Beer

Enhanced economic outlook to improve alcohol sales in 2013

With more money comes more spending power. And with more spending power comes good news for c-store operators looking to improve adult beverage sales.

According to Donna Hood Crecca, senior director, adult beverage resource group for Technomic Inc., 2012 was a reasonably good growth year for the segment due in part to consumers’ growing faith in the economy—though not an “aggressive rebound,” she says. The industry saw a 3.9% dollar growth and 1.8% volume growth at retail last year.

Hood Crecca expects 2013 to surpass the growth of last year; in fact, “we are ... optimistic that people will continue to feel more confident and continue to spend.”

Unsurprisingly, millennials are vital to adult beverage growth. According to Hood Crecca, by 2015, 79 million millennials will be of legal drinking age. “Here you have this massive demographic that was raised on Starbucks and the Internet. They’re very food-savvy, and they’re very tuned into the adult beverage market.”

According to Technomic, 44% of millennial customers visit c-store once a week or more. Fifteen percent purchase alcohol beverages during their visit.

So what’s expected to be a home run in the adult-beverage category in 2013? As a millennial might say, stick to beer and you’re in the clear. Technomic expects to see 3.4% dollar growth and 1.1% volume growth for beer at retail this year. Among the hot sub-segments:

  • Craft beer sales are expected to surge in c-stores in 2013. Hood Crecca expects stores to price craft competitively, and choosing local craft brews would be a big point of differentiation, she says. And though it could be a challenge operationally, growlers of local craft beer could draw in millennials.
  • Powerhouse brands will innovate in order to gain ground against growing demand for craft and other premium beverages. New products and innovative packaging will help these companies retain their sweet spot in the c-store.
  • Flavored malt beverages are also expected to do very well in the c-store this year, building on growth they experienced in 2012.
  • Cider continues to be an interesting product, riding the coattails of the craft-beer movement. It’s on trend with many current consumer interests: artisan, boutique, flavor and alcohol content. In 2011, cider volume grew in 31.3%. Experts expect to see the same in 2012.