On the rise
Why craft sales are increasing in convenience stores
Craft beers are everywhere these days. There are some places you'd expect to find independently brewed IPAs, Pilsners Ales, and more, from stand-alone and chain liquor stores to the alcohol sections of supermarkets. But there's another, somewhat untapped market, that may present a new opportunity for craft brewers to boost sales. People also are quenching their thirst, especially over the last year for microbrews, at bodegas and convenience stores.
While not usually thought of as a craft beer destination, sales data recently collected by National Retail Solutions (NRS) from more than 3,000 stores in its network found that craft beer sales significantly increased in several categories. While overall beer sales at its stores increased by 16% in 2020 Y-O-Y 2019, and beer, flavored malt beverages and cider were up 20% in 2020, craft beer purchases skyrocketed by 29%.
Six-packs sold best in 2020, accounting for 55% of craft beer sales, while individual bottles and cans represented 25% of sales. Interestingly, though, 12-packs and multipacks of less than six cans or bottles experienced the greatest growth, at 64% and 87% respectively. Consumers seem to be interested in either purchasing in bulk to keep stocked up or just enough for a few days. This type of data is important because it lets craft brewers allocate the right mix of categories and provides predictive forecasting for the year ahead so that customers can always find what they need.
The stores selling beer span across several channels. Nearly 80% of beer sales are through the Conventional Independent Convenience Stores (49%) and the Conventional Independent Liquor Stores (30%).
In addition, new points of distribution for craft beer rose 12% across the NRS stores in the last quarter of 2020 compared to the first quarter of 2020 (pre-COVID), which translates to two additional SKUs per store. Meanwhile, mass-produced beer stayed flat—and no one likes flat beer—for new points of distribution during the same time period.
This data must take into consideration that craft brews only represented 4.8% of NRS stores’ total beer dollars in 2020 versus 25% in the overall US Beer Market, but that's not a bad thing. To the contrary, there is tremendous room for growth and opportunity for revenue generation in a market that is gaining steam. Independent brewers would be wise to look at bodegas and convenience stores to accelerate growth.
NRS stores' demographic also is a key indicator and driver of investment opportunities. A great number of stores in the network are located in diverse, multicultural neighborhoods, many with a sizable amount of immigrants. Using this data, craft brewers will not only know where to sell their product but what kind of beer to sell. For example, a craft brewery with a special imprint that appeals to the Spanish, Latino or Asian communities would be a perfect fit for many bodegas, liquor stores and convenience stores.
The stores selling beer span across several channels. Nearly 80% of beer sales are through the Conventional Independent Convenience Stores (49%) and the Conventional Independent Liquor Stores (30%). Superettes and Ethnic Markets combined represent an additional 10% of sales.
Microbrewers also can peruse data to decide where best to leverage distribution. Stores selling beer fall into 168 Designated Marketing Areas (DMAs), but the Top 7 account for over 50% of beer sales: Los Angeles (11.5%), Dallas/Fort Worth (9.4%), Sacramento/Stockton/Modesto (9.1 %), New York (9.0%), San Francisco/Oakland/San Jose (4.7%), San Diego (4.4%) and Boston (3.2%). On a sales-per-store basis, the West Coast is the best coast for beer—with stores in California selling more than five times as much beer as stores in New York and Boston.
Pandemic helped sales
Part of the increase in craft beer sales certainly can be attributed to the pandemic. With bars and nightclubs shuttered, the corner convenience store and bodega have become, in essence, the neighborhood bar, a popular destination to pick up a six-pack, a case or individual bottles of microbrews.
The data also can be interpreted to show that shoppers are becoming more savvy and willing to try new types of beer. Drinking the same old beer may have been sufficient pre-COVID, but new and different routines, or lack of adherence to old norms, have become common during the pandemic. People are craving new experiences, and that could easily extend to new adult beverage choices.
Customers may be enjoying that cold brew at home while watching sports, or the latest hot series or movies from a streaming service. While more people will be going to games and movies in person once venues reopen, they're also likely to still spend a significant amount of time on the couch.
Drinking the same old beer may have been sufficient pre-COVID, but new and different routines, or lack of adherence to old norms, have become common during the pandemic.
We still are in an economic downturn, and live sporting events and movies could pose a budget crunch for many people. Likewise, people during the pandemic spent a significant amount of money on streaming services. It wouldn't make sense to abandon that investment just because sports arenas and movie houses have reopened.
According to BevSource, 2021 is expected to see craft brewers stepping further into the seltzer barrel. NRS stores saw an increase of SKU proliferation of craft seltzer brands carried with 93 unique items scanned across the network in 2020 versus 58 in 2019, an increase of 60%. Another trend anticipated by BevSource is more craft brewers leaning into lagers. Today, most craft beers are ales, but lagers are the most widely drank beers in the world. In 2020, the NRS stores already started to see a growth in craft lager offerings—with a modest 5% growth in lager SKUs available versus 2019.
Craft brewers that acquire NRS data already are ahead of the game in knowing how bodegas and convenience stores, a bustling market in themselves, are following, outgaining or distancing from current trends. Bodega and convenience store sales, when tied to demographics, gives even more insight into how this specialized market operates. Companies like NRS that specialize in tracking these stores' sales can provide substantial data to microbrewers.
Going down to the local bodega or convenience store for a cold craft brew will continue to increase, and NRS will continue to gather unique data and insights that can help grow your brewery.
Elie Y. Katz is founder, president & CEO of National Retail Solutions (NRS), subsidiary of IDT (NYSE: IDT) that operates a nationwide point-of-sale (POS) terminal-based platform to bodegas and other independent retailers. Six years ago, he brought his many years of experience as an executive at various companies, in diverse industries, plus strong leadership, interpersonal and organizational skills, to create NRS.