U.S. convenience stores saw the 15th straight year of record in-store sales and the fourth straight year of $10 billion-plus in pretax profits, according to the National Association of Convenience Stores’ State of the Industry. Foodservice sales overall were $53.3 billion, accounting for 22.5% of in-store sales.
Foodservice continues to be a key focus for growth in the convenience store channel and was the biggest differentiator in terms of profits. Top-quarter stores had prepared food sales that were 3.6 times greater than bottom-quarter stores, and coffee sales at top-performing stores were 5.2 times greater than those of the bottom quarter.
Salty snacks were up 5.6%, candy up 2.6% and alternative snacks up 2%, as all had strong growth. This corresponds with some consumers, especially Millennials, moving toward snacking and away from traditional meals, according to the report. Alternative snacks, a category driven by protein- and energy-rich products, reached the top 10 in-store categories for the second year in a row, which signals the growing appeal of immediate and healthier snacks.
Convenience stores sell 23.8% of packaged beverages in the U.S., according to Nielsen, and experienced a slight sales increase (0.4%) in 2017. In particular, enhanced water had the strongest sales increase at 9.1%, followed by ready-to-drink iced teas (up 3.5%), alternative beverages (3.5%) and bottled water (0.6%). This continues the trend of consumers wanting more healthy and functional beverages at convenience stores. The packaged beverages category accounts for 15.8% of overall in-store sales.
Most of the top 10 convenience store brands in 2017 were beverages, according to IRI’s 2017 New Product Pacesetters report. Median year-one sales across the top 10 were $31.7 million.
Red Bull Green Edition was the top convenience store brand. The list featured LIFEWTR by PepsiCo (ranked 2), Mountain Dew Pitch Black (5) and Sprite Tropical Mix (8).
The energy drink and soda categories are starting to blend and blur more, the IRI report found. Two examples are Monster, an energy drink brand, launching Monster Mutant Super Soda (ranked 3), and Mountain Dew Black Label (7), a soda, developing packaging that looks very similar to energy drink cans.
All of the top convenience brands were pure indulgence products (except for bottled water). This reflects consumers’ ongoing desire for healthier-for-you indulgences, the report stated.
“Innovating to meet core needs and wants is crucial to ensuring new product success, but the challenge doesn’t end there,” said Susan Viamari, vice president of thought leadership for IRI. “For a new product to be truly successful, it is up to marketers to ensure that the product – and messaging – are where the shopper is, where the shopper is ready to buy.”
For the full story, go to this week’s Food Institute Report.
Chris is a business writer and market analyst that focuses on the Markets, Legal and Washington sections of the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He invites you to contact him via email at firstname.lastname@example.org to talk about anything food-related.
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