While convenience store traffic and some in-store categories were challenged in 2020 as the pandemic altered life for so many, the beer category emerged as a major sales and profit driver for retailers, and merchants are looking to continue to build on last year’s big gains in 2021 and beyond.

Average in-store sales of beer soared 18.1% last year as c-stores benefited from closures and reduced capacities at bars and restaurants, pandemic-induced pantry loading and surging flavored malt beverages, according to the NACS State of the Industry Report of 2020 Data. “There was huge, huge growth for beer in 2020,” remarked Jayme Gough, NACS research manager, noting that the category accounted for 6.79% of in-store sales last year and 3.49% of in-store gross margin contribution. Gough added that because 2020 was a stressful year for many consumers, beer and other indulgent categories fared well. In addition, c-store beer sales saw a lift from consumers who shied away from supermarkets and other larger-format stores to avoid coronavirus exposure. “C-stores are a great option for customers to get in and out quickly and safely,” she said.

Joy Young, senior director, category development at Anheuser-Busch InBev, pointed to the value that beer holds in total store profitability. “Beer contributed to over 60% of total store absolute growth dollars, outpacing all other categories,” she reported, citing IRI total U.S. convenience store sales for calendar year 2020. In 2020, “performance was driven by hard seltzers, lighter, low-cal and low-carb beers, and the resurgence of mainstream brands turning to growth,” Young said.

NACS CSX and NielsenIQ data reflect the beer category’s stellar performance last year. CSX monthly data showed beer sales accelerating from trends of the previous three years beginning in April 2020 and spiking in July, and then slowing later in the year. According to NielsenIQ, total beer unit sales in c-stores last year rose an impressive 5.4%, while total category dollar sales jumped 14% to nearly $23.3 billion. The double-digit dollar sales growth indicates consumer trade up in both package size purchases and more premium brands.

Seltzers Sparkle

Flavored malt beverages, and specifically hard seltzers, were the big volume and margin drivers for the beer category in 2020.

Flavored malt beverages (FMBs), and specifically hard seltzers, were the big volume and margin drivers for the beer category in 2020. Average store sales of FMBs surged 70.5% last year, pushing the subcategory into the No. 2 spot for sales contribution after premium beers. FMB’s 22.87% margin—as compared to the category average of 18.44%—helped deliver significant lift to c-stores’ gross profit dollars in 2020. Vince Segura, general manager and retail director at Texas’ Fuel City chain, said young consumers of legal drinking age favor spiked seltzers. “We’re trying to make the shift and take on a lot of the seltzers,” he noted, a move that may require cutting back on SKUs of mainstream brews.

Nearly every other beer subcategory posted growth last year, according to Gough. Premium—which accounts for almost one-third of all c-store beer sales—increased 8.2% while higher margin imports, superpremiums and microbrews/crafts all surged at double-digit rates. “We did well with imports,” Segura reported, particularly brands from Mexico, such as Modelo Especial, Corona Extra, Dos Equis and Pacifico. Chris Peckat, director of purchasing at the PRIDE Stores in the Chicago area, meanwhile, noted that crafts, especially locally produced labels, are seeing continued demand. “We used to go all out and get crafts from California, Colorado, all over,” he said. “But today, it’s just the local ones that people are after.”

Tom McReavy, senior vice president of sales at California’s Stone Brewing Co., said the c-store channel is an ideal one for craft brews. “C-store customers are looking for the opportunity to make a choice quickly, and when they make that choice, they want to know that they are getting a quality beer that tastes great,” he explained. “Craft beer was founded on the principles of quality and flavor, so it’s an easy connection to make that craft and the c-store consumer would be a great fit.”

Pantry loading led to a beer packaging mix shift to 12- and 24-packs for retailers in 2020. While the multipacks typically carry lower margins than smaller pack sizes, they do provide higher basket rings. Chandler Tillery, merchandising assistant at Arkansas’ Big Red Stores, reported that much of the growth in beer sales at the chain last year was due to more than 20% growth in 12- and 30-packs. As a result, Big Red is increasing the amount of space it allocates to multipacks this year.

The big boom in c-store beer sales last year wasn’t without its challenges. Retailers pointed to supply issues as vendors and wholesalers struggled to keep up with soaring demand at a time when the pandemic placed numerous restrictions on the supply chain. According to Peckat, multipack shortages drove customers to “raid our singles cooler. Rather than buying two cans at a time, they would buy six,” he noted. “Then our singles doors would empty out.” Indeed, Tillery said “consistency in inventory” remains a concern today. “There have been more isolated out-of-stock issues from manufacturers,” he reported.

Maintaining the Momentum

While it’s unlikely that the beer category will record another 18% growth hike this year, there are steps retailers can take to maintain last year’s momentum and continue to benefit from changing consumer buying habits. “Track inventory and monitor if shopping patterns are shifting back to pre-2020 habits, and change assortment if needed,” commented Gough. McReavy agreed. “Make sure you’re staying ahead of the trends in beer and have the right assortment of flavor profiles for your local customers’ tastes,” he advised. A-B’s Young added that given the constant challenge for space in the cooler, “look to use ambient space and displays more effectively.”

While 2020 may have been a banner year for the beer category, there’s still plenty of opportunity ahead. Gough pointed to the “huge influx of new customers” who began shopping c-stores during the pandemic. And while last year may have been marked by a return to tried-and-true brands, with the pandemic easing, “consumers may feel more comfortable trying new things again. They might peruse the aisles a little longer than they did last year.”

Indeed, A-B’s Joy said, “Beer has a proven track record in delivering growth during uncertain times, and we’re confident in the category’s trajectory.”

The Power of CSX Data

CSX, the engine behind category metrics and NACS State of the Industry data, provides current and customizable tools for financial and operational reporting and analysis in the convenience industry. Retailers can measure their company by any of the myriad metrics generated via our live database. Contact Chris Rapanick at (703) 518–4253 or [email protected] for a complimentary executive walkthough.