For the second year in a row, the number of convenience stores stocking wine increased in 2019, and retailers and marketers expect the category will finish out this year with a robust performance. Increased retailer attention to wine comes as alternative packaging transforms the beverage into a more convenient option for customers, millennial consumers increasingly demand varied wine options, and some states are loosening restrictions on c-store sales of the product. Moreover, the wine category is benefitting in general this year as bars and restaurants have shut down and reduced customer capacity in the wake of the COVID-19 pandemic, and consumers have shifted to more off-premise purchasing habits.

“Since 2010, there are more than 8,000 additional convenience stores in the U.S., with many choosing to sell wine,” said Chad Fisher, vice president, emerging channels at The Wine Group, marketer of the Cupcake line and other wine brands. “Over the last five years, we’ve seen a large uptick in overall wine category focus from both chain and independent operators.” The relaxation of bans on c-store wine sales in states like Tennessee and Oklahoma in recent years also has contributed to an increased presence of wine in the channel, Fisher added.

While the percentage of c-stores selling wine increased to 52% in 2019 from 46% in the year prior, according to the NACS State of the Industry Report of 2019 Data, the category suffered through lackluster sales performance last year. Average sales per store dropped slightly to $14,357, and category margins dipped to 27.5%. “Within the category, coolers/wine cocktails and sparkling wine were the only subcategories to realize sales growth in 2019, while all other subcategories struggled,” remarked Jayme Gough, NACS research manager.

Desirable Demographics

Still, wine marketers believe that changing consumer demographics bode well for the category in c-stores. According to Herb Smith, vice president, customer development, at E. & J. Gallo Winery, 50% of c-store shoppers are millennials who choose the outlets for “the ease of purchase and reliability. They’re typically on the go with a three minute or less shopping experience and have made their purchasing decisions before entering the store.” Millennial consumers also are willing to try “new wine formats outside of traditional 750 ml. bottles,” Smith noted, such as cans, Tetra Paks and 187 ml. bottles.

Tara Shoultz, associate brand manager for Korbel California champagne, prosecco and brandy, said, “Wine shoppers in the convenience channel are usually younger, female and have slightly higher household incomes than the average wine shopper.” She added that while demographics vary by market, c-store wine shoppers are slightly less price sensitive than average, “although they’re still looking for value.”

Just as the c-store wine consumer is changing, so is wine packaging. With the expanded presence of cans, boxed wine, Tetra Paks and 187 ml. bottles, “c-stores can be arguably the biggest benefactor,” remarked Smith. Wine in cans has become particularly visible in the past few years, and according to Gough, “they’re a great option for occasions where a customer may not have a corkscrew on hand, or might not be allowed glass.”

Beyond cans, other alternative packages also are on the rise. Smith pointed to strong trends this year for three-liter boxes in c-stores. The Wine Group’s Fisher, meanwhile, said that while “canned wine is certainly on a rocket ride over the last year or two, Tetra is enjoying double-digit growth as well, and on a much larger base.” And the innovation continues. The 19 Crimes brand, known for its augmented reality labels, is now available in 375-ml. aluminum bottles, Carl-André Roux, vice president, national accounts, at marketer Treasury Wine Estates, reported.

Pandemic Uptick

As with other in-store categories, the pandemic has dramatically impacted wine sales. According to Koupon, the digital promotion provider for small format retail stores, wine dollar sales in c-stores increased 9% for the 10-week period from February 23 to May 2, 2020. Some 32% of c-store wine buyers during the period were new to the category within c-stores, the company noted, and 17% of those first-time buyers made repeat purchases. Retailers also report impressive trends.

Max Glober, director of marketing at Petro Services Inc., the operator of Daily’s stores in Florida and North Carolina, said wine sales at the chain are up more than 20% year to date. “It’s all selling well but in higher quantities,” he noted. “The rings are higher, and we’re selling more units.” But even before the pandemic, wine was an important category at Daily’s, Glober stated. “It’s not one of our top three categories, but we see a nice little chunk of sales.”

Similarly, at Basecamp Wilson, a high-end market, restaurant and gas station in Wilson, Wyoming, at the base of the Grand Tetons, owner Jimmy Fraser said, “We’re seeing an uptick in wine sales during the pandemic. Customers are willing to spend a little more because they’re not going out.” In April and May, volume sales surged, Fraser reported. “We were selling wine by the case, not just by the bottle.” Like Daily’s, Basecamp Wilson has developed a reputation for wine and even employs a sommelier.

Over the last five years, we’ve seen a large uptick in overall wine category focus from both chain and independent operators.

And at Good 2 Go c-stores, Waldo Wallace, senior beverage category manager, said, “Our wine sales are going through the roof.” While sales had been doubling on a monthly basis prior to COVID-19—thanks to increased focus on the category by the western chain—sales skyrocketed this spring and summer. “We’ve seen increases of 600% in a single week,” Wallace reported. As a result, Good 2 Go’s next wine category reset will likely see an expanded selection, the retailer said.

The pandemic may favorably impact the wine category in c-stores for some time. “With shoppers focused on their health and safety, they’re looking to get in and out of stores quickly,” remarked Korbel’s Shoultz. “This has given c-stores a competitive advantage and has benefitted their wine sales.”

Wine-Shop Tactics

Pandemic or not, savvy c-store retailers know that proper attention to merchandising—including the use of tactics employed by fine wine shops—helps drive category sales. “We pride ourselves in offering a large selection of premium wines from some of the greatest wine-producing regions around the world,” remarked Glober. Handsome wine racks are now part of new-store builds and retrofits at Daily’s, while merchandising features shelf tags touting highly rated wines, as well as wine gift bags.

Good 2 Go relies on cross-merchandising wine with other products. For Valentine’s Day, for example, “I build displays around flowers and include wine,” Wallace noted. “For the year-end holidays, I’ll put bottles of wine by the check stand, along with bows and ribbons.” Prior to the pandemic, Basecamp Wilson offered frequent in-store wine tastings and even hosted wine dinners with appearances from winemakers. To merchandise, the store employs a unique layout: Rather than organizing selection by varietal, “We use occasion themes,” Fraser said, “such as ‘Front-Porch Sippers’ and ‘So, You Like Cabernet.’”

Wine marketers advise retailers to stock the right selection for their stores and to promote the category. “Providing the right selection of varietals, price points and sizes will be extremely important to grow wine sales,” said Shoultz. Smith and others emphasize the importance of chilled wine. “The impact from putting in full doors of cold wine versus half doors can be immense,” the E. & J. Gallo executive remarked. Proper positioning of ambient wine, meanwhile—particularly in the front of the store—helps alert customers that the shop carries the product, Fisher noted.

The Wine Group executive and other marketers see only growth ahead for the category in the convenience channel. “With the addition of more stores, consumers gravitating more toward wine as a viable option and retailers getting more strategic with category management, we expect to see the size and value of wine in convenience grow for many years to come,” he said.

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.

The NACS Annual Shopper Study comprises consumer behavior analytics from more than 10,000 convenience store shoppers across 42 states, representing the most comprehensive consumer-driven metrics available to the industry.

To learn more about the NACS Annual Shopper Study and how to participate, contact Leroy Kelsey, director of industry analytics, at [email protected] or visit www.convenience.org/ctp.