CSN - August 2018 by ensembleiq

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VIEWPOINT

Top Women in Convenience Keynoter Epitomizes Courage & Commitment Paralympian Melissa Stockwell’s adversity fuels her success MELISSA STOCKWELL was the first American female soldier to lose a limb in Iraq. Rather than let it defeat her, she used the adversity to fuel her success. You’re not going to want to miss hearing her keynote speech at this year’s Top Women in Convenience (TWIC) awards reception in October.

A first lieutenant, Stockwell lost her left leg when a roadside bomb exploded while she was leading a convoy in Baghdad. She was awarded the Bronze Star and Purple Heart for her service in Iraq. But she used that adversity to fuel her subsequent success as the first Iraq veteran chosen for the Paralympics. She competed in three swimming events at the 2008 Summer Paralympics in Beijing, and was the U.S. team’s flag bearer at the closing ceremonies. After the Beijing Paralympics, she turned to the triathlon, winning the Women’s TRI-2 (above the knee amputee) class in 2010, and then successfully defended her title in 2011 and 2012. She is currently training for the 2020 Paralympics in Tokyo. Married and the mother of two, Stockwell believes anyone can do anything if they put their mind to it. She hopes her audience at this year’s TWIC awards ceremony walks away with a greater appreciation of life and an “I can do anything” attitude. Stockwell’s appearance is being made possible by TWIC gold sponsor Procter & Gamble.

Inside this issue, we profile the 45 female leaders (five Women of the Year, 15 SeniorLevel Leaders, 20 Rising Stars and five Mentors) who are this year’s Top Women in Convenience winners. We are looking forward to honoring them at our 2018 TWIC Awards Reception, being held Monday, Oct. 8 at the Las Vegas Convention Center from 5:30 p.m. to 7:30 p.m. I especially want to congratulate our five Women of the Year (see their stories starting on page 32). They each exhibit the kind of “I can do anything” attitude espoused by Stockwell: • Line Aarnes, Vice President, Global Marketing, Alimentation Couche-Tard Inc./Circle K • Laura Aufleger, Vice President, Corporate Communications, OnCue Marketing • Dawn Gillis, Senior Director, Acquisition Integration – Tech Services, 7-Eleven Inc. • Missy Mathews, President, Childers Oil Co./Double Kwik C-stores • Maura Scott, Vice President, Sales, Northeast, Altria Group Distribution Co. It is with great pride that we celebrate the success of the 2018 Top Women in Convenience winners. For comments, please contact Don Longo, Editorial Director, at (201) 855-7606 or dlongo@ensembleiq.com.

EDITORIAL EXCELLENCE AWARDS (2013-2018)

2016 American Society of Business Press Editors, National Azbee Awards Gold, Best How-To Article, March 2015 Bronze, Best Original Research, June 2015 2016 American Society of Business Press Editors, Midwest Regional Azbee Awards Gold, Best How-To Article, March 2015 Silver, Best Original Research, June 2015

EDITORIAL ADVISORY BOARD

2018 Jesse H. Neal National Business Journalism Award Finalist, Best Editorial Use of Data, June 2017

2013 Jesse H. Neal National Business Journalism Award Best Single Issue, October 2012

2013 Jesse H. Neal National Business Journalism Award

2013 American Society of Business Press Editors, Midwest Regional Azbee Awards Bronze, Best Editorial/Commentary, July 2012

2017 Eddie Awards, Folio: magazine Winner, Business to Business, Retail, Single/Series of Articles, May 2017 Honorable Mention, Business to Business, Retail, Single/Series of Articles, June 2016

2015 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Single Article, February 2014

4 Convenience Store News C S N E W S . c o m

Jon Bratta Core-Mark International Inc.

Jack Lewis GPM Midwest

Rick Crawford Green Valley Grocery Edward Davidson ER Davidson & Associates (7-Eleven Inc., retired)

2016 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2015 Business to Business, Retail, Single/Series of Articles, August 2015

2016 Trade Association Business Publications Intl. Tabbie Awards Silver, Front Cover Illustration, June 2015

Vito Maurici McLane Co. Inc.

Finalist, Best Profile, August 2012

2015 American Society of Business Press Editors, National Azbee Awards Silver, Best Profile (long form), February 2014 2015 American Society of Business Press Editors, Midwest Regional Azbee Awards Gold, Best Special Supplement, November 2014 Silver, Best Profile (long form), February 2014

Brett Atherton Bolla Management

2014 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2013 Business to Business, Retail, Single Article, February 2013 2013 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2012

Jim Hachtel Eby-Brown Co. Ray Johnson Speedee Mart

Danielle Mattiussi Maverik Inc. Richard Mione GPM Southeast Jonathan Polonsky Plaid Pantries Inc. Greg Scriver Kwik Trip Inc. Roy Strasburger Strasburger Retail

CONTENTS AUG 18

VO LU M E 54 N UMB ER 08

32 FEATURES

DEPARTMENTS

COVER STORY

VIEWPOINT

STORE SPOTLIGHT

4 Top Women in Convenience Keynoter Epitomizes Courage & Commitment Paralympian Melissa Stockwellâ&#x20AC;&#x2122;s adversity fuels her success.

77 Naturally Good The Goods Mart may be mini, but it is mighty in its mission to bring goodness to its customers and community.

12 CSNews Online

GETTING TO THE CORE

32 The Golden Age of Women Convenience Store News celebrates and spotlights its fifth class of Top Women in Convenience. MIDYEAR REPORT CARD

64 C-store Sales Gaining Momentum OTP, packaged beverages and beer are driving performance in the industry.

6 Convenience Store News C S N E W S . c o m

24 New Products SMALL OPERATOR

28 Achieve Executional Excellence in Your Shelf Layouts Increase turns, reduce inventory costs, improve cash flow and better satisfy your shopper.

94 Make It Fast, Make It Friendly Speed of service still reigns supreme among convenience store shoppers.

At Del Monte, we’ve kept the produce industry convenient for 125 years. How we do it is also why we do it. We’re fresh-fruit fanatics, which is why we’re also healthy-lifestyle fanatics. On-the-go fanatics. Individualportion fanatics. Innovation fanatics. And supply-chain fanatics. So you could even say we’re fanatically reliable.

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CONTENTS AUG 18

VO LU M E 54 N UMB ER 08 8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631 (773) 992-4450 Fax: (773) 992-4455 www.csnews.com Direct Mailing Address for Convenience Store News: 11-43 Raymond Plaza West, 16th floor, Newark, NJ 07102

BRAND MANAGEMENT Vice President/Group Brand Director Paula Lashinsky (917) 446-4117 plashinsky@ensembleiq.com EDITORIAL Editorial Director (201) 855-7606

Don Longo dlongo@ensembleiq.com

Editor-in-Chief (201) 855-7608

Linda Lisanti llisanti@ensembleiq.com

Senior News Editor (201) 855-7618

Melissa Kress mkress@ensembleiq.com

Associate Editor (201) 855-7619

Angela Hanson ahanson@ensembleiq.com

Associate Managing Editor (201) 855-7604

Danielle Romano dromano@ensembleiq.com

Assistant Editor (201) 855-7614

Chelsea Regan cregan@ensembleiq.com

Contributing Editor (303) 741-3377

Renée M. Covino reneek@aol.com

Contributing Editor (201) 280-2614

Tammy Mastroberte tmastroberte@gmail.com

ADVERTISING SALES & BUSINESS

INDUSTRY ROUNDUP

CATEGORY MANAGEMENT

16 Fast Facts 16 Walmart Continues to Test the C-store Waters 18 Eye on Growth 18 Competitive Watch 20 Retailer Tidbits 22 Supplier Tidbits

68 What’s Hot on C-store Menus? Maverik’s San Waffael Swell exemplifies originality in a breakfast sandwich.

Ron Lowy rlowy@ensembleiq.com

Associate Publisher & Midwest Sales Manager Kelly Fischer (773) 992-4464 kfischer@ensembleiq.com Account Executive, Southeast (803) 315-0694

Cindy DeBerry cdeberry@ensembleiq.com

Account Executive & Classified Advertising Terry Kanganis (201) 855-7615 tkanganis@ensembleiq.com Classified Production Manager Mary Beth Medley (856) 809-0050 marybeth@marybethmedley.com

FOODSERVICE

70 In & Out The top 10 ideas to maximize grab-and-go fresh food and make your stores a destination.

EVENTS Vice President, Events (647) 557-5094 ext.1001

74 21: More Than Just a Number Five states to date have enacted Tobacco 21 regulation, and the most significant impact is likely to be on local convenience stores.

Director of Audience Engagement Gail Reboletti (224) 632-8214 greboletti@ensembleiq.com

Shelly Patton spatton@ensembleiq.com

List Rental (847) 492-1350 ext.318

MeritDirect Elizabeth Jackson

Subscriber Services/Single-Copy Purchases (978) 671-0449 EnsembleIQ@e-circ.net PROJECT MANAGEMENT/PRODUCTION/ART Vice President, Production (973) 358-4875 Creative Director (973) 607-1320

HOW TO

Michael Cronin mcronin@ensembleiq.com

AUDIENCE ENGAGEMENT

Audience Engagement Manager (215) 301-0593

TOBACCO

58 Win Top Talent By meeting the needs of today’s employees, from career development to flexible schedules, c-store retailers can remain competitive and attract high performers.

Rachel McGaffigan rmcgaffigan@ensembleiq.com

Associate Brand Director & Western Sales Manager (330) 840-9557

FOODSERVICE

14 Couche-Tard Achieves Growth, Inside & Out

Associate Brand Director & Northeast Sales Manager (508) 385-2524

Kathryn Homenick khomenick@ensembleiq.com Colette Magliaro cmagliaro@ensembleiq.com

Custom Project Manager (224) 632-8244

Kathy Colwell kcolwell@ensembleiq.com

Custom Project Manager (973) 607-1368

Judi Lam jlam@ensembleiq.com

Advertising/Production Manager (773) 992-4418 Art Director (224) 632-8245

Ed Ward eward@ensembleiq.com Michael Escobedo mescobedo@ensembleiq.com

CORPORATE OFFICERS Executive Chairman Alan Glass Chief Executive Officer David Shanker Chief Operating Officer & Chief Financial Officer Rich Rivera Chief Brand Officer Korry Stagnito President, Enterprise Solutions Terese Herbig Chief Digital Officer Joel Hughes Chief Human Resources Officer Jennifer Turner Senior Vice President, Innovation Tanner Van Dusen CONVENIENCE STORE NEWS AFFILIATIONS Premier Trade Press Exhibitor

The contents of this publication may not be reproduced in whole or in part without the consent of the publisher. The publisher is not responsible for product claims and representations. Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631. Copyright © 2018 by EnsembleIQ. All rights reserved. Subscriptions: One year, $93; two years, $152. One year, Canada, $110; two years, Canada, $175. One year, foreign, $150. Payable in advance with a bank draft drawn on a U.S. bank in U.S. funds. Single copies, $10, except foreign, where postage will be added. Printed in U.S.A. Periodicals postage paid at Chicago, IL, and at additional mailing offices. POSTMASTER: Send address changes to Convenience Store News, P.O. Box 1842, Lowell, MA 01853.

8 Convenience Store News C S N E W S . c o m

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Newport® (logo), pleasure® and spinnaker design are registered trademarks.

3 NEW WAYS TO WIN THE C-STORE BEER SHOPPER Convenience alcohol shoppers make several trips to the channel each week on average, making these customers key targets for convenience stores. With roughly 33 percent of all c-store shoppers opting for the channel for its beer selection, compared with 24 percent who like c-stores for their alcohol products, it’s no surprise that convenience is the largest beer platform in the United States and growing. Half of all c-store alcohol trips are spontaneous, so the instore experience can play a big role in stimulating shoppers to purchase specific products such as beer. Here are three strategies for leveraging in-store behavioral opportunities within the c-store shopper journey to grow beer sales. 1. RETHINK YOUR STORE LAYOUT Evaluate your store layout and adjacencies with a critical eye to maximize exposure and linkage to your shoppers’ mission goals. “Occasion fit” is a key alcohol consideration, and the most important occasions for c-store alcohol shoppers are relaxing and socializing. For c-store beer buyers, “cold” is the operative word, with 98 percent purchasing their beer cold and 68 percent planning to consume the purchase within three hours. The visibility of the cooler at the store entry, along with the directness of the route between the door, the cooler and the counter, all affect the level of browsing engagement. 2. SIMPLIFY COMMUNICATIONS C-store alcohol buyers shop quickly, but most in-store

communications today are far too complex for this type of shopper behavior. Look at your store through the eyes of an alcohol shopper and ask yourself: Can each deal be absorbed in 1 second? Are product/deal benefits clearly stated? Are occasions messaged explicitly? 3. MAXIMIZE PRODUCT AND COMMUNICATIONS PLACEMENT Products and communications should be positioned as close as possible to the point of the alcohol shopper’s decision—ideally on the rack, in the strike zone, and in the terminal and/or singles door(s). Or, place them on the cooler door, adjacent to the cooler, or on the way to the cooler, although these positions are less effective. Expand the visibility of featured packs by placing a cold display near the counter, where all shoppers will be exposed to it.

FLOORPLAN PLAN FLOOR CIRCULAR PLAN

FORCED PLAN

Cooler Cooler Warm display Warm display

Line of sight display Line of sight display Door Door

More browsing Harder navigation

Less browsing Easier navigation

Counter Counter

COMMUNICATIONS DO’S AND DON’TS

Don’t

PROPOSITION 1 second FONT COLOR

INTENDED C-STORE ALCOHOL CONSUMPTION OCCASION

10 seconds

Relax

Large font

Small font

Bold contrast

Dull, complicated

Social

28%

20%

16% Eating 14% Sports 13% Everyday 9% Party

AAHIGH-ENGAGEMENT HIGH-ENGAGEMENT‘STRIKE ‘STRIKEZONE’ ZONE’EXISTS EXISTSAT ATCOOLER, COOLER, AMPLIFIED AMPLIFIEDWITH WITHSINGLES SINGLESAND ANDTERMINAL TERMINALDOORS DOORS TERMINAL DOOR: Door at end of well-traveled aisles to cooler gets very high engagement

HIGH HIGH & LOW & LOW SIGNAGE: SIGNAGE: GetGet lowlow visual visual attention attention on on most most account account types types

SINGLES DOOR: Doors containing singles get very high engagement STRIKE ZONE: Shoppers’ visual attention is usually concentrated from eye to knee-level

EDLP: EDLP: Value Value shoppers shoppers seek seek everyday everyday lowlow prices, prices, starting starting on on thethe bottom bottom shelves shelves

CATEGORY CATEGORYGUIDING GUIDINGPRINCIPLES PRINCIPLESAND ANDGUARDRAILS GUARDRAILS

76%

C-Store beer

Consumed immediately (w/in 1 hour)

17% Miller Light 12% Corona 10% Dos Equis 9% Tecate 9% Modelo 9% Coors Light 6% Budweiser 6% Bud Light

Recommended “Price Segment Flow” explained:

Category, brand, & pack

Choice are made pre-store

SINGLES LED #1 C-Store pack type “For me for now” occasion

KEY MISSIONS How people shop for this... For me for now

28%

Speedy sharing

24%

117

Planned event

26%

159

PREMIUM +15% Performs best

Dollars per shopper increased

IMPORTS Price parity Adjacent segments Customer perception and price parity for placement between prem+ & craft

Sources: Anheuser-Busch C-Store Explore Super Study Q4 2017; C-Store Explore Online Survey and Exit Interviews 2017

VALUE & NA 6-pack Premium & value most loyal shopper

Trade up opportunity from single to 6-packs

PREMIUM + +5 bps Performs best

Share of total dollars increased

CRAFTS & FMB Share index Highest among all segments

Craft facings to vol: 169 to $: 117 FMB facings to vol: 347 to $: 240

MOST VIEWED NEW PRODUCT

Sprite “The Fresh Faces Series” Campaign Sprite’s new limited-edition collection, “The Fresh Faces Series,” runs until Sept. 2 and features five hip-hop personalities — rappers Logic, KYLE and MadeinTYO, social media comedian Jay Versace, and music producer Wondagurl. Fans can collect illustrated 16-ounce cans or 20-ounce bottles of the talented group. The Fresh Faces Series continues Sprite’s 30-year legacy of working with artists who shape and redefine music culture. A summerlong marketing campaign features custom live and animated video, interactive social content and live activations that bring the talent’s freshness to life. Fans can also unlock unique artist content and exciting rewards through the Sprite Sip & Scan app. The Coca-Cola Co. Atlanta (800) 520-2653 www.sprite.com

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INDUSTRY ROUNDUP

Couche-Tard Achieves Growth, Inside & Out Acquisition integration and rebranding efforts combine with in-store initiatives By Melissa Kress WITH THE CLOSE OF ITS FISCAL YEAR 2018, Alimentation Couche-Tard Inc. capped off “a notable year for acquisitions,” according to President and CEO Brian Hannasch.

During the past year, the Canada-based retailer acquired CST Brands Inc. and Holiday Cos., and is now busy integrating the two convenience store chains into the Couche-Tard network. “Our reach is virtually across the entire U.S., with new density and strength in growing markets like Texas, Colorado and the Minneapolis metropolitan area,” Hannasch said during the company’s fourth-quarter fiscal year 2018 earnings call on July 10. Within the CST store network, Couche-Tard has begun to reset stores, add private label items, narrow the product selection, introduce signature items and push targeted promotions. The integration of the Holiday convenience store network is not as far along because the deal only closed roughly seven months ago. However, even in this early stage of the efforts, Hannasch said the senior leadership teams have begun sharing best practices and other operational learnings from Holiday.

displaying the new Circle K brand. The retailer also grew its North American presence, including expanding to 48 out of the 50 U.S. states and adding more than 2,100 stores through new openings and acquisitions. “M&A continues to remain a core part of our strategy. At the same time, I would characterize the market — particularly in the U.S. — as active but also expensive,” Hannasch said, reporting that multiples on recent U.S. deals have been high.

IN-STORE ENHANCEMENTS Not all growth at Couche-Tard has been the brick-andmortar kind. Starting at the forecourt, Couche-Tard improved its fuel business in fiscal 2018, including investments in the Circle K fuel brand, according to Hannasch. In-store initiatives are also working to boost the CoucheTard customer experience, such as: • The Circle Tobacco Club loyalty program, • A multi-national Polar Pop promotion, • The expansion of the Simply Great Coffee program, and • A standardized car wash concept with enhanced digital technology.

Similar to the CST convenience stores, Couche-Tard has added several Circle K staples like Polar Pop into the Holiday locations, and the retailer is beginning to introduce private label brands.

Looking at the big picture, Hannasch said it is the combination of several little things Couche-Tard is doing that’s improving its performance overall.

These two major acquisitions aside, Couche-Tard was also busy with its global Circle K rebranding efforts in fiscal year 2018. Couche-Tard currently has more than 3,350 sites in North America and 1,650 in Europe

“We are certainly trying to be more disciplined around promotional activities, focusing on those few things that drive traffic and not trying to do the promotions just because,” he said.

14 Convenience Store News C S N E W S . c o m

The

POWER OF WORKING TOGETHER

GROWTH Our retail relationships are built on our desire to work collaboratively and effectively to meet the diverse needs of our customers and their shoppers.

SOLUTIONS Our collaborative approach means customizing our efforts to the needs of our customers and providing differentiation.

TOGETHER, WE WILL DELIVER REAL, SUSTAINABLE, PROFITABLE GROWTH.

Campbell’s value to Our Customers is centered around REAL and comes to life through a commitment to our customers and our consumers. We are committed to building better partnerships because real success comes as we all work together.

FOOD We are transforming our food, beverages, and snacks, making them affordable and accessible to all.

INSIGHTS We know what both today’s and tomorrow’s shoppers want and how they want it. These real, actionable insights enable us to drive loyalty, increase trips, and maximize basket size.

INDUSTRY ROUNDUP

FAST FACTS

Americans were expected to spend $6.9 billion on food for 2018 Fourth of July cookouts and picnics, which was down from 2017’s record $7.1 billion. — National Retail Federation & Prosper Insight & Analytics’ annual survey

Walmart Continues to Test the C-store Waters The Prime the Pump campaign reportedly doubled the number of E15 stations four years in a row, to now include 1,400 stations across 30 states. — Growth Energy

Twenty-eight percent of younger millennials (aged 24-31) prefer to drink at home, compared to just 15 percent of baby boomers (aged 54-72) who said the same.

The retailer opens another small-format location in the Dallas-Fort Worth area

its convenience store footprint. Its latest move into the convenience channel is a 2,900-square-foot location with eight fuel pumps in Plano, Texas.

2,500-square-foot fuel station and c-store combo replaced a previous kiosk at the existing fuel station, which was manned by one employee and offered a small selection of c-store staples like candy, chips and soft drinks.

The Bentonville, Ark.-based retailer does not intend to stop there, with plans to cut the ribbon on more c-stores in Texas’ Dallas-Fort Worth area — a favorite testing ground for Walmart. Three more c-stores are slated for later this year in Arlington, Lake Worth and Lewisville.

Later in 2017, Walmart opened another c-store south of Fort Worth in Crowley that has the traditional c-store offerings, like an ICEE machine, roller grill and walk-in beer refrigerator.

LITTLE BY LITTLE, WALMART IS EXPANDING

The c-store industry is just one building block in Walmart’s goal to become more convenient to its customers. Other building blocks include online delivery, curbside pickup and in-store pickup towers. In early 2017, Walmart unveiled its latest c-store concept in Rogers, Ark., located near the retailer’s headquarters. This

— Mintel

16 Convenience Store News C S N E W S . c o m

All the c-stores, however, are still in testing mode. Each features eight fuel pumps that are open from 5 a.m. to 11 p.m., and all of them are located in Walmart Supercenter parking lots that didn’t already have gasoline pumps. Currently, Walmart does not have plans for any freestanding c-store locations.

INDUSTRY ROUNDUP

Eye on Growth

Yesway acquired 26 Fresh Start convenience stores in a deal that expands its footprint into three new states: South Dakota, Wyoming and Nebraska.

of the Quick Fuel automated fueling network from Milwaukee-based Jacobus Energy. The 49 Quick Fuel sites span 15 states.

TravelCenters of America LLC is launching a new brand, TA Express. The smaller-format stores will range in size from 10,000 to 15,000 square feet, about half the size of TravelCenters’ traditional locations. Global Partners LP closed on its acquisition of the retail fuel and convenience store assets of Champlain Oil Co. Inc. for $134 million. The deal included 37 company-operated gas stations with Jiffy Mart stores, and 24 fuel sites.

The transaction also came with fuel supply agreements for 65 gas stations, primarily in Vermont and New Hampshire.

Flyers Energy expands with the acquisition

Newly formed Riiser Fuels Holdings LLC completed its second deal in Wisconsin, this time picking up the Mad Max Convenience Stores chain. The transaction adds 11 stores to its portfolio. QuickPix parent company Herdrich Petroleum Corp. purchased four retail sites from Milan, Ind.-based Kelly Oil. This acquisition expands its market presence into southeastern Indiana. Alimentation Couche-Tard Inc. is rebranding nearly 400 Corner Store locations in Texas to the Circle K banner. The efforts will take place over the next several months and into 2019. Empire Petroleum Partners LLC bought the wholesale distribution business of Willoughby Inc. This addition boosts Empire’s current footprint in Tennessee, Mississippi and Arkansas.

Competitive Watch Dollar General introduced a mobile checkout app, “DG Go.” It is currently available for use at 10 Nashville, Tenn.-area stores, including five in the city, two in Madison, and one each in Hendersonville, Goodlettsville and Old Hickory. The Kroger Co. entered into a pact with Nuro to pilot an on-road, fully autonomous grocery delivery experience. The pilot is expected to begin this fall. Amazon will open its second Amazon Go location in Seattle this fall. The cashierless store will measure

18 Convenience Store News C S N E W S . c o m

roughly 3,000 square feet — larger than the first-ever Amazon Go, which occupies 1,800 square feet. Starbucks will open its first A similar Starbucks Signing Store Signing Store in opened in Kuala the United States Lumpur, Malaysia, in 2016 with nine this October in deaf employees. Washington, D.C. The store at 6th & H Street is near Gallaudet University, a school for the education of the deaf and hard of hearing. Cargo, the startup that provides an in-car convenience store experience to rideshare vehicle users, is making its West Coast debut in Los Angeles. Collaborations with Snapchat and SnackNation accompany the move.

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INDUSTRY ROUNDUP

Retailer Tidbits

Global Partners LP’s newest Alltown Markets store in Pittsfield, Mass., serves as half convenience store, half neighborhood market. The store features enhanced food and beverage, and fresh produce, with an emphasis on local sourcing. Love’s Travel Stops launched its own line of sandwiches and wraps baked daily in-store. The line includes six breakfast wraps and sandwiches, and five lunch wraps. TravelCenters of America LLC celebrated the grand opening of its TA Commercial Tire Network Retread Center in Bowling Green, Ohio. The facility is part of the Goodyear Authorized Retread Network.

20 Convenience Store News C S N E W S . c o m

Kwik Trip Inc. selected Each Kwik Trip Federal Heath to roll out an location will in-store digital messaging have eight to 12 screens of digital program. The screens are messaging. placed strategically throughout the store, including at the roller grill, beer cooler, register and beverage bar. High’s began offering health insurance benefits to part-time employees. They can choose plans for individual coverage, employee and spousal coverage, employee and child coverage, as well as family coverage. Cumberland Farms customers have saved more than $100 million with SmartPay since its debut in January 2013. The retailer celebrated the milestone by gifting $100 worth of free gasoline to the top 20 SmartPay users. Exxon Mobil launched Exxon Mobil Rewards+, a loyalty program that enables customers to earn and redeem points on fuel, car washes and c-store purchases at Exxon and Mobil stations. It replaces the previous Plenti loyalty program.

Clif Bar owns 24% share of category.*

STOCKING UP ON CLIF BAR® AND BUILDER’S® IS KEY TO LONGTERM CATEGORY SUCCESS.

Do you stock our 5 top-performing convenience SKUs?

*Source: Nielsen Ttl US Convenience Ð YTD 2018 through 4.21.2018

Want to know more? Reach out to your Clif Bar or CROSSMARK representative!

INDUSTRY ROUNDUP

Supplier Tidbits

Conagra Brands Inc. is closer to acquiring Pinnacle Foods Inc. Both companies’ boards of directors unanimously approved the definitive agreement, which is valued at approximately $10.9 billion.

The new facility will allow the companies to expand throughout Kentucky and Virginia.

Hunt Brothers Pizza broke ground on a new distribution center to be operated by Pizza Wholesale of Lexington Inc. in Jenkins, Ky. The 4,648-squarefoot facility is scheduled for completion in October.

Krispy Krunchy Chicken rolled out a new menuboard system that simplifies ordering for customers. It also meets all Food and Drug Administration regulations requiring calorie information on restaurant menuboards.

22 Convenience Store News C S N E W S . c o m

CSN_1/2 Page Ad_BLEED.indd 1

Bake’n Joy’s manufacturing facility officially became peanut-free in May. The company will keep two peanut butter cookies in its product portfolio, but they will be made at a separate manufacturing facility. The Snickers brand debuted three new limited-edition Intense Flavors in retail stores nationwide: Espresso, Fiery and Salty & Sweet. The new varieties join the brand’s “You’re Not You When You’re Hungry” campaign. Smashmallow kicked off a mobile tour showing consumers how to “S’more Better” this summer. Through Labor Day weekend, the tour is visiting events, retail locations and select neighborhoods nationwide. Capital One formed a national food and beverage specialty banking team. This group serves private, public and private equity-owned clients across the entire food value chain.

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NEW PRODUCTS

1. Johnsonville 2. Whirlybird Applewood Smoked Granola Grab-andChicken Apple Go Package Split Sausage Whirlybird Granola is now Johnsonville introduces Applewood Smoked Chicken Apple Split Sausage for customers seeking a betterfor-you sausage option without compromising on flavor. The naturally smoked chicken sausage has real pieces of apple, about half the fat and calories of a pork sausage, and is the first chicken sausage in Johnsonville’s Smoked Sausage line for foodservice customers, according to the company. The split format is perfect for sandwiches, paninis, eggs benedict and breakfast sandwiches. The fully-cooked, skinless links and split links are free of gluten and MSG. The product is frozen for storage convenience, and available 10 pounds to a case.

offering a convenient 2-ounce package designed for the grab-and-go consumer. A collapsible spoon is included, inviting consumers to use the actual package as a bowl. Whirlybird Granola is made with Non-GMO Project verified, vegan-certified and USDA Organic-certified ingredients. The new package size has a suggested retail price of $2.49 and will be rolling out to select retailers soon. Whirlybird Granola Cincinnati (513) 834-5805 whirlybirdgranola@gmail.com whirlybirdgranola.com

Johnsonville Sheboygan Falls, Wis. (800) 837-5391 johnsonville.com

3. Sour Patch Kids Fire & Freeze

4. Ubr Bites Breakfast Round Snacks

Sour Patch Kids released two new, bold takes on the candy with the launch of Sour Patch Kids Fire and Sour Patch Kids Freeze. Sour Patch Kids Fire, made with a heating sensation, come in four flavors: Angry Watermelon, Berry Blaze, Apple Fever and Tropical Flame. Sour Patch Kids Freeze, made with a cooling sensation, come in a Lemonade Variety Mix, which includes Lemonade, Strawberry Lemonade, Cherry Lime Lemonade and Blue Raspberry Lemonade flavors. Both Sour Patch Kids Fire and Freeze are available at retailers nationwide for a suggested retail price of $2.49 (7.2-ounce package).

New from Rich’s Foodservice, ubr Bites breakfast round snacks are fully baked and individually wrapped in four-packs for optimal convenience. The chewy granola bites are available in Cinnamon and Double Chocolate varieties. They are made with whole grains, represent a good source of fiber, and do not contain any trans fat, high fructose corn syrup or artificial flavors, the company noted. The 1.7-ounce ubr Bites come 75 per case, with a suggested retail price of 54 cents per package. Rich’s Foodservice Buffalo, N.Y. (800) 356-7094 richsfoodservice.com

Mondelez International East Hanover, N.J. (855) 535-5648 sourpatch.com

5. Tri Onigiri Rice Ball Snack A new, triangle-shaped Japanese rice ball snack, Tri Onigiri, has a spicy filling that’s surrounded by sushi rice and wrapped in crunchy nori, a pure, dried, crunchy seaweed. It is available in two savory varieties: Sriracha Salmon and Spicy Hummus. The snack is made with partially-milled, California-grown sushi rice, and premium seeds and seasonings. The Sriracha Salmon variety is filled with certified farm-raised, locally smoked salmon from the Duck Trap River of Maine. The Spicy Hummus variety is filled with hummus made from organic chickpeas and local tahini. The premium ingredients are responsibly farmed and harvested, as well as preservative-free, non-GMO, gluten free and antibiotic free, according to the maker. The product’s wholesale distributed price is $3.33, with a suggested retail price of $3.99 to $5 per piece. Onigiri is a popular food all over the world, including in parts of Asia and Europe. Tri Onigiri Amesbury, Mass. (978) 834-6494 sarah@yusogood.com trionigiri.com 24 Convenience Store News C S N E W S . c o m

NEW PRODUCTS

6. Jelly Belly Candy Cones Jelly Belly Candy Co. introduces Jelly Belly Candy Cones, a new line of ice cream-flavored treats. The new assortment features miniature candy replicas of ice cream cones in five classic ice cream flavors: Vanilla, Chocolate, Strawberry, Mint Chip and Orange Sherbet. Each Candy Cone piece has a waffle cone flavor at the bottom and one of the five ice cream flavors on top. Jelly Belly Candy Cones are mellocreme candies that have a smooth texture like candy corn. They are made from ingredients such as fondant and marshmallow frappe. Jelly Belly Candy Cones are available in 3-ounce grab & go bags, 4.25-ounce gift boxes, and in bulk. Jelly Belly Candy Co. Fairfield, Calif. (800) 522-3267 jellybelly.com

7. French Toast & Pancake Breakfast Bites Among the new options that Rich Products is adding to its convenience channel foodservice offering are French Toast Breakfast Bites and Pancake Breakfast Bites. While these bites may look like doughnut holes, they offer nutritional value, the company says. They are made with enriched wholegrain flour and contain no high fructose corn syrup or artificial colors, flavors or sweeteners. Operators can serve them dusted with powdered or cinnamon sugar, with syrup, dipped in glaze, and/or decorate with sprinkles. The 0.51-ounce bites are fully cooked and frozen, ready to pop into the oven for 2-3 minutes. They come packaged 384 to a pack. The suggested retail price for operators is 50 cents for a three-bite serving.

8. Sniki-Tiki Malt Beverages Sniki-Tiki is a new line of 9.9 percent ABV tiki-style flavored malt beverages from North American Breweries. The line builds on the momentum and growth of higher ABV, ready-to-drink, pre-mixed cocktails, according to the maker. Sniki-Tiki beverages boast tropical flavors with a balance of alcohol and sweetness. Packaged in 16-ounce single-serve cans, the line includes two tiki cocktail-inspired varieties: Killer Punch and Scorpion. Killer Punch features sweet pineapple and coconut with a hint of nutmeg and rum, while Scorpion provides a zing of orange, pineapple and rum flavors.

9. Quest Nutrition Tortilla Style Protein Chips Quest Nutrition Tortilla Style Protein Chips boast at least nine times the protein of conventional chips and approximately 75 percent lower net carbs, according to the maker. Each bag delivers 18-19 grams of protein with only 4 grams of net carbs. The savory tortilla-style protein chips currently come in two varieties: Nacho Cheese and Ranch. Quest Nutrition El Segundo, Calif. (888) 212-0601 support@questnutrition.com questnutrition.com

North American Breweries Rochester, N.Y. snikitikico.com

Rich’s Foodservice Buffalo, N.Y. (800) 356-7094 richsfoodservice.com

10. Saffron Road Crunchy Chickpea Snacks

Saffron Road unveils its latest innovation: a line of indulgent, better-for-you crunchy chickpea snacks that include dark chocolate and other sweet varieties. After being roasted to Saffron Road’s signature crunchy perfection, the chickpeas are then enrobed in a proprietary panning process that results in a glazed shell like an M&M’s candy, the company explained. They are packed with more than 3 grams of protein, and free from any artificial ingredients. Varieties include Dark Chocolate, Dark Chocolate Chai, Salted Caramel and Honey Roasted. Saffron Road Crunchy Chickpeas use antioxidant-rich, Fair Trade certified dark chocolate. All of the varieties are dual certified Halal and OU Kosher, as well as gluten free. The chickpea snacks come in a 4.15-ounce package for a suggested retail price of $4.49. Saffron Road Stamford, Conn. (877) 425-2587 info@saffronroad.com saffronroad.com 26 Convenience Store News C S N E W S . c o m

Mentos Wallet Pack with VelcroBrand PRESS-LOKÂŽ Closure Available in three flavors: Fresh Mint - Spearmint - Watermelon

Portable and resealable Appeal to more gum buyers with the new wallet pack

Contact your local

representative or customer service @ 1.800.283.5988

SMALL OPERATOR

Achieve Executional Excellence in Your Shelf Layouts Increase turns, reduce inventory costs, improve cash flow and better satisfy your shopper AS A CONVENIENCE STORE OWNER, you should have a strong understanding of the fundamentals of space management and how it affects your sales and profit, shoppers and inventory levels. Beyond this, you’ll also need to develop a system or process for ensuring you are merchandising your shelves in the best way possible, as well as maintaining proper shelf sets in your store(s).

By Sue Nicholls, Founder & President, Category To maintain a shelf set, you need to first Management Knowledge Group consider how to strategically add new

items to your set (ask your suppliers for suggestions on where they will best fit), and next ensure that you consistently maintain your shelf set through proper stocking procedures.

Suppliers have advanced planogram software to develop shopper-focused assortment and space-planning solutions for your store. As a store owner, you can’t do the due diligence of understanding shopper decision-making, determining the best assortments and shelf layouts, and ultimately creating planograms for your store, but you can track down the best shelf set for your store from your key suppliers, use your scanned sales data to make decisions on items to carry, and adjust the planogram to best reflect your store and shoppers. 2. Follow and maintain the best-practice planograms

Why would you want to do this? Because it’s going to help you increase turns, reduce inventory costs, improve cash flow and better satisfy your shopper.

Once you have the category shelf layout set up in your store based on the planogram, you need to maintain it. This is easy to do if you create some processes and standards for the shelf, and train your employees on how to properly stock the shelves. Below are some procedures for stocking your shelves that will help you keep each section looking clean, organized and shopper-friendly.

1. Ask for best-practice planograms (POGs) from your suppliers

Ask for Best-Practice Planograms From Suppliers

The following are two practices you should consider as they relate to space management in ways that will help you make better and more strategic decisions for the shelf.

Planograms should be updated annually and evaluated by your suppliers to ensure that the top-selling products are merchandised in your store. Planograms that have been developed for each category should be used as a guide to merchandise your store. Think of these as being standard planograms; adjustments may be required based on the shelving space available in your store. Utilize the POGs to reset your store for each specific category. Choose the POG that best works for your store based on the shelf space that you allocate to that specific category. You should also print the POG so that it’s easy to look at while you are setting up the shelf. Review the POG size against your shelf space available to determine if adjustments are required. If a category section size in your store is larger than the POG:

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KF638 | Â© John Middleton Co. 2018 | For trade purposes only.

SMALL OPERATOR

• Place all products in the POG into the larger shelf set. It’s recommended that you compare the items to the top-selling items based on your store’s scanned sales data. • Increase facings of top-selling products in the larger set. • Increase facings of remaining products as needed to fill the available shelf space. If a category section size in your store is smaller than the POG: • You’re going to need to cut back on the number of items carried vs. the POG. • Review the products included in the POG and compare them to the top-selling items based on your store’s scanned sales data. • Ensure that you include the top-selling items from your store in your shelf layout.

Planograms should be updated annually and evaluated by your suppliers to ensure that the top-selling products are merchandised in your store. Follow & Maintain Best-Practice Planograms Once you’ve got the shelf laid out based on the planogram that works best for your store, you’ll want to maintain this shelf set. Ensure that when stocking your shelves, you are stocking what people want to buy, and then keep your shelves well-stocked and organized: this is a critical component for shopper satisfaction. Here’s a simple seven-step procedure for stocking shelves. You’ll also want to share this with employees who may be responsible for shelving: 1. Save Time. Rather than going back and forth from your storage room to the shelf, bring all the products to the shelf at the same time. 2. Rotate Your Stock. Don’t add new stock to the front of the shelf, or you’ll always be pushing older product to the back, resulting in waste. Move older stock forward on the shelf and put the newer stock at the back of the shelf. 3. Remove Damaged and Expired Products. No one is going to purchase expired or damaged products; and if they do without realizing it, you’ll end up with an unhappy shopper. Remove expired and damaged products from

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the shelves and make sure you record the items that were thrown away via some type of waste audit report. 4. Pull Product Forward. Have all product labels facing forward and pull all product to the front of the shelves. Even when there’s not enough stock to fill the shelf, have the product pulled to the front. This is called “facing” the shelf. 5. Reduce Clutter. Remove excess stock from the shelves (or even worse, the sales floor). It looks messy and can cause confusion at the shelf for your very important shoppers. 6. Keep Things Clean. Nobody likes purchasing products from a dirty or dusty place. Clean as you go by picking up packing materials and giving the shelves a wipe, which will clean up spills and/or remove any dust. 7. Stock the Right Products. If you have an out-of-stock on the shelf, the tendency may be to fill it with the wrong product. This can cause shopper confusion or frustration (they may pick up the wrong product from what the shelf label says). You also run the risk of not ordering the outof-stock product, or not filling the shelf when the product arrives because it’s already full. It’s better to only fill empty shelves with what belongs there. Another important consideration for maintaining your shelf set is identifying how you will cut in new products onto the shelf. First, when making decisions to list new products, make sure there’s an identified need for your shoppers that warrants you listing the item. You should also ask your supplier how to cut in the new product into the section (where it should be shelved) and determine slow-selling items that can be delisted to allow you to fit new products on the shelf. Having a clean, well-stocked store that has your shopper in mind is a key to success for any small-business owner. To be successful at this, you need to create the processes and guidelines to get the best planograms for your stores, execute the planograms, and then maintain them. This is critical to increase turns, increase cash flow, increase shopper satisfaction and, ultimately, increase sales and profit for your store. And who doesn’t want that? CSN Sue Nicholls is founder and president of Category Management Knowledge Group (CMKG), based in Calgary, Canada. She is a speaker and consultant, working with business partners to bring category management training solutions to different areas of retailing like the convenience channel. Editor’s note: The opinions expressed in this article are the author’s and do not necessarily reflect the views of Convenience Store News.

2018 HAS BEEN HERALDED AS THE YEAR OF THE WOMAN.

From women’s marches taking place in cities across the nation, to the #MeToo movement, to the hundreds of women running for major political offices this year, it appears The Golden Age of Women has arrived. With this backdrop, Convenience Store News honors its fifth class of Top Women in Convenience (TWIC), an exceptional group of 45 female leaders who are making their mark on the industry. TWIC is the first and only convenience store industry awards program that recognizes women for outstanding contributions to their companies and the industry overall. Over the past five years, the Top Women in Convenience program has recognized 200 of the best and brightest. TWIC honorees encompass a diverse array of women in the industry, serving in a variety of job roles. This year’s award categories include: Women of the Year: Retailer, supplier or wholesaler executives of any rank who have had an exceptional impact on the success or direction of their company, as well as a positive impact on the convenience store industry as a whole. These visionaries have steered their companies into new markets, new opportunities and strong measurable growth. Senior-Level Leaders: Retailer, supplier or wholesaler executives who have executed on a strategy and transformed their business in a positive manner. Rising Stars: Retailers, suppliers or wholesalers with job titles below vice president, including store managers, who are making their mark in the industry even at the early stages of their careers. Mentors: Retailers, including store managers, suppliers or wholesalers who have made an exceptional effort and had an extraordinary impact on the careers of their colleagues. CSNews, with the help of the Network of Executive Women (NEW) and the 2018 Top Women in Convenience Advisory Board (which includes all five 2017

Women of the Year honorees), winnowed this year’s nominations down to the finest female executives, managers and up-and-comers working for convenience store industry retailers, distributors and suppliers. The judging panel ultimately selected five Women of the Year, 15 Senior-Level Leaders, 20 Rising Stars and five Mentors to be inducted into the 2018 TWIC class. The honorees were chosen based on nominations received from their peers. Drawing from achievements during the previous 12 months, nominators were asked to illustrate the candidate’s innovative corporate initiatives, extraordinary financial and strategic accomplishments, astute problem-solving acumen, exceptional performance and selfless charitable participation, along with other attributes that go above and beyond the call of duty. All of the 2018 honorees will be celebrated at an awards gala on Wednesday, Oct. 8, taking place around the 2018 NACS Show, the largest annual gathering of the convenience store industry. The gala will be held from 5:30 p.m. to 7:30 p.m. at the Las Vegas Convention Center. War hero and two-time Paralympian Melissa Stockwell will keynote the event. Read on to get to know this year’s Top Women in Convenience.

2018 TOP WOMEN IN CONVENIENCE ADVISORY BOARD Chairwoman Allison Moran, RaceTrac Petroleum Inc. (former CEO) Karla Ahlert, RaceTrac Petroleum Inc. Sarah Alter, Network of Executive Women Blake Benefiel, Altria Group Distribution Co. Kimberli Carroll, Ruiz Foods Pat Cordle, BIC USA Inc. Elisa Goria, Circle K Stores Inc. Ruth Ann Lilly, GPM Investments LLC Alicia Logan, Chevron ExtraMile Dave Riser, R.J. Reynolds Tobacco Co. Lesley Saitta, Impact 21 Diane Wallace, Coca-Cola North America

THE 2018 CONVENIENCE STORE NEWS TOP WOMEN IN CONVENIENCE PROGRAM IS SPONSORED BY: Founding & Presenting Sponsor

Platinum Sponsors

Gold Sponsors

AUG

20 1 8

Convenience Store News

COVER STORY

Woman of the Year:

Line Aarnes Vice President, Global Marketing, ALIMENTATION COUCHE-TARD INC./CIRCLE K started a new chapter in her career at Alimentation Couche-Tard, which operates approximately 15,000 stores, as vice president of global marketing. She relocated from Europe to Charlotte, N.C., for the newly created role, which was a promotion from her previous post as senior vice president of sales and marketing.

EARLIER THIS YEAR, LINE AARNES

“This will give me the opportunity to learn more about our business in North America, and hopefully bring some of my competence from Europe to my colleagues here,” she told Convenience Store News. Graduating with a Master of Business and Administration from the Norwegian School of Economics in Norway, Aarnes started her career as a consultant and analyst supporting projects in the consumer products industry, even spending eight years working in the grocery business. She also held the role of senior brand manager at Kraft Foods, responsible for areas of its chocolate business in Norway and Scandinavia. Her first foray into the convenience store industry came when she accepted the role of director of foodservice at Statoil Fuel and Retail, working across all European markets. Before Couche-Tard acquired Statoil in June 2012, she held the titles of vice president of category convenience, and senior vice president of sales and marketing. Despite some initial doubt about entering the c-store business, Aarnes said she has never regretted her decision because of all the opportunities it has provided her, as well as the people she gets to work with each day. “It’s a business with quick decisions, and always extremely high speed and full of passion,” she said, explaining that this is one of her favorite parts of the industry, in addition to the impact the stores have on people’s daily lives to help them save time and make the shopping experience more enjoyable. “I also like the fact that everyone has a relationship with their local store, either as a child buying candy and ice cream, or as a grown-up where the c-store is where you meet your local neighborhood and some of your daily needs,” she continued.

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A New Role Her new title with the company marks the first time someone has been recruited globally to focus on merchandising and marketing. The goal is to build a strong and competent organization to support the business units in succeeding in the local markets, she explained. “My role will develop based on what the strategic priorities are for the company,” Aarnes said. “The ambition is to accelerate growth and competence within merchandise and marketing across our business in the U.S., Canada and Europe.” The first project she is responsible for is Couche-Tard’s firstever Global Customer Segmentation Project, as the chain is looking to become a more customer-centric organization. As part of this, the goal is to build a better understanding of what occasions, motivations and drivers are influencing current customers and potentially new customers. “Equally important is how we will use the competence to target and develop smarter and better solutions for our customers. This is a long-term investment that will influence all functions in our company and how we work,” she noted. Right now, the most exciting part of her new position is all the things she is learning about the company and customers in North Carolina. It’s almost like starting a new job in a new company, she said. The move from Oslo, Norway, to Charlotte also has been an adventure. “It’s very exciting on a more personal level for my spouse and myself. It’s the first time we are living in the United States, and need to learn the differences and how to solve new, practical challenges,” Aarnes shared. Looking back on her career in the industry so far, she is most proud of Couche-Tard’s large rebranding from Statoil to Circle K in Europe over the past three years. The retailer’s Irish Business Unit is the last one to be rebranded, which is happening now. The rebranding has been a “tremendous project,” involving many departments across the organization, including sales and marketing. “The collaboration and common goals we set and have delivered with very strong results in brand awareness and financial results is something I am very proud to be a part of,” she said. Her advice to other women in the industry is to say “yes” to all opportunities where they can develop and grow — even if the new tasks seem bigger than what they have experienced in the past. “Think about long-term ambitions in your career, not only the next short-term move,” she advised. “Many interesting opportunities come from the ones you don’t expect.”

CONGRATULATIONS TO OUR 2018 TOP WOMEN IN CONVENIENCE! WOMAN OF THE YEAR Line Aarnes Vice President, Global Marketing

SENIOR LEADERS

Bonnie Birollo

Lisa Geyer

Janie Dial

Vice President of Operations, Western Canada

Senior Director, NA Franchise Operations & Marketing

Director of Fuel, Florida Business Unit

RISING STARS

MENTOR

Desire Shiffer

Marie-Noëlle Cano

Michelle Davis

Director, HR U.S. Shared Services & Information Technology

Senior Director, Global Communications

Training Manager, South Atlantic Business Unit

We take great pride in the contributions of all our Top Women in Convenience on our journey to become the World’s preferred destination for convenience and fuel!

COVER STORY

Woman of the Year:

Laura Aufleger Vice President, Corporate Communications, ONCUE MARKETING LAURA AUFLEGER REMEMBERS “Take Your Daughter to Work Day” when she was younger, where she would go to work with her father at the family’s convenience store chain. By age 15, she started working in the stores herself — running the register, cleaning the bathrooms and taking out the trash. She also worked at the headquarters during the summer months to experience the corporate side of the business.

Today, she is the vice president of corporate communications for OnCue Marketing and her father is still the CEO. She did take a break from the industry to gain experience in advertising and real estate after graduating from the University of Oklahoma, but then returned to the family business after the birth of her first child. “I interned at an advertising agency in Oklahoma, got married and moved to Dallas, where I worked at another advertising agency and became involved with commercial real estate,” Aufleger told Convenience Store News, explaining that she started back with OnCue, which operates more than 75 c-stores, on a project basis, creating the company’s website and social media presence. She then became involved with site selection and commercial real estate.

social media presence she created for the company, she is most passionate about OnCue’s charitable giving and community involvement. The retailer works with St. Judes Children’s Hospital and donations continue to grow every year. This past year, the company raised $355,000. “We do a big campaign every October for St. Jude’s, and we are also working locally in the community right now because there have been funding issues for education, so we have a Support Oklahoma Schools collector’s cup being sold with 50 cents of each sale going to the local school system,” she shared. Additionally, the chain recently started an Employee Advisory Committee, which Aufleger is leading. The goal is to give a voice to people within the company and gain more perspective from all roles in the company, no matter what level. People within every district were nominated, and 10 people come together to go over feedback and the issues employees are dealing with at that time. “It’s still in its infancy. We have been named a top place to work in Oklahoma, but through surveying our employees, there are still some things we realized could be improved,” she said. “We knew we needed another way to listen to our employees’ opinions and understand what is important to them.”

“I saw the opportunities in the company where I had gained skill sets that could help,” she said of her decision to return full-time.

For example, in the first meeting, they discovered people wanted to be appreciated, so the group created an employee appreciation program.

Her current role includes overseeing the company’s marketing and advertising, community relations, charitable donations, operations and the development of real estate. Her favorite part of the job is the team of people she works with and the customers she interacts with each day.

As far as women in the c-store industry, Aufleger does see more women represented today than in the past, and is proud that at OnCue, 57 percent of the employees are female — and they are represented throughout all levels, from store associates to executives.

“The industry is definitely evolving, and it’s exciting to be a part of it. There are no two days that are ever the same,” she said.

Her Current Passions While Aufleger is proud of the new website and

36 Convenience Store News C S N E W S . c o m

“I think women can bring such a valuable insight and different perspective to the industry that can be refreshing and innovative,” she said. “We have a big focus on our female customers and wanting our stores to be a place where they can go and feel safe. People don’t traditionally think of c-stores as a fun business to be in, but the closer you get to it, it’s pretty exciting.”

COVER STORY

Woman of the Year:

Dawn Gillis

Senior Director, Acquisition Integration – Tech Services, 7-ELEVEN INC.

BEFORE JOINING 7-ELEVEN IN 2004, DAWN GILLIS

worked in various industries as a technology consultant, including finance, travel and insurance. Originally hired as a contractor to support 7-Eleven’s store systems, the retailer then hired her full-time as the director of store systems before promoting her to director of business transformation. In 2010, Gillis became senior director of infrastructure and operations, and her most recent role — senior director of acquisition integration, technology services — started in 2017, when the chain purchased assets from the Sunoco brand, including 1,030 stores. This was the largest acquisition in company history. Gillis was accountable for the technology and processes to onboard the more than 16,000 employees and the store locations in an overnight transaction — and the project consisted of five different brands and technology systems. Today, she has another “big” task — assimilating the more than 1,000 stores into the 7-Eleven system following the acquisition. She is proud of the groundbreaking work she and her team are doing for the Sunoco acquisition. Gillis spent three months with the Sunoco technology department to learn how its system could be reconfigured and incorporated into the 7-Eleven platform. It was a challenge, but facing challenges is her favorite part of the job. “It’s an incredible balance between customer service, store operations, merchandising, technology, vendor management, strategy and planning,” she explained. “I have partnered with my peers from

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different functional groups, and we all work together to solve the issues that come up daily. Onboarding a system this large into an even larger 7-Eleven system and then integrating all the operational processes is just the kind of challenge I love to collaborate on. The conversations are robust, fun and innovative.” She also enjoys 7-Eleven’s customers and gets a firsthand opportunity to interact with them because once every three years, 7-Eleven employees in leadership roles must spend three to five weeks working in a store. This ensures the executives have a real-life understanding of what it takes to operate a store, manage product assortment, and how their decisions can affect a store’s sales and customers. “Our business is all about service to the community,” Gillis said. “You can’t help but smile when a mom with a van full of kids stops by after soccer practice to get Slurpees, or meet a person who comes in every day at the same time and is happy to get the product they want and just say hello. It’s fulfilling and enriching, and it makes me happy,” she said. During her 10-plus-year career at 7-Eleven, Gillis has prided herself on finding technological and operational efficiencies and capitalizing on them. In doing so, she has helped the company grow its business and realize significant cost savings. She earned the company’s “Big 3 Award for Business Transformation” for her role in the development and implementation of a major store operations and logistics transformation initiative. The prestigious award was presented to three people who worked on one of the company’s big three initiatives. Gillis’ advice to other women in the industry is to be authentic and understand who they are. “Being true to yourself increases your effectiveness in whatever you choose to do. This helps build your vision, identify your goals, improve your communication and define how you will play a part in it all,” she said.

Congratulations! The Women of 7-Eleven Do It Again! Congratulations to 7-Eleven’s Dawn Gillis and Ashley Borden for being recognized by Convenience Store News as two of the 2018 Top Women in Convenience. Thanks to your talent, dedication and willingness to continually go above and beyond the call of duty, you’ve made 7-Eleven one of the world’s top convenience retailers.

women of the

year

Dawn Gillis Senior Director Acquisition Integration – Tech Services

“Women of the Year” award recipients are recognized for their exceptional impact on the success or direction of their company, as well as their positive impact on the convenience store industry as a whole.

RISING STARS

Ashley Borden Product Director Center of Store

“Rising Stars” award recipients are recognized for making their mark in the convenience store industry in the early stages of their careers.

COVER STORY

Woman of the Year:

Missy Matthews President, CHILDERS OIL CO./DOUBLE KWIK THE CONVENIENCE STORE AND RESTAURANT INDUSTRIES

Reflection & Advice

have been part of Missy Matthews’ life since she was 12 years old and her parents put her to work bussing tables at their family-owned restaurants.

While her favorite part of the job is the team of people she works with, she also loves the customers and the overall c-store industry because there is never a dull moment, and it allows her to express creativity each day.

She worked as a c-store cashier every summer during high school and college and, after graduating from Georgetown College in Kentucky with a degree in marketing and science, she joined the family business, Childers Oil Co., as director of operations. Today she is president of the chain, which operates 43 Double Kwik stores. “I’m second generation,” she told Convenience Store News, explaining that the company is 52 years old, and each summer she would work in a different part of the organization, including roles as store manager, overseeing construction, and accounts receivables. “I have worked in every position for the company, and it was interesting for me to see the different perspectives,” she said. “I never received special treatment, and made the same wages given to each position.” Since her father’s office was the smallest one in the building by his choice, he asked her to build a new, larger one so that she could work beside him and learn the business — listening to his phone calls and conversations on a daily basis. They still share the same 14-foot by 14-foot office, although now works part-time. “I now have the head of each department reporting to me, but have been involved at the operations level for so long that I tend to enjoy being involved there,” Matthews said. “Merchandising and marketing come natural to me, so if we are resetting a store or designing a new store, that is the sandbox I enjoy being in.” She also deals with any issues that come up out of the norm, while her team handles the day-to-day challenges. And with ongoing construction for the past 25 years, Matthews also oversees each construction project.

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“The group of people I work with every day are amazing, and the sky is the limit to what we can do within our stores,” Matthews said. “I love the freedom to do different things for our customers, and offer different options and menu selection. I also love seeing how the customers respond to that. It’s fun and never boring.” Looking back on her career thus far, Matthews is most proud of the three acquisitions the retailer made in 2002, adding more than 50 stores to the chain. While some of the stores have since been divested or closed, the overall process included reopening more than 40 stores that had been shuttered for at least six months due to bankruptcy. “They were standing there fully stocked with no electricity or water. We went in with a planned-out, methodical schedule and cleaned, staffed, stocked and opened every one of those stores,” she shared. “It was exhausting leaving the house before daylight and coming home after dark, but it was gratifying to get them open for that region that had all of those stores close. It was such an inconvenience to those customers and to the vendors affected by the closings as well.” Childers Oil has also been on a construction spree recently, building four new stores from the ground up, along with two raze-and-rebuilds. Two more new stores are on the lineup as well. The interiors of these stores are “cutting-edge,” Matthews said, offering unexpected elements such as barn wood and granite dining tables. Since the wood was in high demand and expensive, the retailer bought a barn and tore it down for the wood. “We turned our metal fabrication shop into a woodworking shop and did it all ourselves,” she said. “People walk in and say they would love to have all of it in their homes.” Childers Oil belongs to the Kentucky Petroleum Marketers Association and NACS, the Association for Convenience & Fuel Retailing. Matthews regularly participates in industry leadership events. Since her early days in the business, she has seen it evolve from where she was the only woman in the room at meetings, to now having more females at the table. She has a lot of women on her team, and advises her peers to always remember why they are involved in the industry. “It’s obvious why we are here — we can do the job and we are qualified, if not over-qualified,” she said. “I try to let my actions speak, and treat others how I would like to be treated.”

CHEERS TO YOU Congratulations to all of the Top Women in Convenience, including those from the Coca-Cola team! Thank you for your remarkable contributions to the industry! Debby Smith Category Management Leader for 7-Eleven Business

Yvette Spears Vice President National Retail Sales

ÂŠ 2018 The Coca-Cola Company

COVER STORY

Woman of the Year:

Maura Scott Vice President, Sales, Northeast, ALTRIA GROUP DISTRIBUTION CO. SHE MAY BE VICE PRESIDENT OF SALES for the Northeast region at Altria Group Distribution Co. today, but Maura Scott did not start off in sales or in the convenience store industry.

It all started with a law degree from the University of Michigan Law. After graduating, she practiced law for eight years at a firm in Seattle, before moving to Richmond, Va., and joining Altria as an attorney. In that role, she worked closely to support the sales organization, learning more about that side of the business. In 2015, she took the opportunity to lead a portion of the sales organization. “I went from managing a group of seven to a group of 500 at the time,” she told Convenience Store News. “It’s not uncommon for people to move around in Altria and broaden their business experiences, but it is unusual going from law to the business side.” Scott now leads a team of 400 employees in 14 states, plus the District of Columbia. She and her team manage relationships with approximately 65,000 retailers and 400 direct distributors for Altria’s tobacco operating companies, including Philip Morris USA, U.S. Smokeless Tobacco Co., John Middleton and Nu Mark. Her favorite aspect of the job is building a team and culture that “raises or lifts people up to perform to their best potential,” she said. “The biggest challenges of my role, and what I think is most exciting, is building a team across 14 states and helping the organization move as one in order to accomplish what our customers and operating companies need from us,” she explained. “Coming from law, I brought a very different perspective to the sales role and it didn’t take me long to realize it was a great thing I could capitalize on.” Scott is currently working to wrap up the company’s Political Action Committee campaign. She’s also working with the new CEO, Howard Willard, who is restructuring the operating companies, and his leadership team to figure out how the company can “be bolder” in the future,” she noted. “Howard brought with him a great passion for the

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future, and we are looking at how do we as a company that has made traditional products for a long time, take those brands and see what the innovative products are that our customers will want in the future,” she said. “We can’t do what we have done in the past. Everything has changed. We have to innovate with courage, be bold and think differently.”

Leadership & Accomplishments Aside from her official role with the company, Scott is also the co-executive sponsor of the Women in Sales Network, one of the biggest employee resource groups in Altria. This group includes both men and women across the organization focused on the development and advancement of women in the company. Scott also serves on the Altria Diversity Council and is a member of the Network of Executive Women (NEW), speaking in 2016 at their national conference on leadership. “I attended NEW’s first executive institute and participated in their eight-month leadership program, which was fantastic,” she said. “I’m also a member of NACS, and people in our company are on the Supplier Board.” Scott does see more women executives in the industry than when she first started years ago, and some inroads have been made, but she believes there is still more work to be done. It’s the more progressive convenience store chains that are taking the initiative to bring the voices of more women to the table, she said. “There are more women in active business roles and not just line or staff jobs,” Scott said. “There are category buyers and vice presidents of marketing. I think the industry is acknowledging that 50 percent or more of their consumers are women and they have to have those diverse voices at the table to help them with their growing diversity.” While she is very proud of the new perspective she’s brought to the sales role thanks to her 20 years of experience practicing law, she is also proud of her team’s reorganization in 2016 when the company put a bigger focus on trade partners and started building account teams to deliver better analytics and support to customers. “We built a great infrastructure internally to bring collaboration between the people in the field at the c-stores and the account people at headquarters,” she said. “We called it our top account framework and it transcended our biggest customers all the way down to independent operators.” To other women working in the industry, she advises them to own and bring forward their unique perspectives, both to the customer and to leadership. “The customer of tomorrow is not the same as it was 20 years ago,” she said. “There are more women, and the industry will need more voices at the table to get them to a successful tomorrow.”

Convenience Store News’

Women of the Year

2018

we are inspired by your ability to

your business

LINE AARNES

LAURA AUFLEGER

VP Global Marketing Alimentation Couche-Tard Inc Circle K

VP Corporate Communications OnCue Marketing

and our very own

DAWN GILLIS

Senior Director Acquisition Integration-Tech Services 7-Eleven Inc.

MAURA SCOTT

MISSY MATHEWS President, Childers Oil Co. Double Kwik C-stores

VP Sales Altria Group Distribution Co.

COVER STORY

Senior-Level Leaders LESLEIGH BATCHELOR Director of Real Estate, RaceTrac Petroleum Inc. • Batchelor is responsible for site selection, acquisitions and asset management in RaceTrac’s Atlanta and Dallas-Fort Worth markets, working hand-in-hand with the retailer’s engineering, legal and environmental departments to select sites, negotiate deals and deliver profitable sites for future RaceTrac stores. • In her more than 18 years with the company, she has contributed to the growth of both the RaceTrac and RaceWay brands, while mentoring and developing numerous team members. • Batchelor is a member of the International Council of Shopping Centers and has served on its planning committee for its Southeast trade shows. She also served on the Retail Advisory Council for five years.

BONNIE BIROLLO Vice President of Operations, Western Canada Business Unit, Alimentation Couche-Tard Inc./Circle K • Birollo leads a network of 306 convenience stores and 21 Subway quick-service restaurants in the Western Canada Business Unit. • She is a CPA professional and Executive MBA graduate with more than 15 years of combined retail operations, sales development and strategic marketing experience. • According to her nominator, Birollo’s business strengths include a systematic approach to decision making, and the ability to effectively communicate with store employees, direct reports, executive peers and the board of directors.

KIMBERLY BOLIN President & CEO, Convenience Distribution Association • As head of the Convenience Distribution Association, Bolin leads programs that help establish and maintain positive working relationships between distributors and suppliers. • She was instrumental in the transformation of CDA, enacting the agenda put forth by the board of directors in early 2015, beginning with a name change from American Wholesale Marketers Association to Convenience Distribution Association. • Bolin was promoted to CDA president and CEO in 2016.

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SANDRA D’ASARO Vice President, Sales Analytics, Development & Technology, Core-Mark International • D’Asaro leads technology development internally and for Core-Mark’s retail partners. She also oversees the company’s sales analytics and field sales directors. • She has been with Core-Mark for 22 years and during that time, has held the roles of senior sales consultant, area sales manager, key account manager, general sales manager, regional director of sales and senior director of sales before being promoted to her current role. • D’Asaro was recognized as Area Sales Manager of the Year in 2004 and General Sales Manager of the Year in 2008 within Core-Mark.

JANIE DIAL Director of Fuel, Florida Business Unit, Alimentation Couche-Tard Inc./Circle K • Dial began her career at Circle K as a parttime file clerk at age 17 and worked her way up through various roles, including fuel accounting, project manager of capital improvement and category manager in the marketing department. • According to her nominator, Dial is one of the most knowledgeable resources for fuel in the organization. • Talking about Dial’s performance following Hurricane Irma, her nominator said, “Janie worked countless hours to help get the Florida region back to normal! We could not have managed the storm without her!” • Dial won the Circle K Pride Award in both 1999 and 2015.

KIM DUET Chief Purchasing/Marketing Officer, Lyons Specialty Co. • Duet has spent most of her 15 years in the convenience store industry with Lyons Specialty, beginning as an assistant, before advancing to buyer, director, and finally into her current role of chief purchasing/marketing officer. • She previously spent two years working for a broker representing Mars Chocolate. This experience gave her a better perspective on the expectations of being on the other side of the desk. • Duet holds a BS in Business Administration from Nicholls State University.

THE CONVENIENCE DISTRIBUTION ASSOCIATION SALUTES THE 2018 TWIC RECIPIENTS.Â We especially recognize and celebrate the many TWIC honorees from CDA member companies.

CDA also congratulates our President & CEO

Kimberly Bolin for her honor as a Top Women in Convenience Senior-Level Leader!

COVER STORY

ANNETTE GANTT Category Manager, Enmarket • Gantt began her career in the c-store industry in 1997 with Enmark Stations (the former name of Enmarket) as an assistant in the marketing department. She advanced in the company, working in just about all aspects of marketing and advertising, as well as spending a few years in fuel pricing and supply. • She became a category manager, overseeing the center store, ice and propane categories, in 2017. Enmarket’s store count has since grown from 59 to 122 locations. • Gantt believes building great relationships with the retailer’s vendor partners and suppliers, as well as with her internal team, has led to success.

LISA GEYER Senior Director, North America Franchise Operations and Marketing, Alimentation Couche-Tard Inc./Circle K • Geyer integrates marketing and operations under one team, negotiates vendor contracts and oversees all areas of franchise development in North America — from floor plans to synergies to construction and opening. • In Canada, she is developing the Circle K franchise brand with recruitment of new franchisees, marketing the offer and managing all aspects of this new business development. • Geyer, who has been with the company since 1985, started working for Circle K as a store employee, going on to be district manager and then holding several roles on the operational side before moving over to the franchise side in 2010.

KATHY KILBURG Senior Director, Strategic Accounts, RAI Trade Marketing Services • Kilburg leads a high-level trade marketing team of key account managers that develops business plans with and advises RAI’s most strategic business partners. • She has spent 25 years with Reynolds American and R.J. Reynolds Tobacco Co. During that time, she’s served as senior division manager, senior key account manager, account executive, senior director of trade marketing and senior director of commercial development.

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• Kilburg is involved in several volunteer and charitable organizations, including the Navy Sponsorship Program, Lighthouse Food Bank and Habitat for Humanity.

RENEE KRISTELLER Senior Director, Category Leadership, Snyder’s-Lance Inc. • Kristeller leads category management efforts for Snyder’s-Lance and provides strategic and consumer insights to the company, as well as its many customers. • She brings ideas and innovative merchandising that is backed by solid facts and supported by the wider macro-trends she has researched on behalf of the company, according to her nominator. • Previously, Kristeller was a category director in convenience retail, revitalizing many center-of-store categories for The Pantry, prior to its acquisition by Couche-Tard.

CINDY RANTANEN Vice President, Centralized Operations, EG Group • Rantanen oversees store operations, real estate, supplier relations, merchandising, finance and people development for Kroger’s c-stores, now owned by EG Group. • She leads Kroger’s test concept, Fresh Eats Kitchen, as well as the company’s Turkey Hill Midwest Division. • Before joining The Kroger Co. in 1997 as a category manager, Rantanen began her career working in the grocery industry at a family store in the state of Washington and later worked for Ennen’s Foods, Frank Russell Co. and Supervalu.

DEBBY SMITH Director, Category Management, 7-Eleven Business, The Coca-Cola Co. • Smith joined the Coca-Cola team in 1998 and has worked in multiple category management roles over the past 20 years. • She focuses on how to help 7-Eleven sell more nonalcoholic beverages by leveraging shopper insights, category trends and best practices in the market. • In 2016, Smith was recognized by 7-Eleven with a Vendor of the Year award.

ALL AROUND. Congratulations to our own

Kathy Kilburg on being named one of the Top Women in Convenience.

Kathy Kilburg Senior Director Strategic Accounts

Building relationships. Building growth.

COVER STORY

Rising Stars YVETTE SPEARS Vice President for Global Circle K Business, The Coca-Cola Co. • Spears is accountable for 76.2 million cases and $418.4 million in revenue, and has overseen six consecutive years of both volume and value share growth. • She is responsible for managing and negotiating all U.S. national contracts with Circle K procurement and brands, based in Dublin, Ireland, while also providing both Couche-Tard and the Coca-Cola system with global support of the Circle K international franchise and COOP business across 16 countries. • Spears spent the earlier years of her career working in the foodservice industry as a manager with Brinker International, Bob Evans and The Italian Oven. She also worked for Sysco Foodservice as a territory sales representative.

CINDI SUMMERS Senior Vice President, Human Resources, Casey’s General Stores Inc. • Summers oversees three departments, $750 million in payroll and 37,000 employees across 16 states. • She spearheaded a project to implement a new HCM (human capital management) and payroll system featuring an integrated software used by multiple departments. • Summers has 25-plus years of experience in HR, payroll and training/development, and has spent much of her career at Fortune 500 companies in the retail, manufacturing and financial services industries. • She serves as a deputy on the Iowa Business Council and is a member of the Convention Committee for NACS.

ERICA WORRELL Regional Vice President of Sales, Indiana, S. Abraham & Sons Inc. • Worrell is responsible for pricing and promoting the SAS brands to more than 550 customers doing more than $250 million in gross sales dollars annually. She manages a team of 17 people and a budget of approximately $2 million in both administrative and direct expenses. • Since assuming her current role in 2014, she has grown sales in her territory by 3 percent. • Worrell was recognized as the Top Female Executive and an Elite American Executive by the Women’s Leadership Association.

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ASHLEY BORDEN Center of Store Product Director, 7-Eleven Inc. • Borden successfully manages a variety of food and non-food categories. • During her 7-Eleven career, she’s also held the roles of senior category manager of confectionery and category manager for wireless. • According to her nominator, Borden is extremely creative, reinforces out-of-the-box thinking, and her strength is building collaborative vendor relationships at all levels.

MARIE-NOËLLE CANO Senior Director, Global Communications, Alimentation Couche-Tard Inc./Circle K • Cano brings 17 years of communication and public relations experience in retail and fuel to her current role, where she oversees communications for all of Couche-Tard’s business units worldwide and supports the executive team in Canada, the United States and Europe. She reports directly to President and CEO Brian Hannasch. • As part of her accomplishments at Couche-Tard, Cano introduced and implemented a “360 strategic approach” that resulted in a global strategic communication plan with rigorous metrics to link the company’s vision and mission, and measure success based on business targets, internal and external inputs, data analysis, and regulatory and stakeholder issues. • Cano’s nominator notes that she has a knack for seeing the big picture and an ability to develop outreach strategies in line with those needs. There is no doubt the convenience store industry will feel this rising star’s influence for years to come, he added.

SONIA CAZE Senior National Distribution Manager, Convenience Channel, General Mills Convenience • Caze leads the National Distribution Team and plays a major role in developing General Mills’ national strategy. • Not only does she lead the company’s Distributor Advisory Board and in-broker support for General Mills Convenience, but Caze also is an active member in the Women’s Employee Networks and the Hispanic Network at General Mills. • Caze, who was the 2009 General Mills Special Achievement Convenience & Foodservice Division Ring of Excellence honoree, deserves to be a “Rising Star” because of her passion for the c-store industry and her ability to continue to drive innovative solutions for her customers, according to her nominator.

Erica Worrell S. Abraham & Sons Regional Vice President of Sales Honored as one of the Top Women in Convenience, Senior Level Leaders

Throughout her 20-year career with S. Abraham & Sons, Erica has exemplified the philosophy of â&#x20AC;&#x153;Customers Firstâ&#x20AC;? and we take great pride in her receiving this honor. S. Abraham & Sons congratulates Erica as a recipient of the Top Women in Convenience award as she continues her commitment to excellence!

Leading Midwest Distributor of Convenience Products www.sasinc.com

COVER STORY

ALICIA CLEARY Director, Trade Relations, Anheuser-Busch • Among her successes at AB, Cleary implemented new strategies that have improved the company’s B2B marketing efforts, such as a year-round approach that allows AB to properly manage funds, content and advertising efforts. • She has increased the number of relationshipbuilding and knowledge-sharing opportunities in the c-store industry by 250 percent and created a model program for industry media and content creation, increasing exposure by 500-plus percent. • A member of the NACS Supplier Membership and Communications Committee and an advisor for the International Foodservice Manufacturers Association, Cleary also mentors MBA students on interview techniques, negation skills and developing competitive advantages.

RACHAEL GEARY Category Manager, Cold Dispensed/Dry/Candy, First Coast Energy/Daily’s/Petro Services Inc. • Now category manager for a mixed assortment of products, Geary started in marketing/brand management and began taking on more responsibilities as they related to category management, loyalty programs, rebates and store setup. • Geary has influence over new products, distribution, budget, rewards and more, and has earned the trust and respect of her employer, as well as vendors, brokers and distributors. • According to her nominator, Geary always has a smile on her face and in her voice, yet is direct when needed and lets suppliers know what is and isn’t working.

JULIE LOGAN District Leader, GetGo (Giant Eagle) VANESSA COPE Customer Sales Lead for Immediate Consumption, Campbell Soup Co. • The sphere of Cope’s responsibilities include, but are not limited to, financial planning and forecasting, and collaboration with cross-functional partners in marketing and shopper marketing to develop new-item launch support plans. • Cope is a two-time Merit Award winner, which is the highest internal sales honor at Campbell Soup Co., and has received two Greatness Awards, which recognize individuals and teams worldwide who have made a difference in shaping the future of Campbell. • Chair of Campbell’s chapter for the Network of Executive Women, Cope also started Campbell’s Women’s Golf League to break the “grass ceiling” and help women participate in customer events with confidence.

KATHRYN DALTON Senior Category Manager, Tobacco, BP Products NA/ampm • Dalton is the in-store expert for visual merchandising, pricing, management and sales of the tobacco category across ampm’s 1,000-store footprint. • She has 18 years of experience in the c-store industry, beginning her career at 7-Eleven Inc., and has since managed nearly all categories within the convenience channel, including stints as a buyer at United Pacific and Rotten Robbie’s. • In her spare time, Dalton volunteers at a dog rescue in Los Angeles that specializes in abandoned or relinquished pugs.

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• Logan got her start at GetGo in 2012 as crew lead, quickly moving into the roles of kitchen lead and senior team leader before becoming the first GetGo store leader in Indianapolis in 2015. She was promoted to district leader in 2017. • In her current role, Logan oversees six stores in the Indianapolis market, including store leader placement and development, and is held accountable for all aspects of her regional profit and loss report. • Logan has developed relationships with local vendors, as well as the communities in which her stores are located, to ensure GetGo provides customers with hometown items and gains a better understanding of what the market’s customers enjoy in their c-store experiences, according to her nominator.

DIANA LUK Senior Account Manager, Altria Group Distribution Co. • Luk manages a four-member account team that supports one retailer’s roughly 1,200-store footprint across 20 states. She is responsible for unit growth, category profitability, contract compliance and operational execution. • According to her nominator, Luk’s knowledge of the category and the industry are huge resources, but not as great as her willingness to be creative in suggesting new tactics, push for additional resources to support her category manager, and create strong relationships with the senior team and all levels of the company’s operations. • A member of Women in Sales at Altria, Luk is a single mom to three-year-old Brittany.

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TOP

W MEN IN CONVENIENCE PRESENTED BY CONVENIENCE STORE NEWS

The Convenience Store News’ Top Women in Convenience awards program recognizes the integral role women play in convenience retailing. Women will be honored from the retailer, wholesaler and supplier communities in four different categories:

AWARD CATEGORIES* Women of the Year

Senior Level Leaders

Rising Stars

Mentors

SPONSORSHIPS AVAILABLE! CONTACT: PAULA LASHINSKY Vice President and Brand Director 917-446-4117 • plashinsky@ensembleIQ.com

KELLY FISCHER Associate Publisher/Midwest 847-894-8134 • kﬁscher@ensembleIQ.com

RON LOWY Associate Brand Director/West Coast 330-840-9557 • rlowy@ensembleIQ.com

CINDY DEBERRY Account Executive/Southeast 803-315-0694 • cdeberry@ensembleIQ.com

RACHEL MCGAFFIGAN Associate Brand Director/Northeast 508-385-2524 • rmcgafﬁgan@ensembleIQ.com

TERRY KANGANIS Account Executive/Classiﬁed Advertising 201-855-7615 • tkanganis@ensembleIQ.com

COVER STORY

STEPHANIE MARTONE Category Manager, OTP, Cumberland Farms Inc. • Nearly 13 years ago, Martone got her start at Cumberland Farms as a temporary employee in training in the planning department before transitioning to a full-time position in the merchandising department in 2006. This was followed by several years in the POS department handling pricing and promotions, with increasing responsibility for reporting. • For the past four years, Martone has successfully managed the OTP portfolio and vendor relationships for this growing category at Cumberland Farms, reporting to the head of the tobacco category, Anne Flint. This year, Martone was given full responsibility for the OTP category across all of the retailer’s 560 stores. • Martone is a member of NACS and the New England Convenience Store & Energy Marketers Association.

CAITLIN MCCORMICK Director, , Marketing Programs, Core-Mark International • McCormick joined Core-Mark in 2015 as marketing program manager. During her two years in this role, she was accountable for development of the company’s customer-centric “Core-Partners” program, which creates relationships with third-party service providers to assist Core-Mark’s base of independent c-store clients. • She has been influential in bringing new distribution opportunities in the alcoholic beverage category, specifically state-by-state regional wines/spirits to drive category sales and profits for the independent and chain retailers serviced by Core-Mark. • Without a doubt, McCormick is adding new ideas and fresh perspectives on less-than-glamorous categories and will be a value to the industry for years to come, according to her nominator.

KATE SCHUSTER Director, National Accounts, Convenience, Mondelez International Inc. • Schuster has 14-plus years of Fortune 500 company experience, with nearly 10 years being spent in the convenience channel. She utilizes that experience in her current role, where she is responsible for driving portfolio growth across 40 of Mondelez’s national and strategic customers. • She collaborates with various cross-functional groups in the organization, including the shopper marketing, foodservice, finance and brand marketing teams, to help develop Mondelez’s annual marketing and innovation plan for the convenience channel. • In 2017, Schuster was recognized with the Leadership for Performance award. She was the Mondelez International Circle of Champions winner in 2012 and 2013.

DESIRÉ SHIFFER Director, Human Resources for U.S. Shared Services & Information Technology, Alimentation Couche-Tard Inc./Circle K • With a strong background in internal audit, Shiffer jumped right into the world of human resources in the convenience store industry and today oversees and supports all of Couche-Tard’s HR functions for North America, such as employee relations, recruiting, succession planning, performance management, and organizational design. • Shiffer successfully handled the employee exit process and prepared severance contracts for 250 employees after The Pantry acquisition, while taking on her new role. • According to her nominator, Shiffer is a champion of the Circle K customer service and culture, is very passionate about her work, carries herself with an approachable demeanor, and does an exceptional job when dealing with employees.

SALENA SIMS Category Manager, Beer, Wine & Dairy, Speedway LLC KESSLER PAMPLIN Brand Manager, CEFCO Stores • Pamplin joined CEFCO in June 2015 as social media manager and was promoted to her current role in July 2017, overseeing social media outreach, advertising, promotions and special events across the chain’s 225 stores. • She received the Well Deserved Recognition award from The Fikes Co. (CEFCO’s parent company) for outstanding performance and lasting contribution, and is part of the CEFCO Bright Ideas Committee. • Pamplin brings a special blend of business-savvy millennial know-how to her position and works diligently every day to ensure that every member of the CEFCO team is truly a “keeper of the brand,” her nominator commented. 52 Convenience Store News C S N E W S . c o m

• Throughout her 20-plus years in the c-store industry, Sims has spent the majority of her career in operations, human resources and, most recently, marketing. She joined Speedway in 2003 and has held five positions during her 15-year career at the company. • After taking responsibility of the beer category at the beginning of 2017, Sims grew the total beer category by a 3-percent increase in dollar sales and a 3.8-percent gain in unit sales. • She has worked through litigation and licensing challenges by opening 200-plus new licenses in Michigan and garnering an additional 4-percent share of the c-store beer business in the state. • Recipient of internal ACE awards from Speedway, Sims is also involved in local Junior Achievers activations.

Give them a tasty reason to hit the brakes.

A Subway® sandwich shop is a great fit for your location. You can become a Subway® franchisee or lease space to an experienced Subway® franchisee.

COVER STORY

RANATA SMILEY Restaurant Manager, Rutter’s • Smiley began her career at Rutter’s eight years ago as a retail team member and was then quickly promoted to shift leader before again progressing when she took on a new challenge as roving restaurant manager. • Today, she is restaurant manager at Rutter’s York Springs location, one of the retailer’s largest sites and top producer of food. • Smiley was a Restaurant Manager of the Year finalist in 2014 and 2017.

ELISABETH STRICKLAND Director of Marketing, Holmes Oil Co. • Thanks to Strickland’s insightful category planning, promotional development and unique marketing campaigns, Holmes Oil has experienced year-over-year growth. • Her accomplishments resulted in her promotion to director of marketing in October 2017, overseeing advertising, sponsorship, brand development and category management across the company’s Cruizers convenience store brand. • Strickland was hired two years ago as a category manager. In that role, she set up a new planogram process to ensure timely updates with the company’s DSD suppliers and grocery wholesalers, driving aboveaverage performance in her assigned categories. • According to her nominator, Strickland clearly sees the objectives of the business, sets and monitors goals, and drives category growth with her amazing consumer insight.

WHITNEY THOMAS Tobacco Category Manager, C.L. Thomas Inc. dba Speedy Shop • Thomas, who recently completed her MBA at New York University, has held various roles at C.L. Thomas across human resources, fuel and, most recently, inside sales. She stepped into her current role one year ago. • According to her nominator, Thomas is open to trying new things to continue to innovate in the c-store environment and expand Speedy Stop in the digital

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arena. For example, she is launching a technology-forward text QR code for a tobacco loyalty program. • Thomas also devotes her time and energy spearheading the company’s efforts in sponsoring, developing and running local community charities and initiatives.

TERESA VOELTER Product Director, General Merchandise, HBW & Automotive; General Manager, Consumer Value Products Inc., McLane Co. Inc. • As a product director, Voelter is responsible for category growth and development, strategic initiatives and financial performance at a national level. She manages 10 teammates and $750 million in annual volume. • In her role as general manager of McLane’s Consumer Value Products, she oversees the development of private label brands and marketing strategies, and initiates actions to source, develop, market and launch new CVP brands and items. • Voelter is chair of the McLane Committee for the Future of Convenience, a member of the McLane Mentor Leadership Team, and a member of the Women’s Foodservice Forum and Private Label Manufacturers Association.

PARKE WHITLEY Lead Sales Analyst, Altria Group Distribution Co. • Whitley joined the Altria family in 2014 and assumed her current role after sales experiences in the Richmond and Charlottesville, Va., markets. • As a lead sales analyst, Whitley supports three chain and wholesale accounts with data analysis and operational strategies for Altria’s tobacco operating companies Philip Morris USA, U.S. Smokeless Tobacco, John Middleton and Nu Mark. • According to her nominator, Whitley’s data analysis, execution plans and collaboration sessions have been outstanding, and her support has been instrumental.

A RECOGNITION WELL DESERVED RISING STAR TERESA VOELTER, PRODUCT DIRECTOR

Congratulations to our own Teresa Voelter on being recognized by Top Women in Convenience 2018. With your determined work ethic, dedication to customers and unwavering commitment to the industry, we are proud of your accomplishments and honored to celebrate this award with you.

COVER STORY

Mentors TERRICA BAILEY Senior Manager, Marketing Partnerships & Projects, RaceTrac Petroleum Inc. • Bailey manages RaceTrac’s partnership with the Atlanta Braves, runs point on all potential and future corporate partnerships, and oversees RaceTrac’s charitable giving program, RaceTrac Gives Back. • She is actively involved with her church’s marketing team. • Mentorship plays a large role in Bailey’s professional and personal life. When RaceTrac established its Mentor Program in 2016, she immediately jumped on the opportunity. Today, she formally mentors two women and informally mentors many colleagues through her involvement in LEAD, RaceTrac’s grassroots women’s initiative. • Prior to joining RaceTrac in 2011, Bailey served as marketing and development coordinator at Susan G. Komen for the Cure’s Atlanta affiliate and as an account executive at Weber Shandwick Worldwide.

CHERI BOOTH Fresh & Local Category Manager, Rutter’s • Booth joined the Rutter’s organization a decade ago as a team member and was quickly promoted to restaurant manager in 2009. In 2015, she was promoted to Foodservice Quality Assurance Supervisor, a corporate role, before taking on the newly created role of Fresh & Local Category Manager this year. • In 2010, Booth was awarded Rutter’s annual No Guts, No Glory Award for her top-level, standout performance as a restaurant manager, and last year she was honored with the Corporate Making a Difference award. • Booth’s nominator said her decade of service to Rutter’s and the community has been impactful and her commitment to quality is unmatched.

MICHELLE DAVIS Training Manager, South Atlantic Business Unit, Alimentation Couche-Tard Inc./Circle K • Davis has worn various hats in the c-store industry over the past 30 years, from sales associate and assistant manager to store manager and training instructor. She started her career with Flash Foods 29 years ago.

56 Convenience Store News C S N E W S . c o m

• Now that Flash Foods is a part of Couche-Tard, Davis continues to lead the training department for the 170 Flash Foods-branded sites, in addition to 300 Circle K stores supported by the Waycross South Atlantic Business Unit. • According to her nominator, Davis is the definition of a great mentor in the convenience retail industry, which is confirmed every day by comments or calls from all segments of the company seeking her expertise and insight.

TINA IRVINE District Manager, Maverik Inc. • Irvine is responsible for the operations and P&L for 11 c-stores and nearly 150 employees within her district, which includes east central Utah and western Colorado. • She has been a Maverik team member since October 1993. In the past 25 years, she’s worked on various committees to help influence decision makers at Maverik’s Base Camp to create the best employee and customer experiences possible. She is a current committee member on Maverik’s foodservice execution and optimization team. • Irvine was lauded by her nominator for her neverending belief in people, consistent development in employees to be better leaders, and her drive to just do the right thing every day.

SIMMI KELLY Director of Accounts, Altria Group Distribution Co. • Last year, Kelly led a multi-level work project to improve Altria’s internal communications between account teams and field members that was adopted in the Northeast region. She also collaborated with her director peers to define necessary skill sets for advancement and success in new roles. • Under her leadership, one of Kelly’s account managers was recognized as a Rising Star in the 2017 Top Women in Convenience awards, and multiple account teams have earned recognition from top c-store partners for Vendor of the Year. • Kelly is an active member in Altria’s Women in Sales employee resource group and has facilitated discussions and sat on panels at her alma mater Penn State’s annual Powerful Women Paving the Way conference. CSN

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Win Top Talent

By meeting the needs of today’s employees, from career development to flexible schedules, c-store retailers can remain competitive and attract high performers By Tammy Mastroberte

FINDING AND RETAINING TOP TALENT has always been a challenge for the convenience store industry, but with the U.S. unemployment rate the lowest it’s been in 17 years, the competition today is greater than ever.

The unemployment rate hit 3.9 percent in May. The last time it remained below 4 percent for a sustained period of time was in the late 1960s. In this market, it’s more important to stand out amongst competitors, and there are some key factors for convenience store retailers to consider, including career development, growth, wages, benefits, flexible schedules and the overall working environment. “Our brand in the community is very strong, so we are able to attract talent because of our reputation,” said Maureen Henson, director of human resources at Jacksonville, Fla.-based Gate Petroleum, which operates approximately 100 Gate-branded convenience stores, while providing fuel for an additional 200 operators. “We strive to connect with the candidate quickly and then in the interview process, we showcase

58 Convenience Store News C S N E W S . c o m

our training, team environment, and growth opportunities for the future.” Today’s employees at all levels are looking for growth and development. Having a strong and dedicated program to accomplish this can help a company stand out to potential employees, said Sam Neff, manager of the Human Resources Center of Expertise at TriNet, a consulting company based in Dublin, Calif. At Gate Petroleum, the goal is to cultivate talent from within. The chain has a structured training suite of products that managers go through to advance. Individuals can apply for this training, but there is a structured approval process and a formal interview process, Henson explained. “All employees should have a development plan tracked and managed, so you always know what is happening with them — both positive feedback and constructive criticism,” Neff said. “Don’t wait until the annual review to provide feedback. Provide it continuously.” Today’s workers are also looking for a mission or purpose they can get behind, he added. This should be used as a way to draw in the right candidates — from the job post to the interview process to starting the job. Neff also recommends setting clear goals from the first day and making sure they align with the organization’s strategic objectives. “Competitive benefits and wages are always important, but

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we also find most employees want to feel like they are part of something,” Henson echoed. “We create a strong team environment and show we care about our employees and their families.” A company should connect the dots for employees so they see how their daily tasks connect to the strategic goals of the organization and how they are helping contribute to the overall mission, according to Neff. Another key factor in attracting and retaining top employees is relationships at work. This includes relationships with colleagues, leaders, managers, customers and vendors. Providing access to decision makers should be a priority, said Bruce Tulgan, founder and CEO of Rainmaker Thinking, a consulting firm based in Whitneyville, Conn. “What is unique about us is our top leaders are in the stores every single day,” Gate’s Henson shared. “They get to know employees and they have a face that goes with the name, so employees feel more comfortable and a part of the Gate family.” When it comes to wages, it may be difficult to break out of the basic wage structure, but what c-stores can do is offer performance-based

compensation with clear benchmarks and rewards for going the extra mile, Tulgan advised. “While baseline pay and benefits should be comparable to the competition, having clearly defined opportunities to earn more based on extra-mile effort and extra-mile results can make a difference,” he noted. “For example, cleaning up the counters while nobody is in the store, or offering exceptional customer service. Make it clear they can earn more over and above their basic pay based on their performance.”

The Recruitment Process The first step in recruiting top talent is to advertise in the right places, and be sure the job description will bring in the right people for the job and the company. “A job post should paint an accurate picture of the organization. It’s a place for a company to start telling their story. The mission and purpose should be included there, so the right candidates gravitate to the job,” Neff said, explaining that each position should have a custom job description that lists and outlines the essential functions and duties of that job, as well as the skillset needed to carry them out. Companies need to be strategic about where they are posting their ads, and think about what the ideal employee looks like and where you would find them. This could include social media, online community message boards, a local newspaper or networking groups, Neff suggested. “Another underutilized source is state workforce development agencies,” he said. “Partnering with them can allow employers to tap into a vast applicant pool. A lot of organizations still do campus recruiting and participate in job fairs, which is another viable avenue.”

Call to Action l With the U.S. unemployment rate so low, it’s more important than ever to stand out amongst competitors. Some key factors for convenience store retailers to consider are career development, growth, wages, benefits, flexible schedules and the overall working environment. l Today’s workers are looking for a mission or purpose they can get behind. A company should connect the dots for employees so they see how their daily tasks connect to the strategic goals of the organization and how they are helping contribute to the overall mission. l When it comes to wages, it may be difficult to break out of the basic wage structure, but c-stores can offer performance-based compensation with clear benchmarks and rewards for going the extra mile. l A job post should paint an accurate picture of the organization. It’s a place for a company to start telling their story. l Companies need to be strategic about where they are posting their job ads. Think about what your ideal employee looks like and where you would find them. This could include social media, online community message boards, a local newspaper or networking groups. l Be selective in who actually gets hired. During the interview process, present all the positive points, but then try and scare the person away by telling them all the downsides. See who is left. l To retain top employees, talent management is important. High performers are often looking to advance within a company. Providing the employee with a path to improve their skills, which can lead to more opportunities, lets them know the company is invested in them.

60 Convenience Store News C S N E W S . c o m

Over the past few years, social media has become a bigger player in job recruitment and within the last three years, it has become a must, Henson observed. “You have to have a vivid presence on social media, but it’s hard to differentiate yourself that way,” Tulgan cautioned, suggesting retailers also build relationships with parents, teachers and career centers, as well as community college professors and career advisors. “Differentiate by going and seeing human beings face-to-face.” Gate Petroleum has a strong commitment to veterans because many of its sites are in military locations. The retailer also utilizes its stores to advertise job postings. A new avenue for Gate Petroleum is using SnagA-Job, which automates the onboarding process to provide a more seamless experience for applicants and helps managers by cutting down on paperwork, said Henson. “It also has a component that focuses on personality traits, with a series of questions to identify if a candidate is a match to our environment,” she noted.

The Interview Process The initial interview is an opportunity to present benefits offered, the mission of the company and the overall environment to a prospective employee. C-store operators should highlight benefits such as performance-based pay, supportive leadership,

control over their own schedule, learning opportunities and a team culture — all of which are top priorities for many employees today, according to Tulgan. It’s important to sell the position, and then make sure the prospective employee is a good fit for the organization as a whole, rather than just hiring “warm bodies,” he said. “The workforce has changed greatly in the last 10 or so years and companies need to keep evolving, too,” Henson said. “Doing the same thing you did in the past is not going to attract or retain top talent. Today, the interview is more individualized and more of a discussion to find out what the employee wants now and in the future, and helping them to achieve that. It’s not just what the company wants, but also what the employee needs and how we can help both.” Companies should not be afraid to ask probing questions, which allow someone to understand exactly what an applicant brings to the table, Henson noted. Asking behavioral questions is also an effective way to understand a candidate’s experience and reveal how they would react to situations they may face in the workplace. “Come up with some common situations and see how they would respond,” Neff shared. “This will give you a good picture of how they would respond if you hire them.” It’s important to be selective in who actually gets hired — which means the bigger the applicant pool, the better. Once a company presents all the positive points of working for them, the next thing to do is try and scare the person away, Tulgan said. “Tell them the downsides and see who is left, and then test them. Give them a realistic job preview, even having them come in and watch what it’s like to actually do the job,” he suggested.

The Retainment Process After going through the recruitment process and hiring the right employees, keeping top performers is the next priority, as c-stores often struggle with high turnover. Retainment starts with a successful onboarding process. “Our model of a perfect onboarding process is the Marines boot camp,” Tulgan said. “Now, you may not have a 24-hour day, but you can do a 13-week onboarding process.” It’s important to push out low performers because high performers don’t like to work with them, Tulgan added. Low performers disrupt the culture, create problems that high performers have to fix, and turn management into police. Rather, a manager should take on the role of coach. “The manager is the chief retention officer,” Tulgan explained. “They help the people who are ambitious advance, get the schedule they want and stay in dialogue with them, so they

62 Convenience Store News C S N E W S . c o m

can identify if someone is unhappy or thinking about leaving and give them a reason to stay and work harder.” Overall talent management is important to top talent, who are often looking to advance within a company. Providing the employee with a path to improve their skills, which can lead to more opportunities, lets them know the company is invested in them. This leads to retention, Neff explained. “Training new employees in cash management and then advancing them to training in inventory management can lead to them becoming a supervisor,” he noted. “This should be clearly illustrated when they are starting out, so they know what the path looks like. And cross training employees is also good for retention and gives the company greater flexibility as well.” Talent management is about recognition and managing and documenting performance — not just when someone is in trouble, but also when they do something good. As Tulgan puts it, “Imagine if in baseball, we only tracked strikes and not home runs to keep score.” At Gate, the chain’s commitment to its employees, from onboarding and training to access with senior leaders,

“Competitive benefits and wages are always important, but we also find most employees want to feel like they are part of something. We create a strong team environment and show we care about our employees and their families.” — Maureen Henson, Gate Petroleum

is important to the company. Gate cares about each employee and is always working to upgrade training, according to Henson. “We have a team-oriented and fair environment, and ensure we do the best for our people. Part of that is the commitment of senior leaders being in our stores every single day,” she said. CSN

AUG

20 1 8

Convenience Store News

FEATURE

Midyear Report Card

C-store Sales Gaining Momentum OTP, packaged beverages and beer are driving performance in the industry By Don Longo CONVENIENCE STORE RETAIL SALES appear to be recovering from last year’s unexpected slump, but it’s still too early to predict that c-store industry sales growth will return to its robust, pre-2017 rates.

and rebounding sales gains in the packaged beverages and beer categories, convenience store sales growth appears to be more positive through the first six months of this year, according to the 2018 Convenience Store News Midyear Report Card. CSN

Driven by strong sales in other tobacco products (OTP),

Beer Better

Cigarettes Snuffed

Beer category growth has improved by a full percentage point from a year ago, with dollar sales rising 1.7 percent on unit growth of 1.1 percent. Last year at this time, total beer sales in dollars were up only 0.7 percent, while unit volume grew by just under 1 percent. Within the category, dollar-sales gains on a percentage basis were again strongest in super premium and import brands, with microbrews/craft beers showing renewed strength.

Cigarettes are down in both dollar sales and unit volume so far this year. Cigarette dollar sales are running 1.1 percent below the first six months of 2017, and the unit volume decline is at the high range (3.7 percent) of its historic 3-percent-per-year decline. Subgeneric/private label and import brands showed the biggest increases in the category in both dollar sales and unit volume growth over the first six months of the year.

DOLLAR SALES % CHANGE VS. YEAR AGO

UNIT VOLUME % CHANGE VS. YEAR AGO

Beer

1.7

1.1

Flavored Malt

5.7

6.9

Imported Malt Liquor

9.3

6.6

-4.5

-5.5

Microbrew/Craft

3.7

6.5

Non-Alcoholic

0.8

1.2

Popular

-5.0

-5.1

Premium

-2.6

-2.2

20.4

17.8

Super Premium

Source: Convenience Store News Research; Nielsen C-store Track, January to June 2018

Candy Coming Back The candy category so far this year is showing similar results as a year ago, though with some interesting subcategory shifts. Total candy dollar sales are flat at 0.1-percent growth on a unit volume decline of 2.5 percent. That’s slightly better than a year ago when both dollar and unit sales were down. Within the category, chocolate bars have stemmed last year’s sharp decline, gum appears to be bouncing back from a long-term decline, and novelty/seasonal candy is leading the percentage growth in the category. DOLLAR SALES % CHANGE VS. YEAR AGO

UNIT VOLUME % CHANGE VS. YEAR AGO

Candy

0.1

-2.5

Bagged or Repacked Peg Candy

3.9

1.5

Bulk Candy

Cigarettes Branded Discount Fourth Tier

DOLLAR SALES % CHANGE VS. YEAR AGO

UNIT VOLUME % CHANGE VS. YEAR AGO

-1.1

-3.7

-4.4

-7.1

-23.3

-32.3

Imported

9.1

3.4

Premium

-0.6

-3.3

4.6

6.3

Subgeneric/Private Label

Source: Convenience Store News Research; Nielsen C-store Track, January to June 2018

OTP on Fire Other tobacco products are once again topping all major c-store categories in percentage growth, this time led by the resurgent electronic cigarette segment. Through the first six months of 2018, the total OTP category was up 21.3 percent in dollar sales and a little less than 8 percent in unit volume. Cigars experienced a solid gain of 11.2 percent in dollar sales on unit growth of 9.8 percent. E-cigs more than doubled in dollar sales on unit growth of 83.6 percent. And smokeless tobacco sales are again running about 4 percent higher in dollar sales on flat unit volume. DOLLAR SALES % CHANGE VS. YEAR AGO

Other Tobacco Products Cigars E-Cigarettes Other Tobacco

UNIT VOLUME % CHANGE VS. YEAR AGO

21.3

7.6

11.2

9.8

160.7

83.6

2.7

-7.2

-100.0

Papers

-4.5

-7.3

Candy Rolls/Mints/Drops

-6.8

-7.4

Pipe/Cigarette Tobacco

-8.6

-11.5

Chocolate Bars/Packs

-1.2

-2.7

Pipes

-89.9

-94.0

Gum

0.9

-4.1

Smokeless

4.2

-1.0

Source: Convenience Store News Research; Nielsen C-store Track, January to June 2018

Non-Chocolate Bars/Packs

58.4

56.0

Novelties/Seasonal

16.7

6.3

Source: Convenience Store News Research; Nielsen C-store Track, January to June 2018

64 Convenience Store News C S N E W S . c o m

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FEATURE

Packaged Beverages Rebound

Salty Snacks Slip

The packaged beverages category is resurgent from a disappointing 2017. Through the first six months of 2018, the total packaged beverages category is up 2.7 percent in dollar sales and almost 1 percent in volume, after running flat to slightly down in both dollar sales and unit volume during the first half of last year. Energy drinks have reenergized the category, with both sales and unit-volume gains of more than 7 percent. That’s an improvement over the meager 2 percent sales and volume gains of a year ago. Enhanced water continues to skyrocket, increasing about 11 percent in dollar sales and approximately 9 percent in unit volume. Sports drinks have also turned around, registering a nearly 6-percent dollar increase on 3.7-percent unit growth.

It was slim pickings for salty snack growth over the first six months of 2018. Salty snack dollar sales are up only about 2 percent, about a point below last year’s pace, and unit volume is down 1.6 percent. The biggest culprit appears to be potato chips, which saw flat dollar sales and lower unit volume compared to a year ago. Unit volume is off throughout the entire category and price increases are not offsetting those declines. Tortilla chips are the bright spot, with dollar sales up nearly 6 percent on a strong 3.5 percent unit-volume increase.

Carbonated soft drinks continued to decline, but not by as much as a year ago, slipping just under 2 percent in dollar sales and a little more than 3 percent in unit volume. Ready-to-drink iced tea is off to a slow start this year after a strong 2017. That subcategory is off by nearly 2 percent in dollar sales and about 4 percent in units over the first six months of this year.

DOLLAR SALES % CHANGE VS. YEAR AGO

Salty Snacks Crackers Mixed Nuts/Seeds

UNIT VOLUME % CHANGE VS. YEAR AGO

1.9

-1.6

-2.0

-6.1

1.9

-1.8

-0.9

-4.3

Other Salty Snacks

3.2

0.1

Packaged Ready-to-Eat Popcorn

0.1

-1.1

Potato Chips

0.6

-2.6

DOLLAR SALES % CHANGE VS. YEAR AGO

UNIT VOLUME % CHANGE VS. YEAR AGO

Packaged Beverages

2.7

0.8

Pretzels

-0.9

-5.4

Bottled Water

2.0

-1.1

Puffed Cheese

3.5

0.2

Carbonated Soft Drinks

-1.9

-3.3

Tortilla/Corn Chips

5.9

3.5

Energy Drinks

7.2

Enhanced Water

11.3

9.2

Iced Tea (ready-to-drink)

-1.9

-4.1

1.4

-0.6

Juice/Juice Drinks Other Packaged Beverages

0.1

-0.3

Sports Drinks

5.3

3.7

Source: Convenience Store News Research; Nielsen C-store Track, January to June 2018

General Merchandise Not Looking Too Sharp In general merchandise, wearables/apparel is the only subcategory growing well over the first six months of 2018, up more than 18 percent in dollar sales and 15 percent in unit volume. On the other end of the spectrum is video/audio tapes, school/office supplies and hardware/tools/housewares, which are all down by upwards of 20 percent in both dollar sales and unit volume. DOLLAR SALES % CHANGE VS. YEAR AGO

General Merchandise Batteries

UNIT VOLUME % CHANGE VS. YEAR AGO

-7.3

-9.3

-4.6

-23.6

Film/Photo

-62.3

-51.0

Hardware/Tools/Housewares

-22.7

-21.8

4.8

3.0

Other General Merchandise School/Office Supplies

-21.7

-29.1

Seasonal

-0.2

1.1

Source: Convenience Store News Research; Nielsen C-store Track, January to June 2018

Edible Grocery Flat Edible grocery has been lackluster so far this year. Through the first six months, dollar sales are down 1.9 percent, while unit volume dropped off by 1.8 percent. Condiments, packaged coffee and tea, and water beverage enhancers were all in negative territory, while breakfast cereal saw a slight dollar and volume gain in the first six months of the year. DOLLAR SALES % CHANGE VS. YEAR AGO

UNIT VOLUME % CHANGE VS. YEAR AGO

Edible Grocery

-1.9

-1.8

Breakfast Cereal

1.2

0.9

Condiments

-0.9

-1.8

Other Edible Grocery

-3.0

-1.7

Packaged Coffee/Tea

-2.2

-10.1

-15.4

-13.6

Water Beverage Enhancers

Source: Convenience Store News Research; Nielsen C-store Track, January to June 2018

Nonedible Grocery Doesn’t Clean Up There’s only one bright spot to report in the nonedible grocery category, laundry care, as every other subcategory was down in both dollar sales and unit volume in the first half of the year. Laundry care was up a meager 0.1 percent in dollar sales, but unit volume declined 2.9 percent. DOLLAR SALES % CHANGE VS. YEAR AGO

UNIT VOLUME % CHANGE VS. YEAR AGO

Nonedible Grocery

-3.4 -11.1 -0.1

-1.2

0.1

-2.9

Smoking Accessories

-2.5

-4.6

Dish Care

Telecommunications Hardware

-5.8

-3.9

Household Care

-5.8 -12.1

Trading Cards

-57.7

-50.5

Laundry Care

Video/Audio Tapes

-32.4

-27.4

Other Nonedible Grocery

-15.5

-16.6

Paper/Plastic/Foil Products

-4.9

-7.2

Pet Care

-4.9

-5.8

Wearables/Apparel

18.6

15.2

Source: Convenience Store News Research; Nielsen C-store Track, January to June 2018

66 Convenience Store News C S N E W S . c o m

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FOODSERVICE

What’s Hot on C-store Menus? Maverik’s San Waffael Swell exemplifies originality in a breakfast sandwich INTRODUCED IN MAY, Maverik Inc.’s San Waffael Swell has what you would expect from a breakfast sandwich: a fried egg, sausage patty and cheddar cheese. However, this limited-time offer (LTO) stands out from the crowd with a Liege Belgian waffle as its carrier.

OPERATOR: Maverik Country Store ITEM TYPE: Limited-Time Offer DATE: May 2018 PRICE: $3.99 We loaded a Liege Belgian Waffle with a fried egg, sausage patty and cheddar cheese to create the perfect blend of sweet and savory. Try one for $3.99.

A Breakfast Sandwich With a Twist

for Draw. Plus, many people see the product as being a good value. At just $3.99, the San Waffael Swell scored in the 78th percentile for Value. Another key score for the sandwich is the high ranking it received for Frequency, as consumers indicate they would make repeat visits to Maverik just for this LTO.

Who Wants It? The San Waffael Swell is a hit with Gen X and baby boomers. Millennials and Gen Z were significantly less interested in the sandwich when rating it on Purchase Intent. This item is also slightly more appealing to men than women. CSN

This sandwich shows how simply using one special ingredient can take a LTO to the next level. The addition of using a Liege waffle as its carrier makes it one-of-akind in the eyes of consumers. The Liege is made from a brioche-based dough and is richer, chewier and sweeter than other waffles. According to Datassential’s SCORES platform, which measures consumer sentiment in six key areas, the sandwich scored in the 92nd percentile for Uniqueness.

Points for Craveability & Value Consumers indicated they would visit Maverik just for this item — the sandwich scored in the 87th percentile

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68 Convenience Store News C S N E W S . c o m

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FOODSERVICE

In & Out The top 10 ideas to maximize grab-and-go fresh food and make your stores a destination By Renée M. Covino at home and at work, consumers increasingly want in-andout, quality, fresh food options, which means convenience store operators must ensure that their grab-and-go foodservice sections are on point at all times — day and night.

WITH MORE ON THEIR PLATES

Here is a top 10 rundown of some of the best ideas and strategies in grab-and-go product assortment, packaging, merchandising, marketing and more: 1. Commit to Fresh This seems obvious, but experts say there is still a hesitation in the convenience channel toward committing to the necessary labor and management that offering fresh food requires. Limited space is also a factor. However, to be successful, there can be no halfway commitment here. If a c-store wants to be a graband-go foodservice destination, it must be all in on the fresh-food commitment. 2. Partner With Local Vendors Passport Café at the University of Richmond in Virginia is a convenience store-like retail operation with a grab-and-go selection that has grown and evolved since its opening in 2010. One of the significant ways Passport Café has grown is through partnerships with local vendors. Working with area businesses allows it to capitalize on their expertise and on the excellent quality of their goods. “Customers are very aware of the local food movement,” Karen Kourkoulis, chef and

manager of Passport Café, told Convenience Store News. “When we partner with a local business, word-of-mouth travels quickly, and the quality of the products speak for themselves.” 3. Consistently Introduce Variety Customers pick up on new items and trends, and are adventurous eaters when given the chance to explore new cuisines, according to Kourkoulis. Dana Evaro, vice president of marketing for Land Mark Products Inc. — home of the Piccadilly Circus Pizza and Day’n Night Bites grab-and-go brands — agrees, and says part of this practice should be featuring limited-time offers (LTOs). LTOs are important “to keep interest and create buzz,” Evaro told CSNews. As an example, he cited that Piccadilly Circus Pizza is working to replicate, for a limited time, popular flavors in other categories onto a pizza, such as the Big Mac and Nashville Chicken. The LTO trend also includes new packaging and program ideas such as that of Dannon Foodservice and its recently launched Snack Hacks program, which is aimed at better-for-you snacking solutions. Each Snack Hacks recipe incorporates Dannon Oikos Greek Nonfat Yogurt, which is available in bulk sizes. This product can serve as a betterfor-you ingredient swap in a variety of recipes because it is lower in fat and calories than full-fat sour cream, cream cheese or mayonnaise, according to the company. The range of Snack Hacks recipe ideas include parfaits, overnight oats, hummus and salad options. Operators can sign up online to receive a free Snack Hacks kit that includes point-of-sale materials to use on-shelf, readymade social media posts to promote products, and culinary inspiration for grab-and-go snacks. 4. Take Note of the Hybrid Flavor Trend Data shows that grab-and-go consumers are enjoying hybrid flavor profiles right now, according to Evaro. With this in mind, Day’n Night Bites has created items like The Donut sandwich, which mixes the sweet taste of a cake doughnut with the savory tastes of traditional breakfast items, such as sausage, egg and cheese. 5. Don’t Expect a Long Shelf Life “Fresh” and “long shelf life” should not co-exist, Evaro maintains. C-store retailers who are seriously

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FOODSERVICE

committed to fresh foodservice should consider the company cultures of all their graband-go suppliers, as well as their own culture. “Every decision made needs to work toward giving the consumer the freshest and best food experience we possibly can. When that is achieved, sales will grow,” said Evaro. 6. Realize the Need for Speed One of the most important factors in a successful grab-and-go fresh foodservice program is speed, as Altoona, Pa.-based convenience store chain Sheetz Inc. can attest. Through a partnership with SMG (Service Management Group), Sheetz found that for food-focused customers, speed of service is a top driver and offers the greatest opportunity.

When customers perceive a good attitude and helpfulness from associates and also experience speedy service, that’s when they’re most likely to return, Peace explained. “It’s when fast meets friendly,” she said. She highlighted Sheetz #587, where a general push to just “do things faster” didn’t work out recently. The store saw its lowest satisfaction ratings at lunch and dinner, so it took steps to address problems with speed at those times. This included 30-minute cleanliness checks of the store’s Fizz City offering and seating area, along with a cashier/ kitchen support plan that provides a procedure for getting assistance when foodservice orders begin to stack up. As a result, the store’s satisfaction ratings have improved. 7. Consider Going the Extra “Made-to-Order” Mile Customers do know the difference between “fresh graband-go” and “made to order.” Both are appealing, but made to order offers the “much-in-demand customization that the age 16-30 demographic wants,” according to Evaro. So, if this is your target, it might make sense to branch out and invest in the labor and space needed for made to order. 8. Mirror the Food With Fresh & Fun In-Store Advertising Rather than just displaying its weekly specials, Passport Café at the University of Richmond finds ways to introduce them in a new light. “We’ve displayed specific ingredients that might be fun to see in their original state before cooked or processed,” Kourkoulis explained. An example of this is the jicama slaw that accompanies the store’s jerk chicken special. “We placed unprocessed jicama on display, which looks completely different before it is peeled and julienned for a slaw,” she said. “It catches people’s interest and makes for great conversation.”

“Not only is it the top driver of an experience with Sheetz, but it’s also a huge opportunity for us,” said Shianna Peace, program manager at Sheetz, which operates more than 565 stores throughout Pennsylvania, West Virginia, Virginia, Maryland, Ohio and North Carolina. Speed of service can help build customer loyalty, too, she added. To increase speed, you must know where any delays stem from, according to Peace. Sheetz recently discovered that food-focused customers who have negative experiences are more likely to talk about inattentive store associates, overly long wait times, preparation errors and a lack of urgency.

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9. Invest in Appropriate Personnel When done right, the investment in fresh grab-and-go runs deep within a c-store chain — right through to the personnel. Those looking to be serious contenders should consider creating new positions to manage the focus, just as York, Pa.-based Rutter’s did recently when it promoted Cheri Booth to the new position of fresh and local category manager. The convenience store chain said it created this role “to help meet emerging consumer needs as they show increased demand for local, fresh and healthier products.” Booth previously served as foodservice quality assurance manager for the family-owned company, which operates more than 60 locations throughout central Pennsylvania and West Virginia. She reports to Ryan Krebs, director of foodservice, and oversees all aspects of local, fresh procurement. This includes produce, seasonal fruits and vegetables, foodservice, snacks, beverages, beer and wine. 10. Mull Over a Really Big Idea Perhaps no best practice is more in line with the graband-go proposition than a drive-thru. If a convenience store operator is truly serious about grab-and-go food and willing to tackle the challenges and reap the opportunities, a drive-thru is worth consideration.

Our Foodservice Advisory Council DAVID BISHOP Managing Partner Balvor LLC

JOSEPH CHIOVERA President, Innovation & Design and Emerging Channels Buddy’s Kitchen Inc.

JOSEPH BONA President Bona Design Lab LLC

TOM COOK Principal King-Casey JACK W. CUSHMAN Foodservice Director Circle K (retired)

ED BURCHER Vice President of Foodservice FriendShip Food Stores

NANCY CALDAROLA General Manager The Food Training Group

This move is a really big one, worthy of its own set of best practices, put in place by fast-food leaders, such as: a willingness to invest in improvement; taking the time to do it right; demonstrating continuous reinvention and improvement; and putting the same design and operations focus on the drive-thru as the interior.

CHAD DEWBERRY Category Manager McLane Co. Inc. DEAN DIRKS CEO Dirks & Associates

RYAN KREBS Director of Foodservice Rutter’s MATHEW MANDELTORT Vice President, Foodservice Insights Eby-Brown Co. LLC

LARRY MILLER President Miller Management & Consulting Services Inc. TIM POWELL Vice President/Senior Analyst Q1 Consulting

trying to sell everything through the drive-thru, rather than focusing on foodservice and beverages. C-store operators that do plan to add drive-thrus should learn from fast-food leaders and “copy shamelessly,” Cook said. They must also take the time to plan carefully; start small and scale up as they learn from experience; start with a laser-focus on foodservice; and be willing to make the investment in store layout, operations and personnel. CSN

Speaking at last year’s Convenience Store News Convenience Foodservice & Beverage Exchange event, Thomas Cook, principal at King-Casey, pointed to In-N-Out Burger and Starbucks as drive-thru standouts in terms of superior customer service and a unique brand experience, respectively. When lines get long, In-N-Out Burger employees will bring tablets to car windows to take face-to-face orders, while Starbucks has begun to provide the interior customer experience to drivers by adding a video barista at the drive-thru. For c-stores, drive-thrus are still in their infancy, according to Cook. Only a handful of players — Parker’s, Swiss Farms, Square One Markets and Farm Stores — have added them. A few of these focus solely on foodservice. For c-store drive-thrus to work, the operator must not view adding one as merely “gluing” it onto an existing store, Cook advised. Drive-thrus require increased staffing, as well as new store designs and logistics to accommodate it. Retailers may also err by

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TOBACCO

21: More Than Just a Number Five states to date have enacted Tobacco 21 regulation, and the most significant impact is likely to be on local convenience stores By Melissa Kress THREE YEARS AGO, TOBACCO 21 efforts

moved to the national forefront when Hawaii became the first state to raise the legal minimum age to buy tobacco products to 21. Prior to Gov. David Ige signing the measure into law on June 19, 2015, the call for increasing the purchasing age had mainly been a rallying cry heard at the local level. Six months later, by the time Hawaii’s law went into effect on Jan. 1, 2016, Tobacco 21 efforts had gained steam on a national scale. California was next to bring the new legal age statewide on June 9, 2016. And fast forward to today, there are three more states where the legal age to buy tobacco products is 21: New Jersey, Oregon and Maine. Maine was the latest state to join the movement — its law went into effect July 1. While five states out of 50 may not sound like a lot, countless local municipalities and counties across the United States have also banned the sale of tobacco products to consumers under the age of 21. There were 310-plus cities and counties as of early July, according to Tobacco

21, a national organization established by the Preventing Tobacco Addiction Foundation. On the local front, Massachusetts leads the pack. As of May 9, more than 175 cities and counties in the Bay State had passed Tobacco 21 ordinances. This covers half of the cities and towns in the state and more than 72 percent of the population. Massachusetts is also close to making Tobacco 21 a statewide law. In late July, Gov. Charlie Baker signed a bill to raise the age limit. The change will go into effect in 2019. Still, not all lawmakers are embracing the movement. Several state-level efforts have failed, and local movements are experiencing some pushback. For example, in New York this June, the Essex County Board of Supervisors failed to pass a T21 measure, and the Monroe County Legislature Agenda/Charter Committee voted to defeat legislation.

A Retailer’s Take Despite some recent defeats, Cumberland Farms Inc.’s tobacco category leader Anne Flint isn’t overly optimistic. “There are some cities rejecting it, but I think a lot [of cities] are looking for their states to pass Tobacco 21,” said Flint, director of category management, tobacco, for the Westborough, Mass.-based convenience store chain. “It should be a state issue, not a local issue. Now that Maine has gone total state, I expect it will spread in the New England area.” If any one retailer knows about tobacco regulation, it’s Cumberland Farms. Its home state is often seen as ground zero for tobacco legislation. According to Flint, almost half of the retailer’s convenience stores in Massachusetts — about 45 percent — are currently prohibited from selling tobacco to consumers under the age of 21. “It does make it tough to manage on a city and town basis. We just had four more cities and towns go to age 21 on July 1. It’s a challenge,” she said. At least for now, the T21 regulations are not hurting Cumberland Farms’ overall business in the state because consumers under 21 “can easily drive to another city or town.” Maine’s statewide move to 21 is a bigger concern. “That is the first state we do business in where the total state went to age 21,” Flint pointed out. And Maine lawmakers did not make it simple. The state put a grandfather clause in that anyone who was age 18 as of July 1 would be grandfathered in. “Not only do we have to card for age 21, but we also have

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TOBACCO

to figure out the date of those who were grandfathered in,” Flint explained. Aside from Maine and Massachusetts, 39 percent of Cumberland Farms locations in New York are in municipalities with Tobacco 21 measures in play. On the other end of the spectrum, it has only one location in Rhode Island affected by the age increase.

A Supplier’s Take Supporters of the T21 movement more often than not cite preventing youth from using tobacco products as their focal point. However, many retailers and manufacturers already take steps to keep tobacco products — from cigarettes to vapor — out of the hands of underage users. There is countless evidence to that effect. For instance, convenience store retailers have an overwhelming pass rate when it comes to compliance checks in accordance with federal tobacco regulations under the Food and Drug Administration (FDA).

To date, five states and countless local municipalities and counties have banned the sale of tobacco products to consumers under age 21.

At E-Alternative Solutions (EAS), the Swisher Internationalowned company behind the Cue Vapor System, strict policies designed to prevent youth access to its vapor products have been in place from the beginning. EAS also limits sales to consumers 21 and older on its website to further limit any risk that its direct sales reach minors. EAS has not experienced any material decrease in sales resulting from states implementing Tobacco 21 legislation, according to CEO and President Jacopo D’Alessandris. “That said, it seems reasonable to assume that an increasing number of states that implement Tobacco 21 legislation could result in a decrease of tobacco sales,” he said.

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D’Alessandris added that internet retailers should comply with the laws of the states into which they sell tobacco products. “As such, youth should find it more difficult to access tobacco products as more states implement Tobacco 21 legislation,” he pointed out.

Is T21 Attaining Its Goal? According to the 2017 National Youth Tobacco Survey published by the Centers for Disease Control and Prevention and the FDA’s Center for Tobacco Products, 3.6 million middle and high school students said they were current tobacco product users — defined as having used a tobacco product in the past 30 days. That is a decrease from roughly 4.5 million in 2011. Electronic cigarettes have been the most commonly used tobacco product among both middle and high school students since 2014. So, does this mean that T21 is reaching its ultimate goal of preventing youth tobacco use? Cumberland Farms’ Flint isn’t so sure. As she pointed out, individuals can easily drive to neighboring towns that do not have age or flavor restrictions on the sale of tobacco products. Studies on flavor bans conducted by Management Science Associates Inc. (MSA) back up Flint’s point. “In all the studies that we have done, when someone implements a flavor ban, consumers typically stick to the items they are used to and just purchase them at another location outside of the ban area,” said Don Burke, senior vice president at MSA. This hurts local businesses and tax revenues. “The municipalities that think they are doing a real benefit to the consumers within their area are really losing a lot of tax revenue,” he added. “It impacts convenience greatly, and unemployment increases since [stores] don’t need as many people or cannot afford to employ as many people without the revenue they lose from the tobacco items.” The impact is typically negative to the municipalities that have enacted them, and the bans don’t really impact consumer behavior all that much, according to Burke. “Consumers don’t change; they just buy the items somewhere else,” he said. Can the same be said for Tobacco 21? CSN

STORE SPOTLIGHT

Naturally Good

Photos by Wyatt Conlon

The Goods Mart may be mini, but it is mighty in its mission to bring goodness to its customers and community By Danielle Romano

The Goods Mart is designed to be a fresh, socially-conscious rethink of the traditional convenience store, bringing better-for-you options to the neighborhood and building an authentic community.

SUPERMARKETS LIKE WHOLE FOODS MARKET

and Trader Joe’s have become synonymous options for health-conscious consumers who prefer shopping for everyday essentials in a neighborhood-inspired setting. But what about consumers of the same caliber in the convenience channel? Enter The Goods Mart, a new kind of convenience store that is dedicated to bringing better-for-you options to the neighborhood, while building an authentic community and inspiring good.

At a Glance

The Goods Mart Location: 3140 Sunset Blvd., Silver Lake, Calif. Size: 900 square feet Unique features: 300-plus mission-driven, better-for-you products that are also environmentally friendly; a community “jungle” garden; and Square at checkout, where guests can use the tip function to donate to local charities

The Goods Mart is the brainchild of Rachel Krupa, who drew her inspiration for the mini-mart concept from growing up in rural Michigan, where she and her family treated the local Sunoco gas station and convenience store not only as a one-stop shop for picking up home staples like milk, eggs and toilet paper, but also as a social catchup spot. Combining childhood nostalgia and her love of c-stores with a desire to do good by providing more than the “choose-thelesser-of-two-evils” options, Krupa opened the doors to The Goods Mart on April 17 in Silver Lake, Calif. “I’m shaking up the archaic 7-Eleven model with a fresh, socially-conscious rethink of the convenience store. … With looks between shocked and puzzled, my friends asked me why I would create a brick-andmortar. My answer was simple: I want to do

good,” explained Krupa, who is also founder of Krupa Consulting, a boutique food and wellness public relations firm.

Putting the “Good” in The Goods Mart When it came to curating the space and product selection of The Goods Mart, Krupa was inspired by the restaurants, snack brands and wellness thought leaders she works alongside at Krupa Consulting, whom she describes as consciously created businesses passionate about ingredient quality and ethical sourcing. “I’ve been lucky to work with incredible startups in the natural space that have taught me quality matters. As I became more educated on ingredients, sourcing and the food system, I realized how important it is to have food with real ingredients. Not only does it taste better, but it’s also better for your body,” she said. When dreaming up the reimagined neighborhood store design, Krupa wanted to create a space that was familiar yet different. She and her design team opted for black and white tones so that products would appear to pop off the shelves. In a similar manner, she wanted the store to be bright and clean to represent the kind of products available there. To bring to life the concept of “good” and “community” in its aesthetics, the store is made with as many recycled materials as

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STORE SPOTLIGHT

“We’re going to open more locations, look to launch new brands, and build community in all of the neighborhoods where we open doors.” — Rachel Krupa, The Goods Mart

possible and features a community “jungle” garden that was designed by local landscape architect Terremoto. The garden functions as a seating area for guests to enjoy a cup of coffee, read a newspaper or talk with friends. Krupa also anticipates using this space to host intimate gatherings that spotlight the local chefs who make the prepackaged sandwiches, burritos and salads for the store. Adhering to the “good” part of The Goods Mart, Krupa’s philosophy is simple: If given an option to do good, people will. And she’s giving her customers that option. “Using Square at checkout, we’re using the tip function as a way for customers to give to local charities that will rotate each quarter,” she pointed out. “We’ve also partnered with Lunch on Me, which will move food within 24 hours of expiration from shelves to the hands of those who are homeless.” Knowing that better food and products come with a higher price tag, Krupa’s mission is for The Goods Mart to be accessible to everybody. She makes this possible by democratizing the products the store carries and making it a place where anyone can shop regularly. For example, an 8-ounce cup of La Colombe drip coffee is available for $1.25, while the 12-ounce option rings up at a flat $2 price point.

Mission-Driven Products At The Goods Mart, balanced accessibility meets plantfriendliness. More than 300 great-tasting, mission-driven products have been curated that fit into a range of budgets, fit the better-for-you bill and are better for the environment.

Photo by Wyatt Conlon

Products must check off a list of core standards before being shelved: free from artificial colors, flavors, sweeteners, growth hormones and pesticides; made from humanely-raised animal proteins that are nitrate-, antibiotic- and GMO-free; and come in BPA-free packaging. In fact, single-serve plastic bottles are prohibited on the

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Photo by Sydney Yorkshire

Photo by Wyatt Conlon

Products must check off a list of core standards before being stocked at The Goods Mart, including BPAfree packaging.

Day by Day, Into the Future As the founder of two businesses, Krupa manages her time bouncing between the store and her office. Her day begins and ends at The Goods Mart. In the morning, she’ll chat with the store’s team member working that day and grab coffee and snacks for the Krupa Consulting team. She makes her way back to The Goods Mart at the end of the day to check in on products, look at feedback and explore new ways to improve the store’s operational systems. Additionally, she spends two days a week working out of the store and is there on the weekends. Thanks to the direction provided by her business management and operational consultant teams, who have helped her learn the ins and outs of the business and product inventory management, Krupa keeps a steady hand on running both businesses. Next up: She is looking to expand The Goods Mart concept.

Photo by Vanessa Tierney

“From its conception, The Goods Mart has been a life-changing, immersive learning experience for me, and Silver Lake. We’re going to open more locations, look to launch new brands, and build community in all of the neighborhoods where we open doors,” she said. CSN Rachel Krupa created The Goods Mart by combining her love of convenience stores with her desire to do good.

shelves, according to Krupa. The single-store operator is also focused on providing her customers with transparency. In-store, an iPad is mounted on the wall and plays videos from brands The Goods Mart carries to give guests the opportunity to learn more about the products they’re buying and consuming. To that end, the product mix available at The Goods Mart includes: • Upcycled “ugly” organic fruits and vegetables; • Freshly baked, gluten-free goods from Sweet Laurel; • Organic slushies from Kelvin Slush Co. that are served in paper cups; • Prepackaged sandwiches, burritos and salads prepared by local chefs; • An array of snacks that extends into salty, sweet and alternative, such as chips, crackers, cookies, jerky and candy; and • C-store staples, like milk, eggs, toilet paper and paper towels.

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ADINDEX 7 Eleven Inc. ...................................................................................... 39 Advance Pierre Foods/Tyson, Inc. ............................................ 95 Altria Group Distribution .............................................................. 2, 43 Anchor Packaging .......................................................................... 71 Anheuser-Busch, Inc. ..................................................................... 10–11 Bic USA, Inc. ...................................................................................... āĊ Campbell Soup Company ............................................................ 15 Cash Depot, Ltd. .............................................................................. 20 Circle K ................................................................................................ 35 Clif Bar & Company ........................................................................ 21 Coca-Cola........................................................................................... 41 Convenience Distribution Assn.................................................. 45 Cookies United ................................................................................. 25 Del Monte Fresh Produce, Inc. ................................................... 7 E-Alternative Solutions ................................................................. 75 Forte Products ................................................................................. 63 GT’s Foods ......................................................................................... 69 Home Market Foods....................................................................... 23 Hunt Brothers Pizza ....................................................................... 69 Imageworks Display & Mktg. Group ......................................... 61 Inline Plastics Corp. ........................................................................ 22 John Middleton Company............................................................ 29 Krispy Krunchy Chicken................................................................ 31 Mars Chocolate NA/ Wrigley...................................................... 17 McLane Company ........................................................................... ĆĆ MilkPEP ............................................................................................... 59 OnCue Express................................................................................. 37 Perfetti Van Melle USA, Inc.......................................................... 27 Phillip Morris...................................................................................... 3 Procter & Gamble Distributing Company .............................. 13 Reynolds American Trade Marketing Services .................... 9, 47 S. Abraham & Sons (SASINC)..................................................... 49 Subway................................................................................................ 53 The Hershey Company .................................................................. 96 Tyson Foods ..................................................................................... 5 Uline ..................................................................................................... 79

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Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 8550 W, Bryn Mawr Chicago, Il 60631. Copyright © 2018 by EnsembleIQ. All rights reserved. Subscriptions: One year, $93; two years, $152. One year, Canada, $110; two years, Canada, $175. One year, foreign, $150. Payable in advance with a bank draft drawn on a U.S. bank in U.S. funds. Single copies, $10, except foreign, where postage will be added. Printed in U.S.A. Periodicals postage paid at Deerﬁeld, IL, and at additional mailing offices. POSTMASTER: Send address changes to Convenience Store News, P.O. Box 1842, Lowell, MA 01853.

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GETTING TO THE CORE

Make It Fast, Make It Friendly

Speed of service still reigns supreme among convenience store shoppers With all of today’s talk about consumers wanting “an experience” when shopping, convenience store customers still want “convenience” first and foremost from the channel. EIQ Research Solutions, an EnsembleIQ sister company of Convenience Store News, recently surveyed 500 consumers who shop a convenience store at least once a month to find out what attributes are most important to them when shopping at a c-store and how c-stores stack up against competitors like grocers, drugstores, dollar stores, restaurants and coffee shops. Among the findings: 85 percent of c-store shoppers say speed of checking out is most important to them.

How important are the following to you when shopping at a convenience store?

74% vs. 66%

(percent responding extremely important or very important) At the high end of the impatient scale: Silent Generation c-store shoppers — 95% surveyed say a speedy checkout is most important.

Speed of checking out Friendliness of employees Helpfulness of employees Employee product knowledge

85% 76% 69% 50%

The percentage of female convenience store shoppers vs. males who place a high importance on the helpfulness of a c-store’s employees.

Base: 501 consumers who shop a convenience store at least once a month Source: EIQ Research Solutions

BE KIND

Thinking about general speed of service, how do convenience stores compare to each of the following?

The friendliness of a c-store’s employees matters most to shoppers aged 35 to 44 — 82% surveyed in this age bracket say friendliness is most important vs. 76% overall.

Want to collaborate and share expertise with your peers? The Council of Retail Experts (CORE) is an exclusive network of convenience store retail leaders who do just that. For more information on how to join CORE, please visit www.cvcoreinsights.com.

(percent responding c-stores are much better or slightly better) Grocery store prepared foods/deli section Fast-casual restaurants (Panera, Chipotle, etc.)

Fast-food/quick-service restaurants Coffee shops (Dunkin’ Donuts, Starbucks, etc.)

48% 47% 45%

About half of c-store shoppers think the convenience channel is superior in speed of service vs. other foodservice providers.

Base: 501 consumers who shop a convenience store at least once a month Source: EIQ Research Solutions

Survey respondents sourced via ProdegeMR, reinventing the market research process by taking a respondent first approach. Visit www.prodegemr.com for more info.

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51%

Roughly three-quarters (74%) of convenience store shoppers feel that c-stores deliver a better checkout speed than mass-merchandisers, and more than half think c-stores out-checkout grocery (58%), drug (58%) and dollar stores (54%).

with

INNOVATION

Bringing you incremental category growth through consumer-led innovation. Join the conversation: @HersheyCompany The-Hershey-Company HersheySolutions.com

PROTECTING THE BACKBAR With the right assortment, convenience stores can continue to win the fight for tobacco dollars.

THE LATEST PERFORMANCE DATA FOR ALL KEY TOBACCO SEGMENTS AUGUST 2018 CSNEWS.COM

EDITOR’S NOTE

Remember Where You Came From Convenience store operators need to keep their eyes on the tobacco category as dollar stores make a grab for share IT’S UNDENIABLE THAT THERE HAS BEEN A SHIFT

in the convenience store industry, away from the traditional smokes-and-cokes retailer and toward the convenience foodservice retailer. Anyone who has attended a NACS Show in the past five years has seen the evidence. However, as the channel evolves to meet the needs of today’s consumers — needs that focus more on fresh and healthy choices — c-store operators should not forget what brought them to the dance, so to speak. And that’s cigarettes. Yes, cigarette volume is declining. And yes, retailers need other merchandise categories to pick up the slack. That those categories bring higher margins is a bonus. But as Management Science Associates Inc.’s Don Burke points out, declining trends in cigarettes do not paint the whole picture of the backbar. Today’s adult tobacco consumers may be buying less cigarettes, but they are not buying less tobacco; they are just buying other tobacco items. While the convenience channel is busy upping its fresh-and-healthy game, it could

be in danger of losing the already-tight tobacco dollar — with dollar stores ready to swoop in. The story is in the numbers. According to data from Management Science Associates, total nicotine volume was up 12 percent in U.S. dollar stores in 2017, the only retail outlets to see volume increase from 2016. Distribution in dollar stores was up nearly 21 percent. Protecting the backbar will take some work on the part of convenience store retailers and suppliers, but it can be done. A few tips include ensuring you have the right assortment, checking out your competition’s tobacco set and carrying exclusive brands. Sometimes, it also takes a little creativity. Just ask Anne Flint, director of category management, tobacco at Westborough, Mass.-based Cumberland Farms (see page 12). For comments, please contact Melissa Kress, Senior News Editor, at (201) 855-7618 or mkress@ensembleiq.com.

EDITORIAL EXCELLENCE AWARDS (2013-2018)

EDITORIAL ADVISORY BOARD

2018 Jesse H. Neal National Business Journalism Award Finalist, Best Editorial Use of Data, June 2017

2013 Jesse H. Neal National Business Journalism Award Best Single Issue, October 2012

2013 Jesse H. Neal National Business Journalism Award

2013 American Society of Business Press Editors, Midwest Regional Azbee Awards Bronze, Best Editorial/Commentary, July 2012

Vito Maurici McLane Co. Inc.

Jon Bratta Core-Mark International Inc.

Jack Lewis GPM Midwest

Rick Crawford Green Valley Grocery

Finalist, Best Profile, August 2012

Edward Davidson ER Davidson & Associates (7-Eleven Inc., retired)

Brett Atherton Bolla Management

2017 Eddie Awards, Folio: magazine Winner, Business to Business, Retail, Single/Series of Articles, May 2017 Honorable Mention, Business to Business, Retail, Single/Series of Articles, June 2016 2016 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Full Issue, October 2015 Business to Business, Retail, Single/Series of Articles, August 2015

Jim Hachtel Eby-Brown Co.

Danielle Mattiussi Maverik Inc. Richard Mione GPM Southeast Jonathan Polonsky Plaid Pantries Inc. Greg Scriver Kwik Trip Inc. Roy Strasburger Strasburger Retail

Ray Johnson Speedee Mart

2015 Eddie Award Honorable Mention, Folio: magazine Business to Business, Retail, Single Article, February 2014 2016 Trade Association Business Publications Intl. Tabbie Awards Silver, Front Cover Illustration, June 2015

AUG

20 1 8

Guide to Tobacco

CONTENTS AUG 18 8550 W. Bryn Mawr Ave., Ste. 200, Chicago, IL 60631 (773) 992-4450 Fax: (773) 992-4455 www.csnews.com Direct Mailing Address for Convenience Store News: 11-43 Raymond Plaza West, 16th floor, Newark, NJ 07102 BRAND MANAGEMENT Vice President/Group Brand Director Paula Lashinsky (917) 446-4117 plashinsky@ensembleiq.com EDITORIAL Editorial Director (201) 855-7606

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EDITORâ&#x20AC;&#x2122;S NOTE

3 Remember Where You Came From Convenience store operators need to keep their eyes on the tobacco category as dollar stores make a grab for share.

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CORPORATE OFFICERS

COVER STORY

6 Protecting the Backbar With the right assortment, convenience stores can continue to win the battle for tobacco dollars. CATEGORY INSIGHTS

16 Cigarettes 18 Total OTP 20 Smokeless 22 Cigars

23 24 25 26

E-Cigarettes Vaping Pipe & Cigarette Tobacco Papers

4 Guide to Tobacco C S N E W S . c o m

Executive Chairman Alan Glass Chief Executive Officer David Shanker Chief Operating Officer & Chief Financial Officer Rich Rivera Chief Brand Officer Korry Stagnito President, Enterprise Solutions Terese Herbig Chief Digital Officer Joel Hughes Chief Human Resources Officer Jennifer Turner Senior Vice President, Innovation Tanner Van Dusen CONVENIENCE STORE NEWS AFFILIATIONS Premier Trade Press Exhibitor

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JULY 2018

COVER STORY

Protecting the Backbar With the right assortment, convenience stores can continue to win the battle for tobacco dollars By Melissa Kress

IN APRIL, CONVENIENCE STORE INDUSTRY INSIDERS gathering at the 2018 NACS State

of the Industry Summit heard 7-Eleven Inc.’s Alan Beach caution them not to turn their backs on cigarettes. That may seem like a no-brainer. However, as the convenience channel moves away from its traditional cokes-and-smokes reputation and toward fresh and healthier offerings, it is easy to overlook the cigarettes category — with its diminishing volumes and tight margins. “You can’t ignore this. We need to protect this; it is what got us here,” Beach urged. Yes, it is true cigarettes have struggled historically. The category was relatively flat in both average sales per store and total industry sales in 2017, according to the latest Convenience Store News Industry Report. Still, it ranks No. 1 among in-store merchandise by a long shot, capturing 29.82 percent of all in-store sales in 2017 (down from 30.11 percent the prior year). That alone should make c-store operators sit up and pay attention. While Beach was talking specifically about cigarettes, his advice can apply to tobacco as a whole. According to the CSNews Industry Report, other tobacco products

6 Guide to Tobacco C S N E W S . c o m

(OTP) ranks fourth among merchandise, at 5.62 percent of in-store sales last year — and growing. “Tobacco continues to be really important, particularly to the convenience retailer, by far,” echoed Don Burke, senior vice president of Management Science Associates Inc. Looking at total nicotine consumption, Management Science Associates found declines of 0.2 percent and 0.3 percent, on average, over the past few years. Recently, total nicotine experienced a greater decline, by about 0.8 percent, driven not by consumer activity but by higher state excise taxes in California and Pennsylvania, Tobacco 21 ordinances and flavor bans, Burke explained. “We are seeing a little bit greater decline; however, that decline is still less than 1 percent,” he noted. “Tobacco continues to be a very important category, and we project that it will be for many more years.” Cigarette consumption, according to Burke, remains consistent, at typical declines of about 3.5 percent a year over the past 10 years. “Because cigarettes account for about 70 percent of all tobacco sales in the U.S., most people look at that decline rate and expect that overall tobacco is declining and not becoming as important. But that is not the full picture,” he clarified. The full picture is being shaped by changing consumer preferences. “When you look across total nicotine, and what’s happening in the other tobacco categories and vapor, you see there

AUG

20 1 8

Guide to Tobacco

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OUR WATCH WE I.D. TOBACCO PURCHASES

HELP KEEP TOBACCO OUT OF THE HANDS OF MINORS. I.D. ANYONE UNDER 27.

It’s up to us to protect our community from underage tobacco use. To help prevent sales to minors, FDA has created the “This Is Our Watch” program. Look for your materials in the mail. Learn more about federal tobacco regulations and order free materials at www.FDA.gov/ThisIsOurWatch.

COVER STORY

are definitely categories that are increasing,” Burke said. “Consumer preferences for the tobacco items they use are changing and because of that, the category is continuing to be very strong. The decline in cigarettes shouldn’t be applied to the entire category,” he added.

Sizing Up the Competition Even with the shift toward other items on the backbar, though, many consumers are still picking up that pack of smokes. Management Science Associates does not survey consumers, but it does track volume-metric data, and the point-of-sale data shows that when someone purchases a tobacco item, the next most-likely item to be in that basket is another type of tobacco item. “So, dual usage of tobacco items is very strong,” Burke pointed out. The convenience channel is performing very well particularly in the OTP segments, and experiencing growth in almost all the other segments on the backbar. “As consumers shift from a combustible item to other items — typically not combustibles — they are starting to increase their usage. Convenience is doing very well in all the other categories,” according to Burke. Right now, the next largest category after

cigarettes is large cigars. In 2017, cigarettes held about 69 percent of the category, large cigars followed at 18.3 percent and moist smokeless was about 8.8 percent, according to data from Management Science Associates. As for vapor products, e-liquid sales in the convenience channel have dropped off tremendously and are continuing to decline. However, the vapor category overall in convenience is increasing, driven primarily by the sale of closed-system vaporizers and their cartridges. Looking at the competitive landscape, convenience stores have traditionally been the king of tobacco — and that is still true today. Pressure began to heat up a few years ago when vape shops burst onto the scene, leading some to question what effect they would have on the c-store market. But to date, such worries have been unfounded. Vape shops typically do not compete with convenience, noted Burke. “[Vape shops] provide a far greater selection of vape items than can be found in convenience. And while some dual users — consumers who use the vape product along with tobacco — will purchase it in convenience because it is easier to do, most of the vape shop consumers don’t typically shop convenience,” he explained. “They are dedicated to a particular vape shop, the type of flavors they offer at that vape shop, or the brands they offer.” The consumer who buys vapor products in convenience stores is typically the consumer who uses vapor occasionally in addition to other tobacco items. With the Food and Drug Administration’s (FDA) deeming rule putting pressure on vape shops, convenience stores are in a place to pick up the slack, according to Jacopo D’Alessandris, president and CEO of E-Alternative Solutions, maker of the Cue Vapor System. “A shift of consumer buying habits in the e-category will be forced upon adults as the FDA regulations continue to hinder the vape shop channel, leading to an expedited consolidation in this channel,” D’Alessandris predicts. “The [vapor] category will grow in importance in the c-store and tobacco outlet channels as this scenario plays out in the next few years,” he continued, adding that many discount tobacco outlets have already expanded into the vapor category and are competing head-to-head with vape shops vs. the traditional convenience channel. Dollar stores are really the retailers to watch, Burke cautioned. “The dollar channel really is the greatest threat to convenience because one, they have the greatest number of stores of any other class of trade as compared to convenience. They are the next most popular type

10 Guide to Tobacco C S N E W S . c o m

COVER STORY

of store in the U.S. They have more locations than drug, mass merchandisers or grocery. Just from that angle, they are a threat,” he explained.

How Cumberland Farms Stays the Victor

And two, dollar stores are starting to carry tobacco items.

Protecting the tobacco category is something convenience store retailer Cumberland Farms Inc.’s category managers Anne Flint and Stephanie Martone take seriously.

“In fact, the dollar channel is experiencing quite a growth in most of the tobacco categories, but they still haven’t quite figured out the right product mix,” Burke said, noting that dollar stores have made a lot of changes in the types of products, brands and items they carry. “They are not as big a threat yet as they will become, but once they figure out the right tobacco items to be carrying in their stores, they likely will be a fairly big threat to the convenience channel,” he said. Across all OTP segments, the only one in which dollar stores have declined is roll-your-own; in every other area, dollar has been growing quite considerably, Burke cited. In the convenience channel, roll-yourown and little cigars join cigarettes in showing declines on the backbar. Other than that, every other segment is growing well.

Not Without a Fight Therein lies the reality that convenience store operators need to protect their tobacco category, and the strategy to do that is twofold: assortment and OTP. “In a study we did in the past several years, we found that about 30 percent of convenience stores are able to increase their tobacco category sales each year. They typically do it by carrying the right products. That’s actually critical,” Burke said. He suggests retailers scout their competition, particularly dollar stores. “If dollar stores are going to be stealing share from convenience, go look at what products they are selling and make sure you are carrying at least those products within your store,” he said.

12 Guide to Tobacco C S N E W S . c o m

Tobacco accounts for a large portion of the revenue at Cumberland Farms — 40 percent, according to Flint, director of category management, tobacco. “It’s nothing to sneeze at. You make more money on foodservice, but tobacco is not something that we ignore. But you are also dealing with a declining customer base because less people are smoking combustibles,” she said. “Will non-combustibles pick up the slack? To some extent, it does. We can make a lot of money on the non-combustible side of the business as taxes have not affected that part of the business.” However, the Westborough, Mass.-based convenience store chain faces an ever-growing web of tobacco legislation on a daily basis. For instance, cigar legislation is one of the big issues currently with the boards of health in Massachusetts. “There are single bans and minimum pricing. The flavor bans are expanding. Those affect not just cigars, but e-cigarettes and smokeless as well,” explained Martone, category manager, OTP. “That is a big fight for us as far as legislation, which also has overrun into Rhode Island now. We are seeing a lot of that in Rhode Island as well.” The lack of guidance as to what is a flavor and what is not is making the job harder. “There is a lot of debate about what is flavored and what is not flavored. There is a guidance list, but not a guidance list from the state. It is a guidance list of many hundreds of items that the Massachusetts Association of Health Boards developed,” Flint said. “There is no clear definition how you get on the list or how you get off the list.” Massachusetts also has restrictions on what you can and cannot do in the category. “You can’t do a lot of things, like cigarette coupons, so you have to have some kind of edge to level the playing field. You can’t take advantage of a lot of the new programs tobacco companies are coming out with as far as app integration or coupons online,” Flint explained. “That’s a third of our stores that get left out of a lot, so you have to be creative.” Still, in the end, Cumberland Farms is finding a way to win in tobacco. “We are surviving today in the combustibles category. We are beating the national trends, which are down 3 percent to 4 percent. We are still on the plus side of those trends,” Flint reported. “I think one of the strongest factors in that is our very strong exclusive brand, First Class, manufactured by U.S. Flue Cured Tobacco, Premier Tobacco. That is our lowest-priced brand. It is helping us maintain, or exceed, our competition.”

COVER STORY

“Make sure you are carrying the right number of SKUs, the right number of products and the right amount of selection. When consumers shop convenience, they are looking for selection,” he added. In terms of assortment opportunities, Burke highlighted a few: 1. C-stores need to embrace the large cigar segment, which has one of the greatest growth rates of all the tobacco segments. “One of things we found recently is that prepriced items, which most convenience stores don’t like, have helped this category considerably,” he noted. If a retailer does not want pre-priced items, then it needs to offer a range of price

14 Convenience Store News C S N E W S . c o m

points within the large cigar segment to meet consumer demand. 2. Moist smokeless is another tobacco segment that convenience stores need to be in because it continues to grow by about 2 percent a year. 3. The third way to build the category is to take advantage of consumer interest in the vapor category, particularly in the vaporizers that typically retail for $20-plus, Burke explained. “That’s a high cash-register ring for the tobacco category and contributes considerably to revenue growth in convenience,” he said. There is a lot of potential for the less-thought-of tobacco segments to be merchandised and featured within convenience. “There are opportunities there,” he advised. He also specifically called out super-premium cigarettes, such as Reynolds American Inc.’s Natural American Spirit and Altria Group Inc.’s Nat Sherman. “[Super-premium cigarettes] is a small category, but even that is growing, so any convenience retailer should be carrying at least one super-premium,” he said. CSN

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CIGARETTES

CATEGORY INSIGHTS: Cigarettes In the 52 weeks ended June 30, cigarette dollar sales were flat (up 0.9%) vs. a year ago, and unit sales were down more than 4 percent — a reflection of premium price increases keeping dollars in the black. UNITS

% CHANGE

$56,562,168,523

DOLLARS

0.9%

818,401,715

-4.1%

$45,605,000,945

1.7%

632,065,836

-3.6%

Branded Discount

$7,777,733,750

-3.2%

124,029,901

-7.3%

Subgeneric/Private Label

$1,536,707,289

13.7%

29,791,941

12.7%

Fourth Tier

$1,525,547,268

-11.0%

29,376,288

-14.5%

$117,179,272

-6.2%

3,137,749

-5.6%

Total Cigarettes Premium

Imports

% CHANGE

Cigarette Segment Share The premium segment continues to account for the majority of cigarettes sold, but growth there is very slight in dollar sales (up 1.7%) and down in units (by 3.6%) — almost as much as the overall category. Premium

Branded Discount

Subgeneric/Private Label

Fourth Tier

UNIT SHARE

DOLLAR SHARE

Imports

3% 4% 14%

15%

80%

77%

Cigarette Share by Region

Top 10 Cigarette Items

Across the United States, the Southeast holds the most cigarette share, with the Midwest a strong second shareholder. The West and Southwest regions are the lowest in share, while the Northeast is snug nicely in the middle.

The top 10 cigarette items comprise nearly 35 percent of all cigarette units sold in convenience stores. Premium cigarettes are king of the road — all of the top 10 items are in this subsegment. The Marlboro brand holds seven of the top 10 SKUs, with Marlboro Gold King currently reigning at the top.

Midwest

Northeast

Southeast

Southwest

West TOP 10 CIGARETTE ITEMS

DOLLAR SHARE

14%

25%

24%

14%

27%

UNIT SHARE

16%

20% 32%

Source: C-Metrics, 52 weeks ending 6/30/2018 C-Metrics is a projected convenience channel database for warehouse-delivered products

16 Guide to Tobacco C S N E W S . c o m

Marlboro Gold KG BX 10CT Marlboro Red KG BX 10CT Newport MTH Green 100 BX 10CT Newport MTH Green KG BX 10CT Marlboro Special Blend Gold KG BX 10CT Marlboro Gold 100 BX 10CT Marlboro 100 BX Camel Blue KG BX 10CT Marlboro Special Blend Gold 100 BX 10CT Marlboro Silver KG BX 10CT

SHARE OF TOTAL UNITS

8.6% 5.4% 4.9% 4.1% 2.6% 2.2% 1.9% 1.7% 1.7% 1.6%

TOTAL OTP

CATEGORY INSIGHTS: Total OTP Once again, “the others” do not disappoint. In the 52 weeks ended June 30, overall dollar sales of other tobacco products (OTP) were up 12.3 percent, and units were up as well, by almost 6 percent. Of the seven segments of OTP, most showed healthy growth. Vaping and pipes, in particular, are performing phenomenally well. DOLLARS

Total OTP Smokeless Cigars E-Cigarettes Vaping Pipe/Cigarette Tobacco Papers Pipes

% CHANGE

$10,889,934,492 $6,925,557,986 $2,464,776,175 $614,746,608 $465,188,758 $209,202,555 $205,016,617 $4,596,576

UNITS

12.3% 7.1% 10.7% 33.7% 100.0% 0.3% 0.5% 100.0%

% CHANGE

4,179,976,383 1,451,331,303 2,490,962,879 53,401,997 29,070,947 24,551,844 128,993,477 1,582,861

5.6% 0.6% 8.3% 11.4% 171.4% -2.2% -1.2% 898.9%

OTP Segment Share

OTP Share by Region

Making up nearly two-thirds of the dollar share, smokeless is the heaviest shareholder in OTP. Cigars, at nearly a quarter-share, are a substantial player as well. However, it’s the e-cig and vaping segments that have experienced a resurgence thanks to the introduction of some new innovative products and interesting flavors.

The eastern part of the United States is very disparate when it comes to OTP share: the Southeast captures the largest portion of OTP dollar share (26.3%), while the Northeast captures the least (16%). The Midwest, Southwest and West are much more evenly divided, each with a dollar share in the 18- to 20-percent range.

Smokeless

Cigars

E-Cigs

Vaping

Pipe/Cig Tobacco

Papers

Midwest

Pipes

Northeast

Southwest

West

DOLLAR SHARE

2% 4%

Southeast

2% 6%

17.6%

23%

20.4%

19.7%

63%

16% 26.3%

OTP Retail Dollar Sales Trend Most OTP segments are showing healthy growth, and this trend appears to be continuing.

250

200

Source: C-Metrics, 52 weeks ending 6/30/2018 C-Metrics is a projected convenience channel database for warehouse-delivered products

18 Guide to Tobacco C S N E W S . c o m

43274

43253

43232

43211

43190

43169

43148

43127

43106

43085

43064

43043

43022

43001

42980

42959

42938

42917

42896

42875

42854

42823

42812

42791

42770

42749

42728

42707

42686

42665

42644

42623

42602

42581

42560

150

SMOKELESS

CATEGORY INSIGHTS: Smokeless Smokeless is the largest segment of the OTP category, capturing 63 percent of dollar sales in the 52 weeks ended June 30, and growing by more than 7 percent vs. a year ago. DOLLARS

Total Smokeless

% CHANGE

$6,925,557,985.50

7.1%

100%

Altria Group

$3,887,656,099.11

5.2%

56.1%

Reynolds American Inc.

$2,416,575,226.32

9.4%

34.9%

Swedish Match

$479,074,143.70

9.7%

6.9%

National Tobacco Co.

$72,696,952.56

14.1%

1.0%

Swisher International

$57,234,963.51

7.5%

0.8%

Smokey Mountain Chew Inc.

$6,300,865.30

4.4%

0.1%

All Other

$6,019,735.00

5.9%

0.1%

Dollar & Unit Share vs. Year Ago There are two major players in the smokeless segment — Altria and Reynolds American — that comprise more than 90 percent of the dollar sales, leaving only 10 percent for the remaining manufacturers. Manufacturer unit share in smokeless is almost a mirror image of dollar share, but unit-share changes vs. last year vary greatly, with Altria and Reynolds American coming up flat, indicating price increases are driving their growth. DOLLAR SHARE CHANGE VS. YEAR AGO

UNIT SHARE CHANGE VS. YEAR AGO

5.2%

Altria Group

9.4%

Reynolds American Inc.

-1.0% 1.2%

9.7%

Swedish Match

14.1%

8.5%

Swisher International

4.4%

2.2%

Smokey Mountain Chew Inc.

5.9%

All Other

19.7%

National Tobacco Co.

7.5%

Swisher International

5.2%

Swedish Match

National Tobacco Co.

Smokey Mountain Chew Inc.

Altria Group Reynolds American Inc.

All Other

-3.6%

Smokeless Share by Region

Share of Smokeless by Brand

The Southeast and Southwest regions of the United States account for more than half of all smokeless unit share and almost half of the segment’s dollar share. The Northeast is the lightweight, comprising only 12 percent each in dollar share and unit share.

Copenhagen, Grizzly and Skoal are the top three brands, respectively, in smokeless dollar share, but only the first two displayed growth over the latest 52 weeks, while Skoal was flat. The three together make up nearly 80 percent of the segment’s dollar sales.

Midwest

Northeast

Southeast

Southwest

DOLLAR SHARE

18%

UNIT SHARE

21% 12%

23% 26%

15%

BRAND

21%

12% 31%

Source: C-Metrics, 52 weeks ending 6/30/2018 C-Metrics is a projected convenience channel database for warehouse-delivered products

20 Guide to Tobacco C S N E W S . c o m

s UP

West

Copenhagen Grizzly Skoal Red Seal Camel Snus Kodiak Longhorn Red Man Timberwolf Stokers

t DOWN

— FLAT

MANUFACTURER

Altria Group Reynolds American Inc. Altria Group Altria Group Reynolds American Inc. Reynolds American Inc. Swedish Match Swedish Match Swedish Match National Tobacco Co.

RANK TREND

1 2 3 4 5 6 7 8 9 10

s s — s s s s t — s

SHARE OF SEGMENT

36.0% 28.1% 15.2% 4.6% 2.9% 2.6% 2.4% 1.9% 1.4% 0.8%

CIGARS

CATEGORY INSIGHTS: Cigars Cigars is a growing and competitive segment, with a 10.7-percent dollar sales increase and 8.3-percent unit volume increase in the latest 52 weeks. Due to size and price variations within cigars, individual manufacturers’ share is known to vary. Total Cigars Altria Group Swisher International Swedish Match ITG Brands LLC Cheyenne International Kretek International Good Times Tobacco Prime Time International All Other

DOLLARS

% CHANGE

DOLLAR SHARE

$2,464,776,175 $778,552,834 $681,876,849 $423,809,232 $367,728,865 $37,064,364 $30,099,971 $23,794,632 $20,935,898 $100,913,529

10.7% 12.2% 7.5% 7.2% 28.6% -0.1% 0.6% -3.4% -16.2% 0.3%

100% 31.6% 27.7% 17.2% 14.9% 1.5% 1.2% 1.0% 0.8% 4.1%

UNITS

2,490,962,879 654,268,270 747,116,494 521,055,324 218,139,661 100,046,719 25,653,160 33,023,888 54,744,900 136,914,463

% CHANGE

UNIT SHARE

8.3% 7.5% 8.7% 7.5% 23.0% 9.6% -3.5% 9.2% -19.6% 9.3%

100% 26.3% 30.0% 20.9% 8.8% 4.0% 1.0% 1.3% 2.2% 5.5%

Dollar & Unit Share vs. Year Ago The top four cigar manufacturers — Altria, Swisher, Swedish Match and ITG Brands — captured more than 90 percent of the dollar sales in the latest 52 weeks. While ITG Brands has the smallest dollar share of the four, it is posting the largest gains by far — up nearly 29 percent. ITG Brands is also showing the largest unit volume gains, up 23 percent. DOLLAR SHARE CHANGE VS. YEAR AGO

Altria Group

UNIT SHARE CHANGE VS. YEAR AGO

Altria Group

12.2%

Swisher International Swedish Match

7.5%

Swisher International

7.2%

Swedish Match

ITG Brands LLC

Kretek International Good Times Tobacco Prime Time International

-0.1%

Cheyenne International

0.6%

Kretek International

-3.4%

Good Times Tobacco

23.0% 9.6% -3.5% 9.2%

Prime Time International

-16.2%

All Other

8.7% 7.5%

ITG Brands LLC

28.6%

Cheyenne International

7.5%

-19.6%

All Other

0.3%

9.3%

Cigar Share by Region

Share of Cigars by Brand

The Southeast holds the largest share of cigars by region, but the difference between dollar and unit share is pretty substantial — 31 percent and 37 percent, respectively. This is most likely an indicator of higher promotional activity in this region.

The top 10 brand families hold about 88 percent of total cigar dollar sales. More than half of them showed growth vs. a year ago, while two declined and two were flat.

Midwest

Northeast

Southeast

Southwest

DOLLAR SHARE

14% 17%

19% 31%

16%

17%

15%

15% 37%

Source: C-Metrics, 52 weeks ending 6/30/2018 C-Metrics is a projected convenience channel database for warehouse-delivered products

22 Guide to Tobacco C S N E W S . c o m

t DOWN

— FLAT

West

UNIT SHARE

19%

s UP

BRAND

MANUFACTURER

Black & Mild Swisher Sweets Backwoods Game Swisher White Owl Dutch Masters Cheyenne Jackpot Pom Pom

Altria Group Swisher International ITG Brands LLC Swedish Match Swisher International Swedish Match ITG Brands LLC Cheyenne International Swedish Match Swisher International

RANK

TREND

SHARE OF SEGMENT

1 2 3 4 5 6 7 8 9 10

s t s s s — s — s t

31.5% 18.1% 9.0% 8.5% 6.5% 6.3% 4.4% 1.5% 1.4% 1.2%

E-CIGARETTES

CATEGORY INSIGHTS: E-Cigarettes E-cigarette dollar sales are showing double-digit growth vs. a year ago. The top two manufacturers — Reynolds American Inc. with its Vuse brand, and Fontem US Inc. with its blu brand — captured almost 75 percent of sales in the 52 weeks ended June 30. DOLLARS

% CHANGE

Total E-Cigarettes

$614,746,608

33.7%

100%

Reynolds American Inc.

$349,593,738

29.0%

56.9%

Fontem US Inc.

$109,274,158

23.9%

17.8%

Nu Mark LLC

$86,665,949

72.5%

14.1%

JTI-Japan Tobacco International

$22,551,448

-24.3%

3.7%

National Tobacco Co.

$8,773,040

-18.3%

1.4%

Sottera Inc.

$2,879,985

16.9%

0.5%

$35,008,290

100.0%

5.7%

All Other

Dollar & Unit Share vs. Year Ago Reynolds American currently surpasses the other e-cigarette manufacturers by holding more than half of the segment’s dollar share. E-cigarette unit share numbers pretty much mirror the dollar share stats in the segment, and clearly show that e-cigs are making a very strong comeback in the convenience channel. DOLLAR SHARE CHANGE VS. YEAR AGO

UNIT SHARE CHANGE VS. YEAR AGO

29.0%

Reynolds American Inc.

23.9%

Fontem US Inc.

Fontem US Inc. 72.5%

Nu Mark LLC

8.3% 55.4%

Nu Mark LLC

JTI-Japan Tobacco International

-24.3%

JTI-Japan Tobacco International

National Tobacco Co.

-18.3%

National Tobacco Co.

16.9%

Sottera Inc.

3.7%

-12.7% -20.8% 34.7%

Sottera Inc. 100%

All Other

84.5%

All Other

E-Cigarette Share by Region

Share of E-Cigarettes by Brand

The Northeast, West, Midwest and Southeast are all pretty evenly divided in share of the resurging e-cig category. Only the Southwest is lagging behind, having less than half the share of the other regions.

The top three brand families — Vuse, blu and MarkTen — are showing strong double-digit growth, and capturing over 88 percent of the segment’s dollars. Meanwhile, double-digit declines are being felt by Japan Tobacco International with its Logic brand, and National Tobacco Co. with its V2 brand.

Midwest

Northeast

Southeast

Southwest

DOLLAR SHARE

West

s UP

UNIT SHARE BRAND

24%

22%

21%

23%

10%

24% 21%

24% 22%

Vuse blu MarkTen Logic V2 NJOY 21st Century

t DOWN

— FLAT

MANUFACTURER

Reynolds American Inc. Fontem US Inc. Nu Mark LLC JTI-Japan Tobacco International National Tobacco Co. Sottera Inc. CB Distributors Inc.

RANK

TREND

SHARE OF SEGMENT

1 2 3

s s s

56.9% 17.8% 14.1%

4 5 6 7

t t s s

3.7% 1.4% 0.5% 0.2%

Source: C-Metrics, 52 weeks ending 6/30/2018 C-Metrics is a projected convenience channel database for warehouse-delivered products

AUG

20 1 8

Guide to Tobacco

VAPING

CATEGORY INSIGHTS: Vaping The vaping category is coming up victorious, as dollar sales are showing very strong growth in the convenience channel vs. a year ago. With just a handful of competitors, the top manufacturer — Juul Labs — captured more than 70 percent of dollar sales in the 52 weeks ended June 30. DOLLARS

% CHANGE

Total Vaping

$465,188,758.27

255.1%

100%

Juul Labs Inc.

$337,476,187.01

626.9%

72.5%

Reynolds American Inc.

$66,397,639.52

25.1%

14.3%

Fontem US Inc.

$19,106,494.39

JTI-Japan Tobacco International

1000.0%

4.1%

$13,544,562.94

-4.1%

EAS

$5,559,773.33

174.7%

2.9% 1.2%

All Other

$23,104,101.08

50.6%

5.0%

Dollar & Unit Share vs. Year Ago While all of the top vaping manufacturers are experiencing dollar sales growth, Juul Labs is soaring. But unlike the others, its dollar share is considerably higher than its unit share, indicating higher price points. In terms of unit share growth, Fontem US and its blu brand are leading, with gains in the quadruple digits. UNIT SHARE CHANGE VS. YEAR AGO

DOLLAR SHARE CHANGE VS. YEAR AGO

626.9%

Juul Labs Inc. Reynolds American Inc.

1000%+ -4.1%

1000%+

Fontem US Inc. 40.5%

JTI-Japan Tobacco International

174.7%

EAS All Other

27.6%

Reynolds American Inc.

Fontem US Inc. JTI-Japan Tobacco International

667.9%

Juul Labs Inc.

25.1%

828.1%

EAS

50.6%

All Other

-2.8%

Vaping Share by Region

Share of Vaping by Brand

Vaping sales skew more toward the East, specifically the Northeast and Southeast regions of the United States. The least amount of vaping activity belongs to the Southwest and Midwest.

The top three vaping brand families — Juul, Vuse and blu — capture more than 90 percent of the segment’s share. Of the top five brands, only one is down year over year.

Midwest

Northeast

Southeast

Southwest

DOLLAR SHARE

22%

27% 35% 25%

11%

35% 24%

Source: C-Metrics, 52 weeks ending 6/30/2018 C-Metrics is a projected convenience channel database for warehouse-delivered products

24 Guide to Tobacco C S N E W S . c o m

BRAND

Juul Vuse blu Logic Cue

UNIT SHARE

10%

West

s UP

t DOWN

— FLAT

MANUFACTURER

Juul Labs Inc. Reynolds American Inc. Fontem US Inc. JTI-Japan Tobacco International EAS

RANK TREND

1 2 3 4 5

s s s t s

SHARE SEGMENT

72.5% 14.3% 4.1% 2.9% 1.2%

PIPE & CIGARETTE TOBACCO

CATEGORY INSIGHTS: Pipe/Cigarette Tobacco Dollar sales in the pipe/cigarette tobacco segment overall are showing flatness, with the top two manufacturers — Republic Tobacco and Scandinavian Tobacco — both posting sales declines during the 52 weeks ended June 30. DOLLARS

Total Pipe/Cigarette Tobacco

% CHANGE

$209,202,555

0.3%

100%

$64,625,291

-0.6%

30.9%

Scandinavian Tobacco Group

$30,317,563

-2.5%

14.5%

RSB Tobacco

$26,940,163

5.2%

12.9%

Santa Fe Tobacco

$23,015,301

4.8%

11.0%

SX Brands

$15,523,926

6.2%

7.4% 4.7%

Republic Tobacco

Rouseco Inc.

$9,781,751

6.9%

$5,984,361

6.9%

2.9%

$33,014,199

-7.0%

15.8%

Inter Continental Trading USA Inc. All Other

Dollar & Unit Share vs. Year Ago The top four pipe/cigarette tobacco manufacturers capture almost 70 percent of the dollar sales in this segment. While the top two manufacturers saw their share decline, almost all of the remaining players gained share over the 52 weeks measured. Meanwhile, unit volume in the segment is declining, with three of the top four manufacturers showing negative unit volume vs. a year ago. DOLLAR SHARE CHANGE VS. YEAR AGO

Republic Tobacco

-0.6%

Scandinavian Tobacco

-2.5%

UNIT SHARE CHANGE VS. YEAR AGO

Republic Tobacco

-2.2%

Scandinavian Tobacco

-7.2%

5.2%

RSB Tobacco

4.8%

Santa Fe Tobacco

-4.7%

Santa Fe Tobacco

SX Brands

6.2%

Rouseco Inc.

6.9%

Rouseco Inc.

Inter Continental Trading USA Inc.

6.9%

Inter Continental Trading USA Inc.

7.3%

SX Brands

-7.0%

All Other

3.1%

RSB Tobacco

4.9% 6.8% -6.0%

All Other

Pipe/Cigarette Tobacco Share by Region Share of Pipe/Cigarette Tobacco by Brand It is clear from the regional charts that pipe/cigarette tobacco is most popular in the Northeast and Midwest. Together, these two regions alone account for more than 60 percent of the segment’s total dollar sales share and unit volume share. Midwest

Northeast

Southeast

Southwest

DOLLAR SHARE

19%

24%

23%

12%

12% 40%

s UP

West

UNIT SHARE

22%

The top 10 brand families capture about 71 percent of total pipe/cigarette tobacco dollar sales. Republic Tobacco owns the most brands in the top 10, however all of them are flat or declining — in step with the overall trend in pipe/cigarette tobacco.

38%

Source: C-Metrics, 52 weeks ending 6/30/2018 C-Metrics is a projected convenience channel database for warehouse-delivered products

BRAND

t DOWN

— FLAT

MANUFACTURER

Good Stuff Gambler Bugler

RSB Tobacco Republic Tobacco Scandinavian Tobacco Group Natural AM Spirits Sante Fe Tobacco Largo Republic Tobacco Criss-Cross SX Brands Golden Harvest Rouseco Inc. Top Republic Tobacco Ohm Inter Continental Trading USA Inc. Tin Star Republic Tobacco AUG

20 1 8

SHARE OF SEGMENT

RANK

TREND

1 2

s —

12.9% 12.0%

3 4 5 6 7 8

— s t s s t

11.6% 11.0% 6.5% 6.3% 4.1% 3.0%

9 10

s t

2.3% 2.0%

Guide to Tobacco

PAPERS

CATEGORY INSIGHTS: Papers Trends in the papers segment are flat overall, both in dollars and units, with only Royal Blunts and HBI International showing any significant growth in the 52 weeks ended June 30. DOLLARS

Total Papers

% CHANGE

$205,016,617

0.5%

100%

Republic Tobacco

$87,276,646

-1.4%

42.6%

National Tobacco Co.

$84,885,074

0.1%

41.4%

Royal Blunts Inc.

$7,169,016

19.0%

3.5%

Rouseco Inc.

$4,952,826

9.7%

2.4%

HBI International

$4,493,757

18.6%

2.2%

Great Midwest Tube

$3,745,247

-2.5%

1.8%

$2,811,259

-5.7%

1.4%

$9,682,792

2.4%

4.7%

Scandinavian Tobacco Group All Other

Dollar & Unit Share vs. Year Ago The top two papers manufacturers — Republic Tobacco and National Tobacco Co. — captured more than 80 percent of the dollar sales in the 52 weeks measured. Unlike in dollar share, where the top two manufacturers are pretty evenly divided, in unit share, the No. 2 company National Tobacco has a 10-point higher share than the No. 1 company Republic Tobacco, indicating a price differential. UNIT SHARE CHANGE VS. YEAR AGO

DOLLAR SHARE CHANGE VS. YEAR AGO

Republic Tobacco

-1.4%

Republic Tobacco

2.6%

National Tobacco Co.

0.1%

National Tobacco Co.

-4.0%

19.0%

Royal Blunts Inc.

9.3%

Royal Blunts Inc.

9.7%

Rouseco Inc.

8.1%

Rouseco Inc. 18.6%

HBI International

21.2%

HBI International

Great Midwest Tube

-2.5%

Great Midwest Tube

-2.5%

Scandinavian Tobacco Group

-5.7%

Scandinavian Tobacco Group

-14.7%

All Other

2.4%

All Other

-14.1%

Paper Share by Region

Share of Papers by Brand

It makes sense that similar to pipe/cigarette tobacco, the complementary papers segment is most popular in the Northeast. However, the second-most popular region for papers is the Southeast; not the Midwest, as in pipe/cigarette tobacco.

The top 10 brand families capture about 90 percent of the segment’s dollar sales, with less than half of the manufacturers showing growth vs. a year ago. Only four brands showed growth; the majority are flat or declining.

Midwest

Northeast

Southeast

Southwest

s UP BRAND

DOLLAR SHARE

15%

20%

9% 25%

UNIT SHARE

16%

10% 27% 31%

31%

Source: C-Metrics, 52 weeks ending 6/30/2018 C-Metrics is a projected convenience channel database for warehouse-delivered products

26 Guide to Tobacco C S N E W S . c o m

t DOWN

— FLAT

West

Zig-Zag Job Gambler Top Premier Royal Blunts Golden Harvest Hot Rod Zen Bugler

MANUFACTURER

National Tobacco Co. Republic Tobacco Republic Tobacco Republic Tobacco Republic Tobacco Royal Blunts Inc. Rouseco Inc. Great Midwest Tube HBI International Scandinavian Tobacco Group

RANK TREND

SHARE OF SEGMENT

1 2 3 4 5 6 7 8 9

— s t — t s s — s

41.4% 16.2% 14.5% 5.9% 2.9% 2.6% 2.4% 1.8% 1.4%

1.4%

2018

A COMPREHENSIVE STR ATEGY GUIDE TO BUILDING BEER BUSINESSES ACROSS CHANNEL S

3 4 5 10 PAG E

PAG E

An Update from Kevin Doyle MillerCoors Advantage Industry Overview Off-Premise

CO N V E N I E N C E S TO R E S

D O L L A R S TO R E S

G R O C E RY S TO R E S

D R U G S TO R E S

20 L I QU O R S TO R E S

30 34 43 PAG E

eCommerce

PAG E

On-Premise

PAG E

Key Takeaways

Beer is big business. It’s a constantly changing one as well, with new brewers, brands and packages appearing seemingly every day. Today’s consumers have more options than ever before when choosing a beer. Consumers also have more options when it comes to where they shop for a beer. And their reasons for purchasing a particular beer are changing as well. Today consumers don’t buy the same beer for every occasion. They buy a beer based on where and when they’ll be drinking it and with whom. That’s where this Building with Beer® publication comes into play. This strategy guide will give you a look at how beer contributes to the overall success of your store and how to capitalize on the changing habits of today’s beer shopper. Building with Beer® shares best practices from each of the industry’s key classes of trade and provides insights and solutions to help you navigate and win in today’s challenging retail environment. At MillerCoors we are committed to providing the tools and services to help you – our customers – grow the size and value of your total beer category. A growing category benefits everyone – including your consumers. This strategic guide reflects that commitment. We hope you enjoy this Building with Beer® publication. To learn more about trends in your business and the full assortment of tools and resources MillerCoors can provide, we encourage you to reach out to your MillerCoors sales team. Thank you,

Kevin Doyle President, Sales and Distributor Operations MillerCoors

M I L L E R C O O R S A D VA N TA G E

The MillerCoors Advantage is the bundle of goods and services we provide to our customers to help grow the size and value of our customersâ&#x20AC;&#x2122; beer category. Brands We have a robust brand portfolio that includes industry-leading premium American lagers and premium American light lagers, crafts, prestige imports, hard ciders, flavored malt beverages and more.

Innovation

MillerCoors Advantage

We create scalable and differentiated innovation that excites consumers, shapes the category and drives incremental value.

Brands

Business Building Solutions We bring a suite of space and assortment, retail marketing, revenue management and other tools to help convert shoppers.

Distributor Services Profitable Category Growth

People We have the most collaborative, passionate and value-add talent in beer with the skills to meet the needs of our dynamic industry and increasingly sophisticated retailers.

Distributor Services Our network of entrepreneurial distributors is constantly looking for new ways to help retailers build their beer business.

Innovation

People

Business Building Solutions

at work trying to bring people into the category, by bringing new innovation, new packaging and more. But getting beer right at retail is critical. That means understanding what makes consumers tick and appropriately setting up the shelf or the bar. This Building with Beer ® publication details the strategies for getting the most out of beer in every class of trade. The insights are the result of exhaustive research MillerCoors has done during the past three For years, retail sales for beer have followed a

years, including interviews with more than 30,000

familiar pattern: Revenue goes up while case volume

consumers and analysis of more than 2.5 billion

remains flat to slightly down.

retail transactions.

But 2017 was different.

What we’ve learned: Now, more than ever, purpose drives purchase.

Dollar sales inched up just 0.5 percent, about a fifth of

Consumers enter the store with a

the growth rate in recent years, while volume dropped

purpose. They want to engage with brands that have

nearly a full percentage point, according to Nielsen.

a purpose. They want a shopping experience that

enables this, and frequently they’re not getting it. The grocery channel appears to be the hardest hit, with revenue down 0.8 percent, marking the first time

The reason: The explosion in new beer brands and

since before 2010 that revenue slipped into the red.

packs has made the beer shop more complicated

Case volume fell 2.2 percent. Convenience dollar sales

than ever.

were up 0.7 percent, but volume slid 0.9 percent.

2,3

In 2017, more than 17,000 SKUs were sold in the Causes range from changing demographics to

beer category, making the beer aisle more chal-

growing competition from wine and spirits to

lenging for retailers – and consumers. For instance,

evolving consumer trends. Brewers have been hard

just 49 percent of consumers said they were

INDUSTRY OVERVIE W INNOVATION • ENGAGEMENT • OCC A SIONS “relaxed” when shopping for beer, compared with 89 percent when shopping for wine.4 And it’s starting to hurt sales and turnover. While the number of beer SKUs rose 14 percent between 2013 and 2017, productivity per SKU declined 5.1 percent.5 This fragmentation also has led to out-ofstocks in core brands, and if you don’t have what consumers want, they are more than willing to go across the street to get it. WHAT’S THE WAY FORWARD?

or pairings. This occasion involves a trip to the

We believe that a healthy category relies on a

grocery or liquor store or an on-premise account.

balanced approach that is grounded in retailer

• Celebrate – This is a high-energy event where you

strategy, and we believe that all segments play a

connect and celebrate with friends and acquain-

role in your path to profitable growth. Here are

tances. You’re looking for something refreshing,

four principles that flow from this belief:

perhaps something flavored and sweet, and sessionable. This indexes highest with liquor and

1) Consumer choice is driven by occasion. People

on-premise.

buy beer based on the situation in which they’ll be drinking it. There are four primary occasions: • Relax – Alone or with family, this occasion is all about relax and reward and treating oneself. You’re looking for a trusted brand with value – and perhaps some prepared foods to go with it. This occasion indexes highest with grocery and c-stores. • Connect – This is about being with family and close friends – people you are comfortable with

2) Every segment plays a role. Right now the above premium segment is driving growth in the beer industry. Does that mean retailers should focus

– to catch up or just hang out. Here

their energy on above premium at the expense of

you’re looking for something light

American light lagers and economy? The evidence

and refreshing and sessionable. This

suggests no.

occasion indexes highest with c-stores. • Social – This is an occasion with friends and

Consumers are interested in exploring the right

acquaintances where you want to impress and

assortment of craft or flavored malt beverages in

stand out, and you’re choosing a beer accord-

above premium. Fully 62 percent of consumers say

ingly. You may be looking for something popular,

they went into a store with a premium brand in

something with flavor, something with a story and

mind – think Coors Light or Budweiser.6 Economy

heritage and, depending on the situation, recipes

is critical: About 23 percent of consumers choose

INDUSTRY OVERVIE W INNOVATION • ENGAGEMENT • OCC A SIONS a store based on perceived value, second only to

come from innovation.5 It’s especially

convenience.6

important to millennials; some 18 percent of them plan to look for

Retailers must find ways to capitalize on growing

something new when they shop. They’re far

segments. But it’s important to remember all

more engaged in new products than their older

segments need to be properly represented to have

counterparts. But too much choice confuses

a growing category.

consumers, clogs up shelves and drives down productivity.6

3) The core matters. More than three-quarters of consumers say

PURPOSE DRIVES PURCHASE

they know from which category

Consumers are faced with increasing options.

they were going to buy before

Finding the correct balance of assortment,

they walked into the store. A combined 66

pack size and type, innovation and pricing is key

percent of beer volume is driven by baby boomers

to earning and retaining a consumer’s business.

and Generation X drinkers, consumers who are

Who they are with and what they are doing has

predisposed to shop by brand and pack size. If

a profound impact on the products consumers

retailers don’t have that brand or pack size in stock,

choose – not just for segments but also for specific

they risk losing that visit. While millennials are

brands and pack sizes. What drives consumer

less focused on brand and pack size, a significant

choice at shelf is dependent on the occasion; 67

percentage of them still care.

percent of total alcohol beverage shops are for the

4) The right innovation works. Fifty percent of industry growth over the past five years has

relax and connect occasions and when shopping for relax occasion, brand and pack are the most important factors to consider.7

THE POWER OF PREMIUM LIGHTS Coors Light, Miller Lite and Bud Light represent

or cans – nearly 79 percent exclusivity.3 And they’ll

a third of beer volume sold at retail. They have

buy the pack size, bottle or can that fits in with

three times higher velocity per SKU than the above

the occasion they’re buying for and the money

premium category as a whole. A big reason is that

they have in their pocket. Premium American light

they fit in with a wide range of occasions, from big

lagers drive business for retailers – 96 percent of

social occasions down to more intimate at-home

retailers who grow premium lights are growing their

occasions. And they have a faithful consumer-base:

beer business. But 72 percent of retailers who are

14 million legal-aged consumers drink premium

not growing premium lights are seeing their beer

American light lagers, while only 8 percent of all

category decline.4

beer drinkers are craft-only consumers.2 People also have a strong preference for bottles

1. Kantar, Custom Behavioral Tracking Study, GPK — Custom Incident Study, 2017 2. Nielsen Homescan, 2017 3. InfoScout Beer Panel, L12M October 2017 4. Nielsen Grocery, full-year 2017

INDUSTRY OVERVIE W INNOVATION • ENGAGEMENT • OCC A SIONS SETTING THE SHELF TO IMPROVE SHOPPER PREFERENCE Choice begins with occasion

SHOPPER NEEDS LINK TO THOSE OCCASIONS

FRUIT Y & FL AVORFUL

E XPER IENTIAL

M Y ROUTINE Light

Quality @ home

Innovative

Expressive

Complex

Fruity & Flavor ful

DECISION DRIVERS HELP TO INDUCE PURCHASE PRICE

•

BR AND

•

PACK

COUNTRY

•

ST YLE

•

PACK

PURCHASE

FL AVOR

•

T YPE

•

ABV

PURCHASE

This means that pack loyalty remains high: 47 percent

of out-of-stocks and SKU fragmentation, opera-

of consumers who purchase 6-packs remain loyal

tional challenges exist across each class of trade.

to that pack, shifting to 35 percent for 12-packs,

Implementing a strategic space plan ensures the

30 percent for 18-packs and 40 percent for big

most complex of layouts and retail environments

packs. Getting the right packs on shelf is more

properly meet the changing needs of today’s

important than ever. Miss a key pack and retailers

consumers.

risk losing the shop. But using space planning as a means to balance With nine out of the top 10 growing packs priced

days of supply, or simply increasing days of supply

under $12, it is clear that consumers also are looking

to help address out-of-stock challenges, can be

for specific price points. Unique packs help you do

dangerous. Simply put, balanced days of supply

just that – provide unexpected value at shelf.

attempt to drive parity between packs in the

cooler. Getting every package to the same days The driver of choice in crafts and imports is different;

of supply only creates excessive inventory on the

price plays a role but where the beer is from, the

shelf and limits the variety that can be offered to

style and the package are more important than

consumers, which can impact your sales.

brand and price. And for FMBs, it’s all about getting the right flavors in each of the sub-segments (seltzer,

While we agree that the long tail is too long and

soda, FMB, higher alcohol).

that there is a need to reduce inventory, simply increasing days of supply on packages is not

SPACE MATTERS

recommended. You first need to consider what you

Retailers are talking about space more than ever.

want in the box so you are selecting the right core

In 2017, the average number of items sold on shelf

items in each segment, delivering on what your

was down. Coupled with an increased number

shoppers want.

INDUSTRY OVERVIE W INNOVATION • ENGAGEMENT • OCC A SIONS Consider the impact of adding one day of supply:

shelf right is dependent on your strategy.

• You will delete an average of 30 shelf SKUs. • Even if items are slow-moving, the deletion

There is no simple, one-size-fits-all solution. We

accounts for the loss of ~5k units a week.

know that the occasions remain stable across

• This translates to $60k dollars in lost revenue

retailers and classes of trade, but the items within

a year – FOR EACH STORE.

each can be tailored to the specific needs of

• If you have 1,000 stores, adding one day of

shoppers. Having a strategy based on true shopper

supply to every store accounts for $60 million

insights that addresses the right assortment, shelf

in lost category revenue.11

flow and in-account experience can be the difference maker in the dynamic beer business.

Imagine what the impact would be if you decided to move to seven days of supply. This is why it’s

This Building with Beer ® publication shares

important to strike the right balance between days

the best practices of successful retailers who

of supply and number of packs.

have done a good job in meeting the needs of shoppers, building the beer business at their own

RETAIL STRATEGY DRIVES FLOW

locations and overall, and who have embraced the

Consumer satisfaction with the shopping experi-

opportunities presented by a solid, thought-out,

ence is declining.12 They know what occasion they

strategic beer plan.

are shopping for and don’t want to be challenged in finding the products they want. Getting the right item assortment on the shelf, spaced appropriately, is the most important thing a retailer can do. Flow can improve shopper experience and drive sales. But getting the flow of the

Sources: 1. Nielsen Total US xAOC + Convenience, year ending Dec. 30, 2017 2. Nielsen Total US Grocery, year ending Dec. 30, 2017 3. Nielsen Total US Convenience, year ending Dec. 30, 2017 4. Kantar Retail ShopperGenetics(r) 52 weeks ending May 2017 5. Nielsen Total US xAOC + Convenience, 2012 -2017 6. Nielsen BevAl Shopper Fundamentals Study, 2017 7. Kantar, Custom Behavioral Study, full-year 2017 8. Nielsen Household Panel 2017 9. Nielsen, 2017 10. Nielsen, xAOC + Convenience, 5 years ending Dec. 31, 2017 11. Custom Space Study (Nielsen Grocery, full-year 2017) 12. Kantar, Retail ShopperGenetics, 2017

DESIGNING A FLOW TO DELIVER ON SHOPPER NEEDS

PURPOSE DRIVEN FLOW

FRUITY & FLAVORFUL

EXPERIENTIAL

MY ROUTINE

SINGLES

CRAFT - LOCAL

SUPER PREMIUM

CIDER

FMB

CRAFT - NATIONAL

PREMIUM (LT/REG)

FMB

CIDER

EUROPEAN IMPORTS

ECONOMY

FLAVORED BEER

MEXICAN IMPORTS

MY ROUTINE

EXPERIENTIAL

FRUITY & FLAVORFUL

SINGLES

MEXICAN IMPORTS

FLAVORED BEER

ECONOMY

EUROPEAN IMPORTS

PREMIUM (LT/REG)

CRAFT - LOCAL

SUPER PREMIUM

CRAFT - NATIONAL

BASKET BUILDING FLOW OR

• LEADS WITH LARGEST OCCASIONS & SEGMENTS

• LEAD THE SMALLER OCCASIONS & SEGMENTS

• SCORES HIGHEST IN SHOPPER PREFERENCE

• PULLS CONSUMERS THROUGH THE AISLE — INDUCE

• PROVIDES DIRECT LINKAGE TO OCCASIONS • ALIGN SEGMENTS BY PRICE & DRIVERS OF CHOICE

INCREMENTAL SPENDING • ANCHOR ROUTINE AT ONE END OF AISLE

C-store is the largest class of trade for beer sales,

the package type and brand are not available, a

representing almost one-third of industry volume

third of shoppers will leave the store.4 However, if

and continuing to increase in importance.1 C-stores

a shopper finds an item in the first 10 seconds,

continue to grow due to consumers’ on-the-go

he/she will buy more items.5

lifestyles. More than 56 percent of consumers look for proximity of stores, 43 percent want to spend

OCCASIONS

less time shopping as they see “it as a chore,” and

C-store beer shoppers buy packages that perfectly

47 percent prefer to get in and get out quickly.

match three occasions.

C-STORE TRIPS ARE

Relax is the first occasion driving purchase intent.

FAST AND WITH INTENT

Relax is an after-work transition to “Shed the Day,”

An average c-store shopper spends less than 20

which usually involves one to two people, with

seconds at the cooler and less than two minutes

singles the most purchased pack.

in the store. Due to this quick decision-making 3

process, it’s difficult to influence the beer shopper

Connect is the second occasion driving purchase

in-store as 86 percent of beer purchase decisions

intent. Customers usually pick small packs to

are made before they step inside. In fact, two-thirds

reconnect with a small, trusted group of close

of shoppers make the brand/package decision

family and friends.

before arriving, leaving only one-third open to influence.4 It’s important to be in stock because if

Social, the third occasion, is when customers use beer to celebrate at a party or tailgate. They will buy

K E Y FAC T S C-STORE SHOPPERS SPEND: • < 2 minutes in the store • < 20 seconds at the cooler VideoMining, 2016

both large packs and small packs for this occasion. Since shoppers are on their way to an occasion, nearly 83 percent of beer purchases are for consumption within two hours, and 65 percent within one hour.6 Therefore, cold beer from the cooler is essential.

C-STORES OCCASIONS • SINGLES • PRICING THE VALUE OF BEER SHOPPERS Beer shoppers are important to c-stores due to

$15

BEER DRINKERS SPEND MORE

their loyalty and frequency. Beer shoppers make 26 c-store trips per month versus only 14 trips by non-beer drinkers. C-stores are a key destination for beer as 55 percent of c-store beer trips are solely to purchase beer. These shoppers also spend more:

AV E R AG E C-STORE BASKET

approximately $15.12 per basket, which is two times the average c-store basket. The after-work window

in focus groups. Through our partnership with

is critical as 60 percent of beer sales occur between

NACS, we studied 8,000 shoppers in the Annual

3 and 8 p.m., making beer the No. 1 category in

Convenience Tracking Program, as well as firms

c-stores during that window. 53 percent of beer is

representing 18,517 stores in the State of the

sold Friday, Saturday or Sunday.7

Industry report to fuel our thinking.

BUILDING WITH BEER®

OPTIMIZE COOLER ASSORTMENT

The foundation of Building with Beer ® starts with

Often beer is under-spaced in the cooler. With a

the most up-to-date, solid facts and insights. Since

lower average days of supply versus other categories,

2010, we’ve analyzed 800 million c-store transactions,

beer is worth more in sales than the space it’s given.

conducted more than 6,100 shopper exit intercepts,

On average, optimal c-stores have at least 40 percent

studied more than 2.9 million in-store visitors and 52

of cooler doors dedicated to beer. As the beer

million c-store baskets nationwide with VideoMining,

category expands space, revenue increases, more

and talked with c-store shoppers across the country

than any other beverage category in the cooler.8

W E E K LY R E V E N U E BY # O F CO O L E R D O O R S

$4,382

$3,666 $3,196 $2,626 $1,866 $429

<= 0.5

$950

# OF UPRIGHT COOLER DOORS

Beer

Tea + Juice

Energy + Coffee

Sports Drinks

Carbonated Soft Drinks

Water

Nielsen Space Audit, 2017

C-STORES OCCASIONS • SINGLES • PRICING C-STORE SHOPPERS

EXPECT TO FIND ECONOMY & PREMIUM AMERICAN LIGHT LAGER BEERS

INDEX ECONOMY

122

PREMIUM LIGHT

119

PREMIUM REGULAR

114

CRAFTS

IMPORTS

FLAVORED MALT BEVERAGES

*Index based on % likelihood purchasing any beer in the channel compared with % likelihood of them purchasing the specific segment in that channel

INDEX* BY SEGMENT

Nielsen Category Shopper Fundamentals Survey, Q4 2016

WIN WITH SINGLES

Creating a singles destination will help the

Singles continue to expand in c-stores and

singles shopper find what he/she needs quickly.

now represent a 25 share of category dollars

Merchandising singles together rather than

and 55 percent of beer transactions. Singles

dispersing them across all doors results in an

growth has been impressive and is responsible

average 18 percent higher sales rate.11 Five distinct

for two-thirds of beer category gains over the

segments drive singles and are all necessary

past five years. Of this optimal 40 percent,

for growth. Merchandising singles within these

c-stores should have at least 25 percent of the

segments will help shoppers quickly find what

beer space dedicated for singles.

they’re looking for, increase their basket size and

encourage trade-up: Singles and multipacks rarely overlap as only 3

• Flavors: Flavored malt beverages, hard sodas,

percent of beer transactions have both singles

cocktails

and multipacks in the basket. So merchandising 10

singles together from a shopper perspective

super premium

makes sense. Singles shoppers are some of the

• Refreshment: Premium and near-premium

most valuable c-store customers and their c-store trips are increasing; singles shoppers will visit a

American light lagers • Value: Economy

c-store 29 times a month and purchase 20 times.

• Indulgence: Imports, crafts and hard ciders,

• Large bottles: 32-, 40- and 42-ounce bottles

C-STORES OCCASIONS • SINGLES • PRICING SIMPLIFY PRICING AT SHELF On average, the singles shopper purchases 1.5 singles per transaction, meaning sometimes he buys one and sometimes he buys two. Too many price points and too many cooler door stickers are confusing for the shopper and lead to fewer sales. To encourage purchase, move to one or two price points on a shelf with “2-For” promotions. Clearly communicate it with prominent shelf strips. Clear signage results in a 5 percent sales lift even when the “2-For” pricing is just the single purchase price times two.11

Too many price points and door stickers

Simple shelf pricing makes it easier to shop

OPTIMIZE ASSORTMENT

largest segment and have the most consumer reach

Base sales make up 98 percent of total c-store

in the beer category.15 So it’s not surprising that

beer volume sales, with just 2 percent attributed to

c-stores that carry both 12-pack cans and bottles

incremental sales.12 Getting the right SKUs on shelf

for all three premium American light lager brands

with enough days of supply is imperative. Make

sell 9.6 percent more beer on average than stores

small multipack mix count. Ensure availability of

that don’t carry all six packages.16

core 12-packs and smaller. Small beer multipacks make up three-quarters of sales and provide one

C-stores must also ensure availability of economy

of the largest c-store basket rings, more than twice

brands to satisfy shopper expectations as economy

the average c-store basket.13

shoppers are very loyal with the highest exclusivity rates in the category.15 They spend more annually

Seven of 10 small-packs sold in c-stores are

in c-stores than any other beer shoppers ($249/

premium American light lagers and economy.

year), they complete 12 percent more trips and 69

However, since 2013 the number of c-store SKUs

percent exclusively want their brand.15

has increased by 29 percent, while American light lagers and economy SKUs fell from 72 to 67

It’s important to focus and hold space for the core

percent.14

segments while also balancing an assortment of growing segments. After American light lagers

C-stores must lean into premium American light

and economy, imports hold 17 percent share of all

lagers to drive conversion. Shoppers are looking for

c-store beer purchases. This is driven by Mexican

12-packs – the No. 1 multipack package in dollar

imports, growing 20 percent in c-stores in three

sales.9 Premium American light lager brands are the

years – up $1 billion since 2014.17

C-STORES OCCASIONS • SINGLES • PRICING I T TA K E S 2 4 W E E K S FO R C - S TO R E S TO G A I N T H E I R FA I R S H A R E O F I N N OVAT I O N SA LE S Fair Share

55.0 45.0

300

250%

200

C-Store $ Share of Measured Outlet Sales for Key Brand Innovation

40.0 35.0 25.0

NEW ITEM FROM THE INITIAL STORE PURCHASE 250

50.0

30.0

S H O PPE R S 2 . 5 X M O R E L I K E LY TO PU R C H A S E

1 wk

10 wk

150 100 24 wk

Total Outlet Nielsen Scan Key Innovation SKUs, 2016

100%

Store Where Purchased New Item

Any Store

0 Total Outlet Nielsen Homescan, 2016

Though the craft segment makes beer industry

pack size and brand decisions. Ensure there is always

headlines, it makes up only 6 percent of total c-store

space for cold beer and that beer is always in stock,

beer purchases. Prioritize national craft to maximize

especially during the 3-8 p.m. high-traffic period.

revenue since national craft moves 1.5 times faster 2) Win with singles by dedicating at least 25 percent

than local craft.17

of cooler space to singles, merchandise singles Millennials and Generation Z are expected to

segments to motivate trade-up, communicate price

represent 57 percent of the population in 2020, so

clearly with shelf tags and implement “2-For” pricing.

it’s important to engage 21+ consumers in new ways to stay relevant. If millennial shoppers choose beer

3) Optimize space by having the right assortment.

at age 21, they’re two times more likely to stick with

Maintain stock on the core segments – American light

beer over their lifetime.

lagers and economy. Balance the portfolio with key

growth segments and be quick-to-market with key Shoppers are 2.5 times more likely to purchase new

innovations that attract new shoppers and increase

items from the site of the initial purchase, however,

return trips.

it takes c-store 24 weeks to gain share of innovation brand sales.19 To attract the millennial shopper, leverage innovation with improved speed to market and support it with breakthrough in-store merchandising that disrupts at the point of purchase. For example, using digital price signs with movement results in a 2.1 percent lift.20 Merchandise the store – make shoppers look for something different. STEPS TO BIGGER C-STORE BEER SALES: 1) Realize the value of the shopper and understand their shop. They’re more loyal, make more trips and spend more money. The shopper occasion drives

Sources: 1. MillerCoors Industry Estimates, December 2017 2. Global Survey Growth Strategies, 2016 3. VideoMining, 2016 4. MillerCoors PBM Consolidated Intercepts, 2017 5. TNS, 2014 6. MillerCoors Profitable Beer Marketing Transaction Study through November 2017 7. 5,000 c-store shopper surveys, January 2017; 2016 NACS convenience tracking program survey; NACS 2016 State of Industry 8. Nielsen Convenience Space Audits, bi-annual audit, Oct. 24, 2015 9. Nielsen C-Store Audit, Q4 2017, MillerCoors Profitable Beer Marketing, 2017 10. MillerCoors Profitable Beer Marketing Transaction Study, 2017 11. Nielsen C-Store Audit, Q3 2016 12. Nielsen AOD C-Store POS Volume Sales, 2017 13. Nielsen C-Store, latest 52 weeks ending May 6, 2017; MC Transaction Analysis 14. Nielsen AOD C-Store POS Volume Sales, 2013-2017 15. Nielsen Panel Data, Q3 2017 16. Nielsen C-Store Analytics/Space Audit, Q4 2015 17. Nielsen Total U.S. Convenience year-to-date Aug. 12, 2017 18. Consumer Adoption Survey, 2014 19. Nielsen Homescan, 2016 20. MillerCoors Digital Price Sign A/B testing OH, February-May 2018

Beer is a big, important category in grocery. It accounts for $11 billion in sales and is the No. 1 category during summer months.1 Beer has the power to drive traffic and influence store choice and trip mission â&#x20AC;&#x201C; as it is the No. 1 category driving trips to stores.2 Year-round, beer is bigger than 98 of the

CONVERT SHOPPERS MORE OFTEN TO TAKE ADVANTAGE OF $390M OPPORTUNITY By having a balanced assor tment of brands and pack sizes.

top 100 categories in grocery.1 In fact, the premium American light lager trio, Coors Light, Miller Lite and

the entire hot dog category and 37 percent more

Bud Light, each year generate more revenue than

revenue than the vodka category.1

GROCERY STORES CONVENIENCE • VALUE • FOOD EXPERIENCE

Success in grocery stores is critical for beer category growth, an area that has slowed in 2017.

TOTAL GROCERY ALCOHOL BEVERAGE SHOPS

two purchase-driving elements: 1) who will I be with and 2) what will I be doing?

However, while the format of a RETURN TO GROWTH

grocery store has changed very little in 50 years, the shopper

28%

has evolved and moved into a

The growth opportunity comes from defining and commercializing the four

new shopping mindset – quicker,

occasions: relax, connect, social and

smaller trip missions. The

celebrate. In a consumer mindset,

average grocery trip is now less

they are non-substitutable pockets

than 15 minutes, with eight out

of demand defined by the number of

of 10 trips smaller in nature.3

39%

The opportunity for retailers to

people involved and the consumer motivations in those moments. As

capitalize upon these trends is

such, many segments and pack sizes

immense as consumers need to

fit into different consumer occasions,

be served on both small trips

with much overlap between occa-

and larger stock-up trips, which

sions and accommodating pack sizes. 13%

are increasingly fulfilled via eCommerce outlets.

A balanced assortment of premium American light lagers, craft, imports and flavored malt beverages is critical

The grocery channel is being

to ensure all occasions are met.

challenged from many sides with more smaller-format stores

Once a consumer has evaluated the 20%

and no-frills retailer expansions

‘who’ and ‘what’ prompting a trip,

supporting the existing avail-

they then decide what items will

ability in c-stores, gas stations

fulfill it (planned and unplanned).

and eCommerce home delivery. Sticking to the fundamentals of

MillerCoors Global Segmentation Study, 2016

what the consumer is looking for – convenience, value and assortment – will create

These needs help define the choice drivers, such as convenience, perceived value and assortment and

ultimately the best shopping outlet.

reasons to bring them into grocery. Retailers should focus on three factors that can

Category growth will return by deepening the under-

bring the category back to growth.

standing of consumer desires, their motivations, their

1) Deliver on consumer occasions

needs and where they are not being satisfied. The

2) Exceed consumer in-store expectations

consumer is not regimented by decision trees and

3) Ensure options are available for all trips – small

stereotyped demographics. They are motivated by

to stock-up missions

GROCERY STORES CONVENIENCE • VALUE • FOOD EXPERIENCE

QUICK TRIP 42% OF TRIPS $163M OPPORTUNITY

FILL-IN TRIP 33% OF TRIPS $128M OPPORTUNITY

cold beer, as well as ensuring large packs are cold for high-energy, larger crowd social events.

STOCK-UP TRIP 25% OF TRIPS

The opportunity for driving beer displays is huge

$97M OPPORTUNITY

in grocery. Seven out of 10 consumers have beer on their list, but of the 30 percent who did not plan

2016 Shopper Landscape Study Pack Size and Beer Segment; Sizing Source: InfoScout, L12M June 2016

to purchase, half stated a display influenced an incremental beer purchase.5 A display can convert

FUNDAMENTALS

50 percent of your consumers who were not

The consumer is motivated by convenience, value and

originally planning on purchasing beer!

assortment. Almost 80 percent of shoppers consume beer within two hours of purchase,4 so it is critical to

Beer is one of the most expandable categories in

leverage food and meal partnering occasions with

grocery, so displays can generate a huge amount of

TOP TE N BR A NDS DR I V E C ATEGO RY SA LE S Top 10 brands account for 53 percent of category sales and the

remaining top 50 account for 29 percent. Category tail of 2,753

ESS G U IN N

PA B S T

S M IR N O

ORCHA

ANGRY

ITA S

K U G E L’

L AG U N

L E IN E N

M IK E ’S

K E YS TO

D OS EQ U IS

A NEW B E L G IU M

N E VA D

L A DA M S

S IE R R A

L IN G

SAMUE

Y UENG

A R T O IS

BLU E M OON

S TELL A

H E IN E K

N AT U R

BUSCH

O MODEL

O B U LT RA

IS E R

M IC H E L

BU DWE

CO R O N

L IT E

L IG H T CO O R S

M IL L E R

B U D L IG HT

brands make up remaining 18 percent of category sales.

Nielsen, U.S. Food, latest 52 weeks through June 30, 2018

GROCERY STORES CONVENIENCE • VALUE • FOOD EXPERIENCE incremental spend for retailers. Almost 40 percent of consumers say a display was important or extremely important to their decision to purchase beer, with one in five consumers noting their purchase was incremental.5 Compounding this, beer holds the same trip patterns when purchased off-display or via cooler, generating a repurchase rate and additional trips similar to salty snacks, bread and cereal (all displayed at higher rates). Consumer motivation to find value through features remains strong: eight out of 10 consumers use features in shop planning, and over $3 billion was saved in promotional activity in 2017.6 Along with a balanced assortment, retailers should bring a feature strategy that reflects consumer spending across both segments and price points. Leading with premium American light

As seven of 10 consumers have beer on the list

lager large packs at a price discount,

pre-store, ensuring there is a comprehensive

supporting with mid-size packs on

assortment of core items is key.6 This will ensure

multibuys and having small packs

sales are converted at a maximum rate, and that

hitting key price points can drive

shoppers are not leaving a store unsatisfied. Core

the highest traffic and conversions.

premium American light lagers, such as Coors Light, Miller Lite and Bud Light, drive one-third of category

42 percent of all feature volume

revenue and turn 53 percent faster than the category

comes from premium American

average.8 Craft has also been growing and is now

light lager large packs, but 25

22 percent of category dollars.7 Maintaining high

percent of feature volume comes

in-stocks of these brands – and cold – is paramount

from Mexican imports, like Sol,

to category success. A balanced assortment of lagers,

reflecting the need for a varied

craft, economy, imports, hard ciders and flavored malt

feature strategy to maximize

beverages will ensure a quality consumer experience

sales.

and a successful beer shopping trip in grocery.

GROCERY STORES CONVENIENCE • VALUE • FOOD EXPERIENCE

FOOD PARTNERING

that meet all needs – from ‘grab and go’ singles

As the expansion of meal kits and prepared food

and small packs to larger packs that can help

and the growth of in-store ‘food-to-go’ areas

serve a crowd. The relax and connect occasions

continues, it is critical that retailers engage with this

fulfill almost 70 percent of grocery trips,12 and

trend and ensure that cold beer is readily available

retailers must have available options for these

to encourage basket building. The consumer

moments to convert the consumer.

buying beer creates a basket that is 43 percent higher than baskets without beer, highlighting

Programs like Pints and Plates offer new ways

the value of a consumer-relevant food and beer

to go to market with food and beer – designed

solution. With 68 percent of Americans considering

to increase trips and basket size. This program

themselves ‘foodies’ and 72 percent of Americans

creates a destination within the store, and via

cooking at home at least four times a week, satis-

digital and social media, where shoppers can

fying the needs of these consumers is essential.

be inspired to purchase more items in an easily

shopable way. With the increased assortment of beer SKUs in the category, the consumer is now becoming more interested in what beer and food pairings could exist when seeking a partner for meals. Considering the different occasions where food is key, it is important for retailers to have offerings

Sources: 1. Nielsen, Answers on Demand, Total US Food + Mass, 52 weeks ending April 21, 2018 and June-August 2017 2. Nielsen Category Fundamentals, 2017 3. VideoMining, 2016 4. Profitable Beer Marketing, 2010-2017 5. InfoScout, September 2016 6. Nielsen BevAl Category Fundamentals, 2017 7. Nielsen, US Food, 2017 8. Nielsen xAOC, 2017 and Willard Bishop, 2016 9. Kantar Retail Shopper Genetics®, 52 weeks ending May 2017 10. Mintel, November 2016 11. PR Newswire, December 2016 12. MillerCoors Global Segmentation Study, 2016

The liquor store format is unique and important to

are clear indicators that the shopper’s needs are

growth across total alcohol occasions. This class of

not being met.

trade is big ($46 billion in total sales) and provides

• Grocery attracts four times the beer households

an exceptional opportunity to recruit and satisfy the

and two times the beer trips with less than half

needs of the shopper with more than 164 million

the variety.2

trips per year.1 However, both sales and trips are

• 32 percent of liquor store trips include beer, less

declining, highlighting an opportunity to improve

than wine and spirits.2

the in-store experience, merchandising discipline

• 44 percent of the U.S. population shops the liquor

and assortment of items carried across segments.

channel, but only 37 percent of those consumers buy beer from liquor stores.2

LIQUOR SHOPPER The liquor store shopper is diverse and evolving,

Why recruit the beer shopper? Beer improves the

and it is essential to exceed his/her expectations.

frequency of trips and has a greater impact across

Stores have aggressively expanded variety in beer,

broader alcohol occasions. Wine and spirits drive 15

spirits and wine to differentiate against other

and 36 percent fewer trips, respectively, than beer.3

channels. The shopper desires variety but never at the expense of shopability. Despite carrying more

Elevating the beer category and improving ambient

than twice the number of beer SKUs as grocery

merchandising with inspiring points of interest

stores, liquor stores struggle with conversion rate,

throughout the store will generate incremental

basket size and recruiting routine shoppers. These

purchase and build a bigger basket.

BEER IS NOT TOP OF MIND FOR SHOPPERS IN LIQUOR STORES

85%

37%

28%

BUY BEER SOMEWHERE

BOUGHT BEER AT LIQUOR

OF THEIR BEER DOLLARS ARE SPENT AT LIQUOR

Down 2.1% InfoScout Beer Shoppers @ the Liquor Channel, 2016-2017

Down 2.3%

Down 0.3%

LIQUOR STORES PORTFOLIO • CUSTOMER BASE • MERCHANDISING

• 38 percent of shoppers state a display was

D I S PL AY SA LE S R ATE

important in their decision to buy beer.4 • 28 percent greater velocity with multi-brand and family of brand displays.4

+28%

A disciplined category management approach across segments in the cooler is crucial to maximize beer consumption occasions. Variety is important, but a balanced portfolio that leverages the advantages of each segment is critical to return the category

Solo Display

Family of Brands

SOURCE: Nielsen NSO Audit, July 7, 2012

to growth. • 93 percent of all beer is purchased cold, while more than half of craft purchases are bought warm.5 • 63 percent of cold beer is bought for immediate consumption (<4 hours).5

Now of legal drinking age, millennials have significant buying power — $200 billion — the most of any generation. This consumer has broad impact, enjoying spirits, wine and beer with their

• 38 percent of cold beer buyers will consume the entire pack size in the same day.5

choices guided by different alcohol occasions. That said, millennials spend 23 percent less than

To win in the liquor class of trade we must partner

general shoppers in liquor stores.6 This group is

together to recruit shoppers and exceed their

very diverse, and the majority fit in the three beer

expectations.

consumer categories described below.

SHOPPER OPPORTUNITY

Women beer drinkers have been overlooked from a

Increasing trips beyond the current customer base is one

merchandising and marketing perspective. Women

of the keys to driving growth in the liquor channel. Two

beer drinkers consume almost 25 percent of all beer

buying groups that drastically under-index in purchasing

volume, which adds up to about 17 billion servings

beer from liquor stores are millennials and women.

a year.7

THE LIQUOR STORE SHOPPER IS DIVERSE AND EVOLVING SOPHISTICATED TAB ENTHUSIASTS

SAVVY ENTERTAINER

CONNECTED BEER EXPLORER

• Millennials • Look to drink and experiment with beer • Look for ratings, descriptions and pairings in-store • Consider themselves beer connoisseurs • Prioritize ambiance, service and selection over price • Seek craft and imports often

• Skews Hispanic and male LDA millennials • Buys across all beer types to ensure there is something for everyone • Less likely to be loyal to a particular store or channel • Although they enjoy browsing, they are somewhat price conscious because they are buying TAB for themselves and others

• Under 40, mostly millennial • Ethnically diverse • Price conscious • Will buy on impulse if product is new or ‘catches their eye’ • Buys across all beer types for party stop

MillerCoors Custom Shopper Landscape Study, 2016

LIQUOR STORES PORTFOLIO • CUSTOMER BASE • MERCHANDISING

We have realized this gap and continue to invest in

connecting to what is being served at parties

products, design, packaging and education to recruit

• Occasion-based merchandising

and improve engagement across the category with

• Shopability of products on the shelf (not

female consumers.

merchandised too high) • Inviting atmosphere and ambiance.

Liquor stores currently under-index in their fair share of women shoppers and consumers. Stores should

• “Fruity and sweet” products compete with wine occasions

make the investment and adjustments to capture the potential of this group. Research focus groups

Build a larger routine beer shopper base in liquor

highlight that women do not feel comfortable shop-

stores through disciplined category management

ping in liquor stores — often due to poor ambiance

principles in the cooler and across the store foot-

and difficult-to-navigate merchandising.

print. Only 7 percent of shoppers claim to spend half their beer dollars in liquor, and 45 percent

With innovations and new flavors in beer, more

of beer shoppers never purchase beer in liquor

women are entering the category than ever before.

stores.8

Retailers should appeal to women by exceeding their expectations with in-store executions.

Routine shoppers are valuable to retailers. Only 11 percent of shoppers make eight or more trips

Female beer drinkers look for:

per year to a liquor store, but they account for 54

• Education and information on pairings and

percent of the beer revenue.9

LIQUOR STORES PORTFOLIO • CUSTOMER BASE • MERCHANDISING

WILL SHOPPERS SHOP MULTIPLE SEGMENTS?

On the other hand, 50 percent of shoppers shop only once per year in liquor stores.8 We see these one-time shoppers using the liquor format for celebrate occasions around the holidays, but these same shoppers buy beer more frequently throughout the

37%

49%

of Trips Include Spirits

year, utilizing other channels. Of one-time shoppers,

36% SPIRITS

22 percent buy beer in liquor stores around the Fourth of July, while 12 percent buy beer in liquor

stores around Christmas.8

22% BEER

Consumers are taking more purposeful trips and shoppers are visiting fewer retailers overall. Their store choice is defined by the occasions they are shopping

32%

for and four macro trends that meet their needs:

of Trips Include Beer

convenience, value, experience and information. • 78 percent of beer shoppers say they are always

25% WINE

of Trips Include Wine

InfoScout Panel, Total Households N=24,601; May 1, 2016 – April 30, 2017

trying to simplify their life.5 • While 57 percent of beer shoppers are open to discovery, they want it to be simple.

• 42 percent of craft shoppers leave stores without

Liquor stores need to meet the ever-increasing demands of consumers with a disciplined merchandising approach and category manage-

buying beer because of three main barriers: over-

ment process. By doing so, they can strategically

whelming variety, unable to find desired product

leverage the role of each segment to the broad set

and desired product out of stock.

of consumer occasions.

Improve conversion and basket building with the current shoppers. Beer under-indexes in liquor stores and is not top-of-mind – about 77 percent of liquor revenue is generated by spirits and wine. Developing a total alcohol beverage solution and elevating beer through ambient displays and strong cooler management will add multiple segments to the basket. Nearly 18 percent of households are total alcohol beverage shoppers in liquor stores, but only 1 percent of transactions have items from all three categories in the basket.5

LIQUOR STORES PORTFOLIO • CUSTOMER BASE • MERCHANDISING

WHY IS A BALANCED CRAFT ASSORTMENT CRITICAL? ADDS TO STORE’S BEER CREDIBILIT Y IF BAL ANCED CORRECTLY

MOTIVATIONS • Wide variety • Exploration and experimentation • A product for every occasion • Makes buying beer special

BARRIERS • Too many options makes selection process overwhelming • Lack of organization makes it tough to find specific product

SHOPPERS DESIRE VARIETY BUT NOT AT THE EXPENSE OF SHOPABILITY AND IN-STORE EXPERTISE

Summer adds incremental occasions and an oppor-

Today’s millennials are savvy entertainers. They love to

tunity to inspire shoppers with ambient displays

plan large get-togethers, especially over the summer

integrating spirits, wine, beer and multi-brand

holidays. They look to make everyone happy and

points of interruption throughout the store. Summer

ensure they have the right beer selection for everyone.

brings in 13 percent more beer households and 12

Multi-brand displays create the opportunity for a

percent more beer trips.

one-stop-shop to help fulfill these occasions and needs.

Beer is a planned trip more than 70 percent of the time. The ability to influence purchase decisions differs based on beer’s perceived importance. On a beer-focused trip, 21 percent of shoppers made some type of incremental purchase – either a larger-size package of brand choice or a brand on display that the consumer wasn’t planning on purchasing. More than half of those shoppers were not going to buy beer, but did so because of the display.9 Sources: 1. Nielsen Homescan Panel Data, 52 weeks ending Aug. 27, 2016 2. InfoScout, 52 weeks ending Sept. 25, 2016; Nielsen Panel Data, Sept. 27, 2016 3. Nielsen Panel Data, 2016; Willard Bishop Super Study 2016; InfoScout Receipt Capture Data, Oct. 16, 2016 4. InfoScout Display Analysis, September 2016 5. InfoScout Panel, Total Households N=24,601, May 1, 2016 – April 30, 2017 6. InfoScout Insights Survey, June 2017 7. MillerCoors Behavioral Tracking Study (bi-annual), December 2015 8. InfoScout Custom Survey, October 2016 9. InfoScout Panel, Total Households N=24, 601, May 1, 2016 – April 30, 2017

DOLLAR STORES

Dollar stores are the fastest-growing channel, driven

Premium American light lagers and economy lead

by consumer need for value and convenience. Since

the way based on both revenue and productivity

2001, dollar channel household penetration has

($/item). Beer also helps increase basket rings from

increased from 59 percent to 66 percent. The number

$14.77 without beer to $29.48 when beer is in the

of dollar stores has more than tripled in the same

basket.3

timeframe, totaling more than 29,000 outlets, and projected to be more than 34,000 outlets by 2020.1

CATEGORY SALES IN DOLL AR CATEGORY

TOTAL $

$/TDP

CANDY, GUM, MINTS

$1,551,787,311

$23,613

approaching 9,300 stores. 2 Beer sales per store

SOFT DRINKS

$1,519,076,290

$82,516

are also increasing, up 24 percent in 2017 versus

SALTY SNACKS

$1,259,450,814

$42,637

COOKIES AND CRACKERS

$533,134,776

$26,919

MILK PRODUCTS

$491,579,495

$221,709

CEREAL AND GRANOLA

$329,614,480

$32,194

BEER

$324,182,139

$171,456

WATER

$277,348,826

$107,383

PACKAGED COFFEE

$276,308,726

$64,722

BREAD

$233,716,276

$160,866

NUTS

$132,101,546

$29,888

TOTAL WINE

$54,012,977

$71,298

MILK/DAIRY ALTERNATIVE

$4,853,193

$42,478

$826,246

$123,634

Total 2017 beer sales in dollar outlets were up 36 percent, while the number of dollar stores selling beer has dramatically increased since 2012,

a year ago.

Beer is the second most productive consumable category tracked by Nielsen in terms of velocity ($/point of distribution), surpassed only by milk. BEER DOLLARS PER STORE CONTINUE TO INCREASE Beer Dollars per Store

$35,301

Stores Selling Beer $21,051 $10,315 $3,852 2012

$23,659

$28,371

$15,279 $5,023

$6,437

$7,350

$8,461

2013

2014

2015

2016

$9,276

2017

Nielsen Scan Data, 2012-2017, Dollar General + Family Dollar Geographies

TOTAL SPIRITS

Nielsen Edible Scan Data, Dollar General + Family Dollar, calendar year 2017

DOLLAR STORES AWARENESS • ASSORTMENT • EXECUTION

DOLLAR SHOPPER

or less) with less than 20 percent coming from larger

Dollar is the preferred convenience channel for

than 18-packs.1 Singles are also a large opportunity.

female shoppers, who represent 72 percent of total

They fit with the relax occasion and drive only 6

store trips. Dollar store shoppers also tend to skew

percent of dollar sales, but make up 22 percent of the

lower income with 49 percent of shoppers earning

unit sales.2

less than $40,000 per year.2 BUILDING WITH BEER® WHAT ARE THE OCCASIONS? • Relax: An after-work transition to me-time that

The biggest beer opportunities for dollar retailers are low beer shopper conversion and trip leakage to competing channels. Of

usually involves singles

all the beer-buying households that

• Connect: A time to spend

shop dollar stores, only 4 percent of

with friends/family

them buy beer in the dollar channel.2 Dollar channel beer shopper leakage

Beer shoppers buy packs

to the grocery channel represents

that perfectly match these

more than 50 percent, and opportu-

occasions. Three-quarters

nity remains to increase conversion

of their beer purchases are

and capture more trips from the

small packs (multipacks of 12

grocery channel.3

DOLLAR STORES AWARENESS â&#x20AC;˘ ASSORTMENT â&#x20AC;˘ EXECUTION

T YPE SHARE IN DOLL ARS AND SKUs

door assortment strategy that focuses on the core items that consumers purchase

BEER SEGMENT

$ SHARE

# SKUs

SPACE TO SALES INDEX

PREMIUM AMERICAN LIGHT LAGER

38.5%

25.9%

ECONOMY

27.8%

22.0%

PREMIUM AMERICAN LAGER

10.1%

8.4%

Economy and premium American light

SUPER PREMIUM

11.8%

22.4%

190

lagers are the biggest beer segments,

IMPORT

5.0%

8.0%

160

FLAVORED MALT BEV/COOLERS

5.2%

7.1%

136

CRAFT

1.4%

3.5%

253

HARD CIDER

0.2%

0.0%

ALTERNATIVE

0.0%

most.4 In a recent dollar channel study, allocating more cooler space to beer contributed to a 38 percent sales lift.4

and currently are under-spaced from a space-to-sales standpoint. Economy beer buyers are the most loyal and frequent shoppers, representing a valuable shopper to target. Ensure enough days of supply on key economy packs. Start with the right mix of singles and

Nielsen Dollar Channel Space Audit, 2017

multipacks. Based on Nielsen space audits, the optimal beer cooler

Dollar retailers must

allocation is 25 percent singles and

overcome three barriers

75 percent multipacks.4

in order to drive continued growth and

3. IN-STORE EXECUTION

increase conversion:

Display execution and reducing out-of-stocks are the biggest execu-

1. AWARENESS

tion opportunities. Displays help to

Capture leakage by

trigger awareness for beer and serve

building awareness for cold beer through in- and out-of-store messaging. Target

as back-stock for fast-moving items, especially if they are on promotion.

messaging to shoppers who are not visiting the beer aisle (endcaps, special displays, circular ads, etc.)

Finally, reducing out-of-stocks is critical to maintaining

while focusing messaging on small packs, as these

strong growth trends and requires coordinated effort

are more likely to drive trial with female guests.

among the retailer, brewer and distributor network supported by solid store-level execution.

2. EFFECTIVE ASSORTMENT Dollar stores tend to have limited cooler space, and 82 percent of small-format shoppers prefer to purchase beer cold; it is critical to have a cooler

Sources: 1. Statista 2. Nielsen Dollar Scan Data through calendar year 2017; Dollar Geographies are Dollar General and Family Dollar only 3. InfoScout Receipts, 2017 4. Nielsen Space Audit, 2017

DRUG STORES

The drug store channel is a relatively small

retailers all rank within the top 15 accounts for

class of trade in beer volume, just 3.5 percent,

total category beer volume.

but almost double that of 2016. Drug stores 1

DRUG STORE SHOPPER

provide consumer needs for value and convenience. Drug channel household penetration across edible products was 82 percent in 2017.

Drug is a preferred channel for convenience 2

among female shoppers. Female shoppers represent 62 percent of total store trips and

Beer is a large business for drug retailers,

61 percent of total beer trips. The most

ranking No. 3 among front-end categories

common trip types are quick trips, followed

and No. 2 based on velocity per store, just

by a fill-in trip. 3

behind tobacco. The drug channel’s top three The drug channel serves two primary roles for BEER STILL THIRD-LARGEST CATEGORY IN DRUG, VELOCITY SECOND DOLLAR VOLUME

VELOCITY ($/TDP)

RANK

CANDY

$3,110,024,023

$75,557

TOBACCO

$2,798,749,730

$434,534

BEER

$1,294,263,529

$350,918

LIQUOR

$951,451,382

$335,571

SOFT DRINKS

$927,069,763

$143,224

SALT Y SNACKS

$905,090,011

$76,695

WINE

$746,822,536

$178,811

WATER

$440,052,982

$200,500

NUTS

$425,725,412

$106,728

Nielsen Scan Data, latest 52 weeks ending Dec. 30, 2017, Total Drug

most shoppers: • Convenience for female shoppers to make quick, in-and-out trips • Place to make balanced, lifestyle solutions OCCASIONS • Relax: An after-work transition to me-time that usually involves singles • Connect: A time to spend with friends/family Beer plays a key role in the personal and social occasions that support many drug shoppers’ expectations for a balanced lifestyle. Beer shoppers purchase beer just 3.8 times per year and generally spend $30 when beer is in the basket – $15 more than when beer is not in the basket.3

DRUG STORES CONVERSION • AWARENESS • VALUE BUILDING WITH BEER®

ASSORTMENT

The biggest beer opportunities for drug retailers

The most common beer purchases across the

are low beer shopper conversion trip leakage to

relax and connect consumption occasions are 6-

competing channels and low frequency. Of all the

and 12-packs of American light lager brands and

beer-buying households that shop drug stores,

leading imports.1 These segments are currently

only 10 percent of them buy beer in a drug store,

under-indexed in terms of space to sales.

leaving the remaining beer purchases to competing channels.2

Cold beer assortment is also critical – 82 percent of drug store shoppers buy refrigerated beer,

Many drug chain beer buyers consider the drug

while 22 percent buy room-temperature beer.4

channel to be better for quick convenience trips. The top barriers preventing these shoppers from purchasing beer at drug stores center on awareness and perceptions of value and assortment.4

Sources: 1. Nielsen Scan Data Volume through 2017 2. InfoScout Total Drug, 2017 3. Nielsen Homescan Total Drug, 2017 4. C+R Drug Research, 2016 5. Nielsen Scan, 2017 6. National Drug Retailer Shopper Card Data, 2015

AWARENESS Capture leakage by building awareness through in- and out-of-store messaging that connects with

SEG M E N T D O LL A R A N D T Y PE S H A R E $ SHARE

SHARE OF SKUs

SPACE TO SALES INDEX

conversion and trip frequency. Target in-store

PREMIUM AMERICAN LIGHT L AGER

29.7

18.1

messaging to shoppers who are not necessarily

IMPORT

28.6

19.8

CR AFT

10.0

14.7

147

PREMIUM REGUL AR

8.3

7.2

more likely to drive trial with female guests.5

PREMIUM AMERICAN L AGER

7.8

7.1

PERCEIVED VALUE

ECONOMY

6.2

5.1

SUPER PREMIUM

5.0

5.6

113

FLAVORED MALT BEVER AGES/ COOLERS

2.8

6.5

227

HARD CIDER

0.8

2.6

307

ALTERNATIVE

0.0

6.4

occasions. In-store beer displays trigger shoppers to the presence of cold and warm beer sections and can help direct a path to purchase, increasing

visiting the beer aisle (endcaps, special displays, circular ads, etc.) while focusing the messaging on small packs (6- and 12-packs) as these packs make up more than 50 percent of drug revenue and are

Advertise value to shoppers by ensuring clear execution of promotional pricing at retail – accurate shelf price tags and eye-catching, value-offer displays.Leverage displays that cross-merchandise with beer as 87 percent of drug shoppers buy other items with beer; 55 percent of shoppers purchase food and snacks and 27 percent select another alcohol beverage.6

BEER SEGMENT

Nielsen Drug Channel Space Audit, 2017

Five years ago, online shopping generally was about one thing:

explosion of microbrews,

CPG HOUSEHOLD PENETRATION

craft and seasonal products

convenience. Online beer sales were insignificant, because online availability was tiny and the sites

in this category broadens the competitive set, but also

72%

23%

means physical shelf space is

FUTURE

TODAY

were clunky. Convenience, with

more of a battleground than

beer, wasn’t as big an issue with a convenience store on every corner.

ever. Currently, all of CPG ONLINE

growth is coming from online

OFFLINE

– up 25 percent in 2017

The Digitally-Engaged Food Shopper, Nielsen and FMI, 2017

The online experience has moved

while in-store is basically flat.

rapidly from convenience-centric to convenience

Nielsen forecasts that by 2023, 20 percent of all

+ exploration + joy + inspiration + endless variety.

CPG volume will be ordered online (approximately

Brick-and-mortar retailers are now struggling at

5 percent today) and that online household

times to provide as good an online experience as

penetration will grow from 28 million to 88 million

digital-only retailers where the online experience is

households by 2025.1

often faster, simpler, more intuitive and more fun. The changing retail landscape is accelerating online There’s an entire class of on-demand delivery

beer growth as well. Online beer is expected to

middlemen offering an exceptional user experi-

grow to 4 percent of total off-premise beer volume

ence. And within beer specifically, the continued

by 2020 (85 million cases) driven by growth from

ONLINE BEER SHARE 2% 12%

62%

2020 Case Share

24% MillerCoors Estimates, January 2018

BRICK & MORTAR

• Walmart • Kroger

• Total Wine & More • Safeway

3RD PARTY DELIVERY

• Instacart • Drizly

• Shipt

PURE PLAY

• Amazon • Peapod

• Fresh Direct

DIRECT TO CONSUMER

• Half Acre

• Great Lakes Brewing Co.

eCOMMERCE A W A R E N E S S • U S E R E X P E R I E N C E • I N S P I R AT I O N ONLINE SHOPPING OCCASIONS

HIGH PURCHASE INTENT 56 %

Current online grocery buyers intend to purchase beer online in the next year

81%

Current online beer buyers intend to purchase the same amount or more in the next year

PERCEIVED CONVENIENCE 98 %

More likely to say it was easier/more convenient

42 %

More likely to say it saved me time/ I was in a rush

LOW AWARENESS 33 %

Don’t think it’s legal in their state

47 %

Have never considered it

MillerCoors Online Shopper Research Study, January 2018

large-format mass, grocery and liquor stores along with expansion of pure-play retailers.2 In fact, many large-format retailers expect to drive 10 to 15 percent of their beer volume online by 2020.

45% - RELAX

19% - CONNECT

I wanted to be comfortable or treat myself. Low energy me-time, or time with my partner, recharging or decompressing.

I wanted to spend time with a small group of close friends and/or family, where the reason was to connect with other people.

18% - SOCIAL

18% - CELEBRATE

I wanted to meet up with a small to medium group of friends, where people cared about impressing others.

I wanted to go to or plan a special event with a large group, where people were expecting a good time.

MillerCoors Online Shopper Research Study, January, 2018

And while retailers still have to navigate the liquor laws in their local markets to determine the best

enjoyable. And while online beer shoppers are

online business model, online beer is currently

intrigued with the promise of convenience, many

available in more than 78 percent of the country and

online grocery shoppers are not aware that beer is

expanding rapidly. The bottom line is people love

available online.3

shopping for beer, and consumers are bringing that beer-buying passion to digital channels in rapidly

Let’s face it, the digital beer-buying experience lags

increasing numbers.

far behind the broader eCommerce space.

ONLINE EXPERIENCE

The key to winning more online beer shoppers

The experience they encounter, however, often isn’t

is to infuse more joy into the digital beer-buying

TOP 10 USER FRUSTRATIONS 1. There were few or no promotions/sales available

6. Product descriptions were not as detailed

2. The promotions/sales were hard to find

7. There were no customer reviews

3. Filtering by type (e.g., type of beer) was difficult

8. It was hard to get a feel for the products from the

or unavailable 4. Navigation to product pages (e.g., beer, wine) was difficult or unavailable 5. There were no staff picks or favorites

visuals provided 9. There were no recommended products 10. Categorization of products did not make sense MillerCoors Online Shopper Research Study, January 2018

eCOMMERCE A W A R E N E S S • U S E R E X P E R I E N C E • I N S P I R AT I O N

eCOMMERCE BEHAVIORS TO INFLUENCE

DRIVE TRAFFIC ... BY BUILDING CATEGORY AWARENESS

CONVERT SHOPPERS ... BY ELIMINATING FRUSTRATIONS

1st BASKET

BUILD BASKETS ... BY PROVIDING INSPIRATION AND EXPLORATION OPPORTUNITIES

REPEAT

GROW LOYALTY

... BY ENCOURAGING REPEATING BEHAVIOR

experience. To accomplish this it is important

1. Ensure the beer category navigation filter is

to understand how the four key occasions drive

clearly visible on the homepage, making it quick

online beer purchase.

and easy to jump to the beer category department. 2. Place beer occasion banners on the homepage

WINNING ONLINE BEER SHOPPERS

to communicate beer awareness and inspire

With this knowledge, retailers can build solutions

shoppers to purchase beer and other products

to drive online beer sales by leveraging the

for key beer occasions.

specific shopper needs for each occasion. Our

3. Place point-of-sale in the beer aisle of your

solution framework outlines the key beer shopper

physical stores, letting your shoppers know they

behaviors retailers must influence.

can also buy their beer online.

Within this category framework MillerCoors has developed a suite of solutions to help retailers win the online beer shopper. The following solutions are aligned to each of the opportunity areas. DRIVE TRAFFIC

Beer is a top-selling category for most retailers but under-indexes online due to low awareness and low conversion.3 The key is to drive online traffic from the homepage to the beer category page. To help accomplish this goal, retailers can take three key steps: 32

eCOMMERCE A W A R E N E S S • U S E R E X P E R I E N C E • I N S P I R AT I O N beer solutions. Of

CONVERT SHOPPERS

online beer shop-

To convert beer shoppers to beer buyers, retailers

pers, 55 percent

should focus on driving conversion with best-in-

like exploring new

class product content and providing easy search

beer options versus

and exploration options.

sticking with what

1. Ensure online beer assortment includes core

they know. 3

items so shoppers can purchase their preferred

2. Provide shopable

beer items.

occasion solutions

2. Provide intuitive filters and taxonomy to make

to inspire shoppers

it easy for beer shoppers to explore the beer page.

and help make

3. Provide best-in-class product content with

their beer drinking

search-optimized product titles and descriptions

occasions

so shoppers can easily find the items they are

more enjoyable.

searching for. Include great product and lifestyle

3. Offer educational

images/video content to drive conversion once

content to inspire

shoppers find what they want.

confidence and aid browsing for

Only 20% of Shoppers Go Beyond the First Page

71%

90%

of category sales happen on the first three pages 13%

PAGE 1

PAGE 2

6% PAGE 3

C AT EGO RY S A L E S B Y PA G E

53%

of online beer shoppers RESEARCH online prior to purchasing in-store

57%

of all beer shoppers are OPEN to DISCOVERY

Profitero Analytics, November 2017 MillerCoors Online Shopper Research Study, January 2018

beer shoppers when they are in the exploration shopping mode. This will make their shopping experience more enjoyable and encourage them to add more items to their basket. GROW LOYALTY

Increase purchase frequency to increase the value of each shopper through repeated purchases. 1. Deliver targeted offers to lapsed users. 2. Offer loyalty programs, rewards and online exclusive offers. Online beer is going to grow at an accelerated

BUILD BASKETS

Build bigger baskets via new and seasonal

rate because of increased availability coupled with shoppers’ desires for convenience and an enjoyable beer shopping experience.

product offerings, occasion solutions and beer education. 1. Encourage shoppers with new and seasonal

Sources: 1. The Digitally-Engaged Food Shopper, Nielsen and FMI, 2017 2. MillerCoors Estimates, January 2018 3. MillerCoors Online Shopper Research Study, January 2018

WINNING BACK THE ON-PREMISE The beer category remains the biggest contributor

TRAFFIC

(47 percent) to total alcohol beverage in the

71%

69%

66%

Q4, ‘16

on-premise establishments (casual or fine dining,

66%

Q3, ‘16

58%

Q2, ‘16

63%

Q1, ‘16

The total number of consumers visiting traditional

Q4, ‘15

account for 76 percent of total on-premise beer.1

(SHARE OF CONSUMERS VISITING AT LEAST ONE ON-PREMISE ESTABLISHMENT IN PAST TWO WEEKS)

Q3, ‘15

on-premise channel. Casual dining and bars

59%

64%

55%

On-premise traffic (the percentage of consumers

Q3, ‘17

quarter and a year-over-year decline from 2016.2

Q2, ‘17

third quarter of 2017, reflecting a drop from the past

Q1, ‘17

hotels, bars and clubs) dropped to 55 percent in the

visiting) remains very soft for many operators. Technomic Co-Pilot, Q3 2017

ON-PREMISE CONTRIBUTION TO BEER ON-PREMISE

In this modern, experience-driven on-premise

Other - 14%

environment, the on-premise consumer continues to evolve faster than ever before. The channel is

Casinos - 2%

experiencing a split between millennials and guests

Hotels - 7% Concessions - 0.4%

aged 35 and older. Older, 35+ consumers are Bars 39%

going out for smaller, more food-driven occasions. Millennials are going out to the on-premise less frequently, and when they do go out they are opting

Casual Dining - 38%

for fewer, bigger, share-worthy evenings.3 But even with the lower frequency, the on-premise remains the only channel that over-indexes for millennials.

On-Premise Overview, Technomic, October 2017

That’s good news for the channel!

ON - PREMISE A S S O RT M E N T • V I S I B I L I T Y • P R I C I N G S T R AT E G Y

KEY ON-PREMISE OCCASIONS

ENERGY: Lower

ENERGY: Higher

NEEDS: Connect and feel comfortable

NEEDS: Impress/stand out and feel energized

AGE: 25 to 49

AGE: 21 to 34

GENDER: Mostly male or mixed gender

GENDER: Mixed

Four macro-occasions have been identified. Two

• Share of all on-premise visits that included an

occasions over-index for the on-premise and over-

alcohol drink rose to 47 percent from 41 percent

index for beer, thus offering the biggest opportunities

year-over-year!2

for the beer category: connect and social occasions.

• Beer is the beverage of choice on-premise, capturing more than 55 percent of occasions,

The opportunities for the channel don’t stop there.

followed by spirits at approximately 43 percent.2

Three top trends that emerged in late 2017 provide opportunities for the beer category going forward:

Six imperatives are recommended for an on-premise account to leverage these trends and to ultimately

• Average number of visits to all on-premise

grow the size and value of their beer category:

establishments has increased consistently since 1. Drive volume and variety with optimal assortment.

the second quarter of 2016 – from 3.6 to 4.5 visits in the third quarter of 2017.

2. Increase the visibility for beer.

3. Win big with the right pricing strategy. SHARE OF ON-PREMISE OCCASIONS 57%

52%

55%

56%

55%

57%

43% 41%

45%

42% 44%

44%

45%

44%

20%

22%

23%

21%

22% 20%

23%

51%

20%

56%

4. Elevate the beer category.

5. Provide share-worthy experiences and meaningful connections with consumers.

6. Drive a passion for selling beer. 41%

22%

Q3 ‘15 Q4 ‘15 Q1 ‘16 Q2 ‘16 Q3 ‘16 Q4 ‘16 Q1 ‘17 Q2 ‘17 Q3 ‘17 Beer/Cider

Spirits

Wine

Technomic Co-Pilot, Q3 2017

ON - PREMISE A S S O RT M E N T • V I S I B I L I T Y • P R I C I N G S T R AT E G Y

IN THIS NEW WORLD, EVERY BEER HAS ITS PLACE... from the more functional to the more emotional

FUNCTIONAL

AMERICAN LIGHT LAGERS

• Massively familiar • Comfortable • Democratic

MASS DOMESTIC

• Approachable • Intrigue

MASS IMPORT

• Historied • Premium • Exotic

CRAFT

• Storied • Diverse • Craftsmanship • Constant variety

EMOTIONAL

Glassware Exploration, The Sound, August 2017

DRIVE VOLUME AND VARIETY

segment is a mainstay representing one out of every

WITH OPTIMAL ASSORTMENT

three beers sold, and the segment with the most loyal drinkers.4

WHAT WE KNOW: The optimal assortment drives volume and revenue.

Crafts represent one of the core growth segments within beer over the last year.¹ However, craft

And despite this fact, draught brands that don’t

drinkers like to play the field. More than 50 percent

drive sales are taking the taps from brands with the

of their volume is sourced from segments outside of

most volume. The opportunity for the on-premise is

craft. And when drinking within the craft segment

to focus on the winning segments – segments that

they tend to choose from the top 30 national craft

deliver both volume and revenue.

brands.5

With an approximate 14 percent share of total tap

The import segment is another that grew over

handles, premium American light lagers deliver

the past year.6 The top-performing brands overall

the average dollars per distribution point. Those

are from the import segment. Over half of this

velocities are 1.5 times higher than imports and two

segment’s draught volume and dollars are sourced

times higher than craft. It is important to continue

from six brands. It is important to note that the

to leverage the power of premium American light

dollar yield per distribution point is 65 percent of

lager.

premium American light lagers. Once again, it’s a

balance. It does not, however, suggest ignoring craft brands. It’s a balance. The premium American light lager

Similar to draught brands, low-velocity packaged

ON - PREMISE A S S O RT M E N T • V I S I B I L I T Y • P R I C I N G S T R AT E G Y brands are taking sales from brands with the biggest

thousands of innovative brands the account size

volume. The opportunity is the same – focus on the

can determine the optimal tap handle total.7

winning segments. INCREASE THE VISIBILITY FOR BEER An assortment that is anything less than optimal will not satisfy consumers and will negatively impact the

WHAT WE KNOW: What consumers see sells.

bottom line. Give consumers what they want!

Beer is the alcohol beverage of choice for most While providing consumers with optimal

Americans. Despite this, beer is often not visible

assortment, it is important that choices are not

in accounts. At times, the only evidence is a tap

overwhelming. “Food first” accounts can satisfy

handle, and in accounts with a wide variety of

consumers with eight tap handles, a variety of beer

draught brands, it is a sea-of-sameness where

styles that pair well with menu offerings. The game

one brand struggles to stand out from another.

changes in “beer first” accounts, where consumers

Great theater has a huge impact upon consumers,

go to enjoy their favorites and experiment with new

especially when the scene is fun, emotional

styles. Here, 24 handles can be enough, but with

and engaging. This is a powerful tool to attract

D R AU G H T B E E R SA LE S BY SEG M E N T

AVERAGE $/ DISTRIBUTION POINT

PREMIUM AMERICAN LIGHT L AGER

$4,763,229,934

22.2%

220,155

14.4%

$19,947

PREMIUM AMERICAN REGUL AR

$1,326,018,795

6.2%

81,382

5.3%

$17,836

$271,862,751

1.3%

30,964

2.0%

$8,544

$3,180,237,360

14.8%

241,261

15.8%

$13,036

$83,753,064

0.4%

12,722

0.8%

$6,857

$10,234,452,458

47.8%

775,457

50.7%

$9,408

$11,423,781

0.1%

4,816

0.3%

$2,372

$505,925,078

2.4%

74,803

4.9%

$6,944

$1,039,847,521

4.9%

87,300

5.7%

$5,947

$21,416,750,742

100.0%

1,528,860

100.0%

$90,892

SEGMENT

ECONOMY IMPORT SUPER PREMIUM CR AFT FL AVORED MALT BEVER AGE HARD CIDER *ALL OTHER /UNASSIGNED TOTAL *Includes coolers, malt liquor, near beer, unassigned items

SALES

DISTRIBUTION POINTS

Nielsen, year-to-date, week ending Dec. 2, 2017

ON - PREMISE A S S O RT M E N T • V I S I B I L I T Y • P R I C I N G S T R AT E G Y

attention. At a time when accounts prefer “clean”

• Illuminated posters have more impact than

walls, there are impactful ways to increase the

non-illuminated; when illuminated, the graphics

visibility of beer:

tend to be simpler and more colorful.

• Animated, digital menu boards attract attention and drive consumer purchase. • Differentiated illuminated signs make a big

• Chalkboards always score more customer attention – there is something about the personalization of the message and the

difference to customer attention in an account

immediacy of what it is saying that tends to

and can be used to effectively capture attention

attract attention.

– the key is differentiation.

• Tent cards typically work well when placed upon a table as there is often “time to kill.” • Glorifiers work well for two reasons: 1. They provide more excitement to the product and frame it. 2. Their location increases the opportunity for a customer to note and perhaps prompt purchase. Sell more beer when you attract consumers’ attention in a unique and engaging way.8

ON - PREMISE A S S O RT M E N T • V I S I B I L I T Y • P R I C I N G S T R AT E G Y PRICE SENSITIVITY VARIES BY GEOGRAPHY: NORTHEAST CENTRAL

I am willing to pay MILLER LITE

COORS LIGHT

BUD LIGHT

LOCAL CRAFT

IMPORT

NATIONAL CRAFT

different prices for different types of beer.

LIGHT LAGER

OPTIMAL PRICE GAP IS TYPICALLY $1.50-$2.50

NON-PROMOTIONAL PRICING (NPP)

CRAFTS AND IMPORTS

NPP X 1.40

NPP X 1.55

N O R T H E A S T CE N T R A L E X A M PLE BEER SEGMENT

PTC CURRENT

PREMIUM AmLLs

$2.00

NATIONAL CR AFTS

$2.50

INDEX TO PAmLLs CURRENT

REVENUE BASED ON 100 UNITS/WEEK $200.0

125%

$250.0 $450.0

TOTAL REVENUE

PTC WILLINGNESS TO PAY PREMIUM AmLLs

$3.50

NATIONAL CR AFTS

$4.90

RECOMMENDED INDEX TO PAmLLs $350.0 140%

$490.0 $840.0

TOTAL REVENUE

$390.0

POSSIBLE INCREASE IN REVENUE BASED ON CONSUMER WILLINGNESS-TO-PAY DATA

87%

Nielsen CGA On-Premise, Q1 2017

WIN BIG WITH THE RIGHT

Some things stayed the same.

PRICING STRATEGY • American light lagers are more price-sensitive WHAT WE KNOW: Suboptimal price gaps can

– price change has more influence on demand.

leave money on the table.

Consumers drink more per occasion and have high brand loyalty.

In 2017, when consumers were asked: “How much

• Crafts and imports are less price-sensitive

would you be willing to spend on a standard serve

– price change has less influence on demand.

of your preferred drink when out?” their responses

Consumers pay more for the higher quality

were varied by geography and by beer segment

perception but they drink less per occasion.

within each geography.

ON - PREMISE A S S O RT M E N T • V I S I B I L I T Y • P R I C I N G S T R AT E G Y

Some things changed.

ELEVATE THE BEER CATEGORY

The new news is consumer responses vary in nine

WHAT WE KNOW: Signature glassware is a

regions of the United States. Painting the country

sign of quality.

with the same pricing brush is not the way to achieve optimal price gaps and maximize revenue.

This is a glass-half-full story. It’s an opportunity to drive profit and elevate the consumer experi-

Follow these two simple steps to leverage the

ence with signature glassware.

biggest pricing opportunity: 1. Set the base by understanding what consumers

While glassware alone will not elevate the quality

in your region are willing to pay for a premium

perception of beer, the consumer does believe

American light lager when not on promotion.

that there are benefits to glassware. No matter

2. Apply the relevant price index for the craft and

the segment, glassware enhances the

import segments in your region to the non-promo-

experience.

tional pricing of premium American light lagers. • Domestic beer – unique glassware helps Based on the example on the previous page, an

brands stand out from the pack and makes the

account has the opportunity for an 87 percent

drinking experience feel special.

increase in weekly revenue when implementing

• High-end beer – a glass specifically shaped

optimal, region-based, non-promotional pricing.

for the style of beer enhances the experience

A couple of bucks can make all the difference.

and adds an intrigue or premium.

ON - PREMISE A S S O RT M E N T • V I S I B I L I T Y • P R I C I N G S T R AT E G Y The proper glass isn’t just about marketing. It allows

of education and entertainment. Unbranded

the drinker to:

on-premise engagements provided server and

• See the beer

consumer beer education, impacting three key

o Three Cs of beer presentation: color, clarity and carbonation • Smell the beer o 80 percent of beer flavor comes from aroma • Enjoy the beer o Glass shapes can amplify the taste and maintain beer head – making it feel less filling

areas: • BEER – delivered education for American light lagers and, importantly, elevated the light beer category • CONSUMER – created the memorable experience that consumers seek • RETAILER – made participants feel more favorable toward the bar and more likely to return to the account

A recent study showed results overwhelmingly in favor of signature glassware.

Accounts that embrace such engagements on the right day of the week and at the right time of the

“I SAW SOMEONE ORDER A BEER IN A

SIGNATURE GLASS, AND I WANTED THE SAME THING.” LET’S DO IT! Glassware Exploration Study, August 2017

day will attract younger, legal-aged consumers, give them what they want and encourage them to come back for more. Social media remains a crucial communication platform. Whatever the engagement, if the 21+

PROVIDE SHARE-WORTHY

consumer is the target, an account must leverage

EXPERIENCES AND MEANINGFUL

every social media platform to talk to them pre-tail,

CONNECTIONS WITH CONSUMERS

at-retail and post-tail.

WHAT WE KNOW: Consumers, particularly the 21-

Know what consumers desire and give it to them.

to 27-year-old set, increasingly expect on-premise operators to make leaving the house worthwhile. To reverse softening on-premise traffic, operators have to change the way they think and compete. They must know: • what your consumers desire, • which occasions are important, • what experiences they seek and • when they want them. One of the most successful beer category programs in 2017 was Edu-Tainment, the combination

ON - PREMISE A S S O RT M E N T • V I S I B I L I T Y • P R I C I N G S T R AT E G Y

LET’S SAY STAFF SERVES...

750 PEOPLE =

PER WEEK

IF THEY CONVERT...

1 OUT OF 4 PEOPLE

TO SPEND $4...

FOR ONE EXTRA BEER

$112/WEEK

$750/WEEK

EXTRA FOR SERVER

REVENUE FOR THE BAR

MSS, Bartender Influencer Beer Report, January 2015

DRIVE A PASSION FOR SELLING BEER

consumer is leaning on bar and waitstaff for recommendations. Unfortunately, in many

WHAT WE KNOW: Beer is the alcohol beverage

instances, consumers are not getting them. Not

of choice for most Americans.

all beers are created equal. Beer education for any server will improve their knowledge of the

Thirty-seven percent of U.S. consumers drink out

product. They’ll learn what a quality product is

at least once a week (versus 33 percent in October

and will understand what makes each style of

2016). Controlling the path-to-purchase is abso-

beer different. All in, service staff will then be

lutely vital as more than 25 percent of consumers

able to make informed recommendations to the

do not know what they are drinking beforehand.

consumer.

Consumers often feel lost, but they are open to

Persuasive power from waitstaff is a win-win: It

suggestion and are willing to pay more:

boosts revenue for the account and increases tips

• 40 percent of consumers don’t know what they

for servers. Inspire your staff to make recommen-

want prior to ordering;

dations for increased sales.

• 27 percent of consumers are interested in bar and waitstaff recommendations and • up to 26 percent lift in price if the drink is seen as a premium. The average shopper drinks beer but doesn’t know beer, and is eager to learn. With so many different beer styles and segments, the 42

Sources: 1. Technomic On-Premise Overview, October 2017 2. Technomic Co-Pilot, Q3 2017 3. CGA On-Premise User Survey, September-October 2017 4. Nielsen Homescan, 2016 5. BTS, October 2016/Guest Metrics, 2016 6. Nielsen CGS On-Premise data – volume, 288-oz EQ, rolling 52 weeks ending Nov. 4, 2017 versus year ago 7. Geo Tracking Technology Services, 2017 8. Which elements of POS work best? Ian Scott, instinct laboratory LTD, Sept. 7, 2017 9. Nielsen CGA On-Premise, 2017 10. Nielsen CGA On-Premise User Survey, March-April 2017, sample size: 15,042 11. Nielsen CGA View from the Bar, 2017

K E Y TA K E A W AY S CONVENIENCE STORES • Realize the value of the beer shopper and understand their shop. The shopper occasion drives pack size and brand decisions. Ensure beer is always in stock, especially during peak high-traffic periods.

• Focus assortment on right packs with importance on both premium light and economy segments. • Ensure robust in-store execution plans to ensure enough days of supply and help increase conversion.

• Win with singles by dedicating at least 25 percent of beer cooler space to singles, merchandise

DRUG STORES

singles segments to motivate trade-up and

• Generate awareness for beer through both

communicate price clearly with shelf tags. • Optimize space by having the right assortment. Ensure stock on American light lagers and economy. Maintain a balanced portfolio with key growth segments and be quick to market with key innovation.

pre-shop and in-store messaging to increase conversion. • Drive value messaging to change perception of value within drug channel. • Focus assortment on right packs with importance on both premium light and import segments.

GROCERY STORES

eCOMMERCE

• Consumers are motivated

• Drive traffic by building awareness for your online

by convenience, value and assortment. • Consumer grocery beer purchasing behaviors are prompted by occasions. • Leverage cold beer with prepared food and meal partnering occasions. • Get beer on the floor – a display can convert shoppers who were not planning to purchase beer.

beer offering. • Convert beer shoppers by providing intuitive navigation filters and best-in-class product content, making shopping easy and fun. • Build baskets by featuring new and seasonal product offerings, occasion solutions and beer education. • Grow loyalty via personalization, loyalty programs and online exclusive offers.

LIQUOR STORES • Beer improves frequency of liquor store trips. • Elevate the beer category and attract millennials and female shoppers with improved ambiance and merchandising. • A disciplined category management process will leverage the role liquor stores play in meeting a broad set of consumer occasions.

ON-PREMISE • Give consumers what they want with optimal assortment. • Create impactful ways to increase beer’s visibility in accounts. • Know what consumers in your region are willing to pay and apply relevant price indexes. • Utilize proper glassware to elevate the perception of beer.

DOLLAR STORES • Generate awareness for beer through both pre-shop and in-store messaging to increase conversion.

• Connect with consumers in meaningful ways – often through social media. • Empower waitstaff to make recommendations to increase sales. 43

At MillerCoors, we are committed to growing the size and value of the beer category in your business. Our approach is simple: Understand retailers’ businesses and objectives, and then work on opportunities to achieve those goals. Our network is ready to share with you the Building with Beer® suite of channel solutions designed to deliver total category results.

PLEASE CONTACT YOUR MILLERCOORS SALES TEAM FOR MORE INFORMATION.

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