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VIEWPOINT

By Don Longo, Editorial Director

A Woman’s Touch

The convenience store industry benefits as more females take leadership roles

F

or more than 40 years, Convenience Store News has closely watched the progress women have made in leadership positions in the convenience store industry. Even before we launched this industry’s first awards program for female leaders four years ago, our editorial pages featured interviews with women like E-Z Mart CEO Sonja Hubbard, Stop’n Go’s leader Becky Shotwell, Flash Foods technology maven Jenny Bullard, and Jacksons Food Stores chief Andrea Jackson about what it meant to be woman leaders in a predominantly male-dominated business.

These articles led us to launch the Top Women in Convenience (TWIC) awards program in 2014 to recognize a diverse array of females in the c-store industry, including senior executives, mentors and rising stars. When we sent out that first call for nominations, we didn’t know what to expect. We were thrilled to be blown away by the number of entries about women who were making a difference at For comments, please contact Don Longo, Editorial Director, both their own companies and the at (201) 855-7606 or industry at large. Each year since, dlongo@ensembleiq.com. we’ve struggled to choose winners from among hundreds of inspiring professionals.

This year’s Top Women in Convenience nominations represented a similar challenge. From more than 150 nominations, CSNews, along with our TWIC Advisory Board, winnowed the list down to 50 female

executives, managers and up-and-comers who work for convenience store industry retailers, suppliers and distributors. As in past years, we selected five Women of the Year, along with 22 Senior-Level Leaders, 15 Rising Stars, and eight Mentors.

We are looking forward to honoring them at our 2017 TWIC Awards Reception, being held Wednesday, Oct. 18 at the Hyatt McCormick Place Hotel in Chicago. The awards program begins at 5:30 p.m., right after the NACS Show floor closes for the day.

For the first time, this year’s event will feature a keynote address. It will be delivered by Marcia Clark, the lead Los Angeles prosecutor in the O.J. Simpson “Trial of the Century.” Clark, who is also the author of several bestselling legal thrillers and serves as a public speaker on a range of women’s issues, will discuss empowering women in the workplace. Her appearance is being made possible by TWIC presenting sponsor Altria Group Distribution Co. I want to congratulate all 50 of our Top Women in Convenience, who are being recognized for their exceptional impact on the success and direction of their companies.

As more women take leadership roles within their companies and in the industry, their influence continues to expand and they gain a greater voice in increasing the likelihood that the industry will continue to prosper and overcome new challenges. The accomplishments of this year’s TWIC award winners are exemplary, and it is with great pride that we celebrate their success.

EDITORIAL EXCELLENCE AWARDS (2013-2017) 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 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 2013 American Society of Business Press Editors, Midwest Regional Azbee Awards Bronze, Best Editorial/Commentary, July 2012 2016 Trade Association Business Publications Intl. Tabbie Awards Silver, Front Cover Illustration, June 2015

EDITORIAL ADVISORY BOARD

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

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

4 Convenience Store News | AUGUST 2017 | WWW.CSNEWS.COM

Brett Atherton Bolla Management Jon Bratta Core-Mark International Inc. Rick Crawford Green Valley Grocery Edward Davidson ER Davidson & Associates (7-Eleven Inc., retired) Jim Hachtel Eby-Brown Co. Ray Johnson Speedee Mart

Jack Lewis GPM Midwest

Kirk Leff McLane Co. Inc.

Roy Strasburger Convenience Management Services Inc.

Danielle Mattiussi Maverik Inc. Kyle McKeen Alon Brands Inc. Richard Mione GPM Southeast Jonathan Polonsky Plaid Pantries Inc. Greg Scriver Kwik Trip Inc.

with

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CONTENTS AUGUST 2017

VOLUME 53/NUMBER 8

28 | COVER STORY Wonder Women

Fourth-annual Top Women in Convenience awards honor 50 formidable females.

FEATURES

INDUSTRY ROUNDUP

MIDYEAR REPORT CARD

12 | Couche-Tard Takes a ‘Holiday’ This Summer

54 | Convenience Channel Sales Lagging Behind Last Year’s Growth Soft spots emerge in the 2017 Convenience Store News Midyear Report Card.

76 | Are You Appealing to Fresh & Healthy Millennials?

Representing a third of convenience store traffic, this generation is a force.

14 | Fast Facts 14 | Applegreen Is After a Significant Presence in U.S. Market 16 | Eye on Growth 16 | Retailer Tidbits 18 | Seen on Social Media 18 | People on the Move 18 | Supplier Tidbits

Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 570 Lake Cook Rd. Deerfield, IL 60015. Copyright © 2017 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.

6 Convenience Store News | AUGUST 2017 | WWW.CSNEWS.COM

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CONTENTS

570 Lake Cook Road, Ste. 310, Deerfield, IL. 60015 (224) 632-8200 Fax: (224) 632-8266 www.csnews.com Direct Mailing Address for Convenience Store News: 111 Town Square Place, Suite 400, Jersey City, N.J. 07310

CATEGORY MANAGEMENT FOODSERVICE

58 | How to Raise the Bar at Your Coffee Bar If you really want to jam with java, sip on these elevated best practices.

COLD VAULT

64 | Wine Sales Uncorked C-stores can raise the conversion rate of consumers who typically purchase wine elsewhere.

IN-STORE MERCHANDISING

68 | Getting Specific With General Merchandise Capitalize on this high-growth category through attention to detail.

MOTOR FUELS

74 | The Pump-to-Store Conundrum Exclusive research shows frequent shoppers key to building conversion rates.

DEPARTMENTS

Group Brand Director (330) 840-9557

Ron Lowy rlowy@ensembleiq.com

EDITORIAL Editorial Director (201) 855-7606 Editor-in-Chief (201) 855-7608 Senior News Editor (201) 855-7618 Associate Editor (201) 855-7619 Associate Managing Editor (201) 855-7604 Assistant Editor (201) 855-7614 Contributing Editor (303) 741-3377 Contributing Editor (201) 280-2614

Don Longo dlongo@ensembleiq.com Linda Lisanti llisanti@ensembleiq.com Melissa Kress mkress@ensembleiq.com Angela Hanson ahanson@ensembleiq.com Danielle Romano dromano@ensembleiq.com Chelsea Regan cregan@ensembleiq.com Renée M. Covino reneek@aol.com Tammy Mastroberte tmastroberte@gmail.com

ADVERTISING SALES & BUSINESS Associate Brand Director & Northeast Sales Manager Rachel McGaffigan (508) 385-2524 rmcgaffigan@ensembleiq.com Associate Publisher & Midwest Sales Manager Kelly Fischer (773) 992-4464 kfischer@ensembleiq.com Southeast Regional Sales Manager Erika Cann (330) 357-9207 ecann@ensembleiq.com Western Regional Sales Manager Dian Melius (949) 387-1451 dmelius@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

CUSTOM MEDIA

VIEWPOINT

4 | A Woman’s Touch The convenience store industry benefits as more females take leadership roles.

10 | CSNews Online

BRAND MANAGEMENT

20 | New Products

Vice President/Custom Media Division Pierce Hollingsworth (224) 632-8229 phollingsworth@ensembleiq.com General Manager, Custom Media Kathy Colwell (224) 632-8244 kcolwell@ensembleiq.com

MARKETING Strategic Marketing Director (224) 632-8214

Bruce Hendrickson bhendrickson@ensembleiq.com

AUDIENCE DEVELOPMENT

22 | Finding the Right Franchise Under a big brand, small operators can compete and profit in a consolidated industry.

Director of Audience Development Gail Reboletti (224) 632-8214 greboletti@ensembleiq.com Audience Development Manager Shelly Patton (646) 217-1045 spatton@ensembleiq.com List Rental The Information Refinery (800) 529-9020 Brian Clotworthy Subscriber Services/Single-Copy Purchases (978) 671-0449 EnsembleIQ@e-circ.net

EXPERT’S VIEW

ART/PRODUCTION

80 | Out, But Still Not Always Equal, in Retail The LGBT community has talent and purchasing power.

Director of Production (973) 358-4875 Advertising/Production Manager (314) 403-4753 Art Director (224) 632-8245

SMALL OPERATOR

STORE SPOTLIGHT

84 | From Corner to Corner Street Corner is on a mission to meet the needs of the urban market.

GETTING TO THE CORE

106 | Fizzy Feelings C-store shoppers offer insights into their beverage path to purchase.

Kathryn Homenick khomenick@ensembleiq.com Roz Gilman rgilman@ensembleiq.com Michael Escobedo mescobedo@ensembleiq.com

CORPORATE OFFICERS Executive Chairman Alan Glass Chief Operating Officer Rich Rivera Chief Financial Officer Len Farrell Chief Business Development Officer & President, EnsembleIQ Canada Korry Stagnito Chief Customer Officer/President of Enterprise Solutions Ned Bardic Chief Digital Officer Joel Hughes Chief Human Resources Officer Greg Flores Chief Brand Officer Jeff Greisch

CONVENIENCE STORE NEWS AFFILIATIONS

Premier Trade Press Exhibitor 8 Convenience Store News | AUGUST 2017 | WWW.CSNEWS.COM

Reprints, permissions and licensing, please contact Wright’s Media at ensembleiq@wrightsmedia.com or (877) 652-5295.

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CIGARETTES

CSNEWS.COM TOP 5 Daily News Headlines The most viewed articles online.

1 | R.J. Reynolds Brings Newport Platinum National A brand extension from Newport is making its way to backbars across the United States. Newport Platinum styles offer adult smokers “a fresh take on Newport cigarettes with a refreshingly smooth menthol taste that is different from the traditional Newport family,” according to maker R.J. Reynolds Tobacco Co. 2 | QuikTrip’s Cadieux Lands on Top CEO List Chet Cadieux III, CEO of QuikTrip Corp., is ranked among the top chief executives in the United States according to a new list by job site Glassdoor. Cadieux takes the No. 28 spot on this year’s Glassdoor Employees’ Choice Awards ranking with a 95-percent approval rating. Last year, QuikTrip’s chief held the No. 26 spot.

3 | Cold Brew Comes to Wawa’s Hand-Crafted Specialty Beverage Program Cold brew coffee is now available at all Wawa Inc. convenience stores as part of its hand-crafted specialty beverage program.

Wawa Cold Brew incorporates a slow steeping process and is available in traditional black or sweet cream flavors, in both 16and 24-ounce sizes.

4 | Delek US Puts Alon USA Acquisition in the Books It’s official: Delek US Holdings Inc. has taken full ownership of Alon USA Energy Inc. The deal, which saw Delek US acquire all the remaining outstanding shares of Alon common stock in an all-stock transaction, closed July 1.

5 | Retailers Roll Out National Hot Dog Day Specials Convenience store retailers rolled out hot deals in honor of National Hot Dog Day on July 19. Pilot Flying J, Love’s Travel Stops & Country Stores and Thorntons all had special promotions.

ONLINE EXCLUSIVE PHOTO GALLERY: L.A.’s Trimana Blends Fresh Food With Convenience A new operation located in modern, high-rise office buildings is the latest retailer to blur the lines between restaurants and convenience stores. Called Trimana, the concept is the brainchild of Bijan Yadegar, founder of High Rise Goodies Restaurant Group Inc., owner, operator and franchisor of approximately 50 restaurants that serve a mixed cuisine of American, Mexican, Italian and Asian food. Yadegar currently operates three Trimana convenience stores in Los Angeles.

For more exclusive stories, visit the Special Features section of www.csnews.com.

PRODUCT HIGHLIGHT

The most viewed New Product online.

Probiotics + Prebiotics Energy & Calming Shots Probiotics + Prebiotics Energy and Calming Shots from JUS by Julie are a great on-the-go way to get a daily dose of probiotics with the added benefit of natural energy or relaxation, according to the maker. The shots include a strain of flavorless vegan probiotics called GanedenBC30 that has been shown to survive 10 times more effectively than yogurt cultures. JUS by Julie also introduces Single Serving Probiotics + Prebiotics Food/Drink Mix that allows users to easily turn any food or beverage into a probiotic product. Also using GanedenBC30, the single-serving packets can be put into almost any hot or cold meal or beverage.

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EXPERT VIEWPOINT: Maintaining Perspective in the Age of Amazon Joseph Bona, founder of Bona Design Lab, writes that the announcement of Amazon’s plan to buy Whole Foods Market for $13.7 billion underscored a couple of things: No. 1, convenience retailers really do need to learn how to operate at an Amazon-like “fast clock speed,” as the Norwegian retailing expert Jacob Schram puts it in his new book “Business Essentials”; No. 2, it’s equally essential for convenience retailers to stay grounded in the face of all this disruption so that they don’t ever lose sight of their core business.

10 Convenience Store News | AUGUST 2017 | WWW.CSNEWS.COM

INDUSTRYROUNDUP

Couche-Tard Takes a ‘Holiday’ This Summer

Its latest acquisition includes 522 convenience stores, food commissary in the Midwest

A

limentation Couche-Tard Inc. is continuing its acquisition run in the United States, reaching an agreement with Holiday Cos. to acquire all the issued and outstanding shares of Holiday Stations Inc. and certain affiliated companies.

Midwest-based Holiday’s assets include more than 500 company-operated and franchise convenience stores, a food commissary and a fuel terminal. Holiday is a privately owned company based in Minnesota and was founded by the Erickson family in 1928.

Of its 522 Holiday Stationstore c-stores, 374 are company-operated and 148 are franchises. It has locations in 10 states: Minnesota, Wisconsin, Washington, Idaho, Montana, Wyoming, North Dakota, South Dakota, Michigan and Alaska.

Holiday’s retail sites sell fuel under the Holiday brand, and the company operates 221 car washes.

“The acquisition of Holiday is a great fit for Couche-Tard and will allow us to continue to build on our geographical growth strategy. The Erickson family and its management team have created one of the strongest, well-run companies in the Northern Tier

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region of the U.S. with a great brand and consumer offer. We are pleased to welcome the Holiday brand and its highly successful programs to the family,” said Brian Hannasch, president and CEO of Couche-Tard.

The transaction is anticipated to close in the fourth quarter of Couche-Tard’s fiscal year 2018 and is subject to customary regulatory approvals and closing conditions.

Both companies have agreed to not disclose the purchase price at this time.

“We believe there are tremendous synergies between the two companies and that it also gives us a great entry point into the Upper Midwest and, in particular, a strong position in the Greater Twin Cities metropolitan area, with a population of 3.5 million,” Hannasch said.

Couche-Tard intends to continue Holiday’s operational base at the Holiday corporate headquarters in Bloomington, Minn.

“We are pleased to entrust Couche-Tard with carrying forward the Holiday brand and our highly successful programs. Our 90-year history and our promising future are being placed into excellent hands,” said Ronald Erickson, chairman and CEO of Holiday.

INDUSTRYROUNDUP FAST FACTS Of those expected to travel over the July Fourth holiday weekend, 37.5 million Americans were estimated to drive to their destinations.

Source: AAA Independence Day Travel Forecast

The cigarettes market will record a $7.7-billion loss by 2021, compensated by $13.2-billion growth in heated tobacco products sales in the same period.

Source: Euromonitor International

Millennial women consume sports drinks at levels that exceed their male counterparts. Similarly, women aged 50 and older also exceed males in consumption of energy drinks.

Source: Packaged Facts, Energy & Sports Drinks: U.S. Market Trends & Opportunities

The most popular styles of craft beer continue to be India Pale Ales (IPAs) and seasonal offerings.

For the year ended Jan. 28, IPAs racked up more than $1 billion in sales.

Source: Nielsen

Applegreen Is After a Significant Presence in U.S. Market Dublin-based retailer is buying 42 Pitt Stop stores from The Brandi Group

A

pplegreen plc, the convenience store banner of Ireland’s largest independent forecourt retailer Petrogas Group Ltd., announced its first major U.S. acquisition. It is acquiring the assets of Columbia, S.C.based The Brandi Group, operator of 42 Pitt Stop convenience stores.

The $5.4-million deal includes trade assets and the convenience stores, 34 of which are gas stations that incorporate a number of fast-food outlets, such as Subway, Blimpie and 11 Burger King restaurants. The purchase also includes eight standalone Burger King sites.

“We consider The Brandi Group to be an excellent fit for our business given the attraction and convenience of its locations centered in the city of Columbia, together with the significant component of foodto-go offers that exists within the estate,” said Applegreen CEO Bob Etchingham. “We believe that this acquisition represents an opportuni-

14 Convenience Store News | AUGUST 2017 | WWW.CSNEWS.COM

ty to establish a significant presence in this market while also providing the potential for us to leverage our retail experience in this sector to enhance the current offering.”

Applegreen first entered the U.S. convenience store market in 2014 with the purchase of two gas stations in Hicksville and Plainview, Long Island, N.Y. In tandem with Applegreen’s purchase, Getty Realty Corp. will acquire related property assets from The Brandi Group in an acquisition leaseback transaction for $70 million. Getty will simultaneously enter into a unitary lease with Applegreen covering all of the sites.

The transaction is expected to close before the end of the fourth quarter. The unitary lease — to be effective at closing — provides for an initial term of 15 years, with four five-year renewal options.

Rent is scheduled to increase annually during the initial and renewal terms.

INDUSTRYROUNDUP

eye on growth Loco Inc. Terms of the deal were not disclosed.

n Alimentation Couche-Tard Inc.

officially took ownership of San Antonio-based CST Brands Inc. Postacquisition, Couche-Tard increased its store count in North America by nearly 1,300 locations. n Empire Petroleum Partners is buying

70 locations from Couche-Tard. The gas stations are in Arizona, Colorado, Florida, Georgia, Louisiana, New Mexico, Ohio The Federal Trade Commission directed and Texas.

Couche-Tard to divest the sites as part of its acquisition of CST Brands.

n Western Alta Holdings Co.,

parent company of Alta Convenience Stores, added six Colorado convenience stores through a joint venture with

n QuikTrip Corp. will open its

first stores in the San Antonio and Austin, Texas markets in summer 2018. The retailer plans to operate more than 100 stores in this region. n Motiva cut the ribbon

on its first 76-branded gas station featuring the new 76 Crest image and the fuel’s legacy orange and blue color scheme. Located in Island Park on Long Island, this site is the start of Motiva’s growth plan to supply 76-branded stations throughout its territory of 26 Gulf and East Coast states.

retailer tidbits tional efforts, including in-store displays.

n CEFCO Convenience Stores

unveiled a new store in Giddings, Texas, that showcases unique amenities including an RV dump station and a pet exercise area. This is the retailer’s first new location of 2017. n Yesway kicked off its

loyalty program, Yesway Rewards, which was developed in collaboration with Paytronix. The rollout includes the launch of a Beverage Club.

Yesway Rewards members earn “Smiles” for each dollar spent on fuel or in-store merchandise.

n Pilot Flying J inked a four-year sponsorship pact with

the collegiate Southeastern Conference (SEC) and ESPN to be the “Official Travel Center of the SEC.” The retailer will have category exclusivity and rights to SEC and SEC Network marks and logos for use in all marketing and promo-

16 Convenience Store News | AUGUST 2017 | WWW.CSNEWS.COM

n VERC Enterprises rebranded the 40-year-old

Mayflower Food & Spirits store as Mayflower Provisions following its purchase of the landmark site in Plymouth, Mass.

VERC worked with branding firm Scribendi Digital Advertising to develop the new name and a new logo. n Gulf Oil and Discover Financial Services

jointly developed a summer savings campaign. Consumers who download the Gulf Pay app and link a Discover card will automatically save 15 cents per gallon of gas. The campaign runs through Oct. 15. n Orton Oil Co. selected PDI as

its enterprise resource planning software provider. The software implementation at Orton Oil sites is currently underway.

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INDUSTRYROUNDUP SEEN on SOCIAL MEDIA

people on the move Empire Petroleum Turns Over CEO Reins to Industry Veteran

E

Wawa Inc., Wawa, Pa.

Vote for your favorite The Wawa Foundation Hero Award finalist who will receive $50K from The Wawa Foundation: http://bit.ly/ WawaHeroAward

mpire Petroleum Partners LLC named industry veteran Rocky Dewbre as its new CEO. The appointment came as current CEO Hank Heithaus announced he is retiring Sept. 15.

Dewbre joins Dallas-based Empire after serving on the board of directors of CST Brands Inc. The San Antonio-based operator of the Corner Store convenience

store chain was recently acquired

by Circle K’s parent company, Alimentation CoucheTard Inc. Prior to joining CST’s board, Dewbre was CEO of Susser Petroleum Partners LP. “I am excited to join Empire and look forward to continuing to build a team focused on serving customers and the continued growth of our business,” Dewbre said.

supplier tidbits n Core-Mark

Holding Co. Inc. closed on its acquisition of Farner-Bocken Co. The $174-million deal was paid in cash and Carroll, Iowa-based is subject to Farner-Bocken operates post-closing in 14 states. adjustments.

MAPCO Mart, Nashville, Tenn.

Ready to put that winning smile to work for you? Well, we’re hiring. Apply now. http://bit. ly/2nTVBlY

n AdvancePierre n The Hershey Co.

is refreshing the Nutrition Facts panel on its products.

Changes include more prominent calorie and serving size information, and updated daily values and serving sizes.

Casey’s General Stores, Ankeny, Iowa

Congrats to Carolyn B.! She is our Free Gas for a Year Winner at our Grand Opening in Ogallala, NE.

include a code providing access to a Spotify playlist created by Paisley, which gives consumers the chance to win a trip to the 51st Annual CMA Awards in Nashville on Nov. 8.

n Hostess Brands LLC teamed

18 Convenience Store News | AUGUST 2017 | WWW.CSNEWS.COM

up with the Country Music Association (CMA), Sony Music Nashville and country music star Brad Paisley for a recent promotion. Select Hostess snack items

Foods opened its newest manufacturing facility in Vineland, N.J., with a ribboncutting ceremony on June 21.

The 75,000-square-foot facility contains two raw and four cooked production lines for Philly steak. n Vollrath acquired Belleco Inc., a

manufacturer of American-made conveyor toasters and ovens.

Before the end of 2017, all Belleco operations will transition to Wisconsin.

POLICY

TRADING

TAXES

INNOVATION

SERVICE

INSIGHT

NEWPRODUCTS Kombucha Wonder Drink

Strongbow Artisanal Blend

Kombucha Wonder Drink, available in both bottles and cans, is looking to provide a modern take on traditional kombucha beverages. Using a proprietary process to pasteurize the kombucha to include all of the benefits while ensuring safety and alcohol compliance, Kombucha Wonder Drink aims to be the best-quality kombucha on the market and a leader in innovation, according to the maker. The probiotic line includes such flavor varieties as Thai Carrot, Strawberry Basil, and Honey Lavender. The brand also offers a prebiotic line in Traditional Kombucha, Green Tea & Lemon, Cherry & Black Currant, Asian Pear & Ginger, Apple & Juniper Mint, and Concord Grape varieties.

Strongbow Hard Apple Ciders unveils its newest variety, Strongbow Artisanal Blend. The new flavor is made with heirloom cider apple varieties that are cold-pressed and blended together for a semi-sweet taste, according to the maker. Strongbow Artisanal Blend contains no artificial flavors or colors. The new variety will become available in September in six-packs of bottles, variety 12-packs, variety 24-packs, and limited-edition mini can four-packs. Strongbow Artisanal Blend has a 6 percent ABV.

Kombucha Wonder Drink Portland, Ore. (503) 224-7331 wonderdrink.com

Heineken USA Inc. White Plains, N.Y. (914) 681-4100 info@heinekenusa.com heinekenusa.com

Optimo Natural Leaf Grape Cigarillos

Jack Link’s is launching a new line extension, Jack Link’s Extra Tender. The new products include Jack Link’s Extra Tender Original Beef Steak Tips, Jack Link’s Extra Tender Teriyaki Beef Steak Strips, Jack Link’s Extra Tender Sweet & Spicy Beef Steak Strips, and Jack Link’s Extra Tender Peppered Beef Steak Strips. All varieties have a suggested retail price of $6.99 for 2.85 ounces.

Optimo Natural Leaf Cigarillos are now available in a grape blend, finished in first-class candela leaf wrappers. Each Optimo Natural Leaf Cigarillo pairs a natural leaf wrapper with a blend of imported tobaccos. The Optimo Natural Leaf Grape Cigarillo is the only cigar with the classic grape filler blend wrapped in green candela leaf, according to the brand. Optimo Natural Leaf Grape Cigarillos are packaged in two-count, resealable foil pouches, and available in “2 for 99¢,” “Save on 2” and “2 for $1.49” price formats.

Jack Link’s Beef Jerky Minong, Wis. (715) 466-2234 jacklinks.com

Swisher International Jacksonville, Fla. (800) 874-9720 swisher.com

Jack Link’s Extra Tender

Chef Pierre Mini Cornbread Loaves Chef Pierre Mini Cornbread Loaves feature a cake-style batter and a moist, tender texture in a unique mini-loaf format. Individually wrapped to maintain freshness, Chef Pierre Mini Cornbread Loaves only need to be thawed to be ready to serve.

They have a 21-day ambient shelf life.

Tyson Convenience Springdale, Ark. (800) 248-9766 tysonconvenience.com

20 Convenience Store News | AUGUST 2017 | WWW.CSNEWS.COM

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SMALLOPERATOR

Finding the Right Franchise Under a big brand, small operators can compete and profit in a consolidated industry

By Tammy Mastroberte

F

or independents and small operators, the convenience and fuel retailing industry is getting more and more competitive as consolidation is leading to the big chains getting even bigger. Opting to join a franchise network is becoming a more attractive proposition to stay in business and remain competitive. The c-store industry offers many different franchise brands to consider.

“What’s true of any franchise business is you are in business for yourself, but not by yourself,” said John Reynolds, president of the International Franchise Association (IFA). “You get brand recognition, training, marketing support, and economy of scale.”

One of the biggest competitive issues small operators face is price. Larger chains have more buying power, which allows for discounts at the store level.

But when part of a franchise, a small operator can have access to better price points, too.

“Being part of a larger franchise gives me as a single-store owner the buying power of the

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entire network,” said Marylou Mendez, chief financial officer of Mendez Automotive Services in Costa Mesa, Calif., operating a Chevron ExtraMile franchise location. “I get pricing and service from vendors that I could never negotiate on my own.”

A franchise operator also gets access to the parent company’s established business and technology systems, marketing and merchandising tools, and more.

This provides them with the knowledge and power of the larger brand, which they would not otherwise have access to on their own.

“We are offered tools and standards developed for us, as well as ongoing guidance,” explained Marc Strauch, owner of Folsom, Calif.-based Strauch Cos., operating 10 BP ARCO/ampm franchise locations.

“They continue to check on standards for us quarterly and do secret shops to make sure customer service is up to par. And they offer new plans moving forward.”

BP has a quarterly site inspection process called CORE, where third-party contractors visit the sites unannounced to conduct inspections and see where each site is performing well and where they need to improve. BP also does quarterly mystery shops, according to Matt Chandik, retail operations support manager at BP Americas, which has more than 950 franchise locations in five states, including California, Nevada, Arizona, Washington and Oregon.

“We know there is a relationship between how our sites score on CORE and their fuel and c-store volumes. So, the more the sites invest in the process and the better they do at improving their CORE scores, that will translate into higher revenues,” Chandik said.

Strauch is also taking advantage of the newest programs BP is rolling out, such as the MOJO program with new graphics and a new coffee and sandwich offer. The last time the company did a major refresh was in 2003, and BP is now offering all franchisees the update, which includes fresh sandwiches,

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w w w. m u l t i c u l t u ra l r e t a i l 3 6 0 . co m / s u m m i t

SMALLOPERATOR Ninety percent of 7-Eleven’s 8,500 U.S. locations are franchised.

fruit, salads and more.

In addition to ongoing support, many franchisors offer extensive upfront training. For example, when joining 7-Eleven Inc.’s franchise network, new owners spend a week in Dallas going through Launch, which introduces them to the 7-Eleven brand. They then spend between six and eight weeks going through the College

The Option of Licensing

of Operations Leadership for in-store training. This is where they learn how to use the business systems and reports offered through it, all of which are designed to help them grow their business in an optimal way, explained Larry Hughes, 7-Eleven’s vice president of franchise systems. 7-Eleven has roughly 8,500 U.S. locations, with 90 percent of them franchise owned.

“Their field consultant will then visit the store once per week to share how to manage day-to-day details and look at the reports from our system to help the franchisee translate them into action in order to grow their business,” Hughes noted.

CITGO Petroleum Corp. offers extensive education to its franchisees, as well. This includes its Retailer Institute, a hands-on seminar that features industry speakers and real-world examples from stores to help CITGO independent dealers find solutions for their locations, according to Alan Flagg, assistant vice president of supply and marketing at CITGO, which has more than 5,300 locations in nine states.

from any supplier so long as it meets the Top Tier specification,” Taylor explained.

While the fueling canopies and dispensers have to be Outside of franchising, another option to bring brand recognition branded Sinclair, licensees have the option of having their own to a convenience store/fuel station location is licensing. Under convenience store brand, or using Sinclair’s Dino Mart brand this model, an operator can maintain more control over their for the c-store. The biggest benefit of Sinclair licensing, besides business because licensing does not have the same operations the recognizable brand, is the ability to buy unbranded fuel or product-assortment requirements as franchising does. at the lowest price possible, unlike major oil brands Some companies offering the licensing option in Sinclair Oil that supply fuel directly. And although the comthe convenience and fuel retailing space are Gulf licensees get to use the brand’s iconic Dino symbol. pany doesn’t get directly involved in operations, Oil, Clark Brands, 76 Brand and Sinclair Oil. Sinclair still monitors the sites to make sure Sinclair offers a license program for they are upholding brand standards. areas outside of the markets where it cur“We do three brand assessment shops rently supplies fuel. This is “primarily on per year because we require the licensee to the West Coast, Arizona, New Mexico, uphold the same brand standards as Texas, Arkansas and anywhere east of the the Sinclair sites we directly supply, includMississippi,” said Kary Taylor, general maning clean bathrooms, courteous service, and ager of product sales and strategic business a well-lit, safe environment,” Taylor said. “Most development for the Salt Lake City-based comof our interaction is with the distributor. If a site pany, which has been in business for more than fails our brand assessment shop for some reason, 100 years. we will work directly with the distributor and the operator to Sinclair has more than 1,300 branded stations and 135 get things fixed.” licensed sites. The company works with more than 400 distribuTo become a Sinclair licensee, there is a flat license fee of tors. Licensees get access to Sinclair branding, national and $500 per month, and usually the distributor is the one who will local marketing support, its credit card network, and Sinclair’s pay the fee. Sinclair has been offering its licensing program iconic Dino symbol. for more than three years now. The company is expecting to “Our customers are the distributors. So, the distributor grow its number of license sites to more than 500 over the would pay to reimage the site for the operator, and they can next few years. brand themselves Sinclair. However, they can source gasoline

24 Convenience Store News | AUGUST 2017 | WWW.CSNEWS.COM

You have the power to create customer loyalty.

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SMALLOPERATOR BP likewise requires franchisees to go through its training program, and they must pass in order to be qualified to run their site, said Chandik. Then, for ongoing support, franchisees are assigned a franchise business consultant to work with them on execution at the site level, sharing best practices, and providing support to implement programs and initiatives designed to grow their business. Strauch was assigned a franchise business consultant when joining and has been working with the same person since 1999.

CITGO tailors its programs to meet the needs of its independent dealers.

WHICH FRANCHISE IS RIGHT FOR ME?

If the franchise concept appeals to an operator, there are a number of reputable and proven brands to choose from. In order to select the right fit, numerous factors must be considered. Operators should “do their homework and take a comprehensive look at what each franchise system might be offering,” said IFA’s Reynolds, beginning with the royalty fee structure and financial performance of the franchisor.

“Does the company really stand by its promises?

Do they provide the support you need to run your business? How do you benefit from the fees you pay each month?” Mendez offered as questions operators should ask during the selection process.

Other things to consider include: the track record of the brand in the market; what the brand means to consumers in the area; consistency from location to location in terms of offering; and whether or not the franchise system is growing with new operators.

“Owners should ask what the brand is doing to improve their offers and drive new business,” said Chandik of BP. “Does it look like the franchise is investing in enhancements and improvements? Also, what is the longevity of franchisees in the business, and do they have multiple sites they are adding?”

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Operators can request franchise disclosure documents from each brand so they can learn more about the company’s management, financials, market territories, agreements, and their obligations as a franchisee, Reynolds pointed out.

“It’s a comprehensive disclosure of the business you are getting into, and this process is regulated by the Federal Trade Commission so you know you will get all the information you are entitled to before you sign any contracts or pay fees,” he shared.

Many franchisors will provide information like this, including their financial performance earnings or estimate of earnings, as well as what they offer for marketing, training and support. Also part of this disclosure document is a list of existing franchisees the operator can contact to find out their satisfaction with the system, according to Reynolds.

“Talking with some other franchisees will give you some insights into how the program works,” Strauch recommended.

When applying to be a franchisee of 7-Eleven, the company does initial testing and screening interviews to help the candidate determine if 7-Eleven is a good fit, and vice versa. This process includes putting them in contact with local franchisees so they can discover what the system has to offer. Out of 14,000 applications in the past year, 7-Eleven franchised with only 350 people. However, Hughes said for those who do go on to franchise, the process from application to opening can be as little as three to six months.

“We have a couple of different models. The traditional, which could be a single store or multisite, is turnkey where all the work is done on changeover day and the business is ready to operate. We also have our Business Conversion Program, where we take existing independent stores and transfer them into 7-Eleven,” he explained.

Franchise companies must disclose if they have been in litigation with franchisees in the past, and what the turnover rate is. These could be red flags when deciding on a company to brand with, and an attorney or advisor could help in this area, said Reynolds.

“In some cases, larger companies will have more litigation than smaller brands, and it’s not always a bad thing. But you want to make sure you understand what is going on in that particular system,” he advised.

PARTNERSHIP BEST PRACTICES

Becoming part of a franchise system means access to best practices, tools and support, and the best way to make the most of these resources is to use them and

ask for help. Whether it’s reporting systems, planograms, marketing and advertising, or new program launches, the more a franchise utilizes the resources, the better his or her results will be.

“If you buy into a franchise system, you really want to take full advantage of it and get the most out of the branding, marketing and advertising, as well as the training and support they offer,” urged Reynolds.

Many brands offer consultants, franchise managers, category managers and more to help franchisees customize their offerings to fit the needs of their individual store and customer base. For instance, CITGO offers flexible, competitive rebate programs, and the chain tailors its programs to “meet individual needs of the single-store or multi-store operator,” said Flagg.

“They are empowered to make their own decisions and we work with them to tailor a custom program.”

At BP, franchise business consultants work with the store operators to collaborate on a site business planning process, goals and action plans. 7-Eleven additionally offers field consultants and marketing

managers whose job it is to work hand-in-hand with the franchisees to grow their business.

“Our business system and information system allow franchisees to really understand what the customer is buying and wants, so they can tailor the assortment and optimize it,” Hughes said. “The way you get the most out of being a franchisee is to really lean into that business system, get your arms around the tools, and understand what your customers want.”

While tools like these are available from all franchise brands, not all owners dig into them. There are also optional programs, like loyalty and foodservice programs, available to enhance store offerings. Since many brands are actively advertising these new programs, a franchisee can benefit from having them in their store.

“The most successful franchisees take advantage of our offers and support, and are hands-on. They consistently evaluate their business and are looking for new opportunities to serve customers,” BP’s Chandik said.

“The franchisees are paying a royalty, so they should be taking full advantage of it.” CSN

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A Convenience Store News Staff Report ake a look at the executive team rosters of the top convenience store chains today and you will see the inroads that women have made in this traditionally male-dominated industry. Over the past four years, the Convenience Store News Top Women in Convenience awards program has recognized 150 of the best and brightest ladies making a positive impact, not only at the companies they work for, but also within the entire convenience retail channel.

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This year, another 50 formidable females join the esteemed Top Women in Convenience (TWIC) ranks, as CSNews once again celebrates the growing presence and achievement of women in the c-store industry — from the c-suite to the store level to the independent entrepreneur.

From more than 150 nominations, CSNews, with the help of the Network of Executive Women (NEW) and the 2017 Top Women in Convenience Advisory Board (which includes all five 2016 Women of the Year honorees), winnowed the list down to the finest female executives, managers, and up-and-comers working for c-store industry retailers, distributors and suppliers.

As in years past, the 2017 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.

This year’s judging panel selected five Women of the Year, 22 Senior-Level Leaders, 15 Rising Stars, and eight Mentors to be inducted into the 2017 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 2017 honorees will be celebrated at an awards reception taking place during the 2017 NACS Show, the largest annual gathering of the convenience store industry. The program will begin at 5:30 p.m. Wednesday, Oct. 18 at the Hyatt McCormick Place Hotel in Chicago, right after the NACS Show floor closes for the day. Marcia Clark, the lead Los Angeles prosecutor in the O.J. Simpson “Trial of the Century,” will keynote this special event.

Read on to get to know this year’s Top Women in Convenience.

The 2017 Convenience Store News Top Women in Convenience program is sponsored by: Presenting Sponsor

Platinum Sponsors

Gold Sponsors

Bag Sponsor

2017 TOP WOMEN IN CONVENIENCE ADVISORY BOARD Laura Asbell Blake Benefiel Kimberli Carroll Pat Cordle Niki DePhillips Nancy Krawczyk Sharon Kuncl Danielle Mattiussi David Riser Nancy Smith

Mondelez International Inc. Altria Group Distribution Co. Ruiz Foods BIC Consumer Products Kum & Go LC Network of Executive Women Eby-Brown Co. LLC Maverik Inc. R.J. Reynolds Tobacco Co. 7-Eleven Inc.

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A

fter graduating from the University of South Carolina with a degree in business, Karla Ahlert found herself working in real estate for RaceTrac Petroleum Inc., the Atlanta-based operator of now approximately 700 locations. But this wasn’t her first exposure to the world of convenience stores and petroleum. She “grew up around a gas station,” with her grandparents working as Exxon jobbers.

“RaceTrac came on my college campus to interview students, and I loved Atlanta because my parents lived there, and I thought the real estate analyst position was interesting,” Ahlert recalled to Convenience Store News.

After three years in real estate, her business and ffinance background created the ideal ffit to move into RaceTrac’s finance department, armed with her recent d

make sure we were not missing something doing it on our own. Now, we are reaping the benefits of both.”

Ahlert is currently working on a number of projects, including: building a more robust “audit” function (internal and field), changing the culture of audit from “police” to “consultants”; executing a new and larger revolver; enhancing the company’s cash forecast capabilities; exploring alternative strategies/arrangements for running the ATM program; rolling out a private label credit card program; and developing a sales plan/strategy for fleets.

MENTORING & ACTIVISM

Ahlert is involved in a number of committees within the RaceTrac organization, including leading the Investment Committee and working with the Talent

WOMAN OF THE YEAR: W

Karla Ahlert

Vice President of Finance & Treasurer, RaceTrac Petroleum Inc. V knowledge about the real estate side of the business.

She is now vice president of finance and treasurer.

“RaceTrac changed its strategy of raising capital and started going to banks in the communities where it was building stores, using the stores as collateral.

The banks’ main questions were around real estate, so the company asked me to start spending time in finance,” Ahlert explained.

She started as a senior analyst in finance and continued to grow in the department through promotions, including director and assistant treasurer titles, before reaching her current title in 2011. Her role consists of setting the overall finance strategy, determining the optimal capital structure and funding mix, maintaining relationships with the company’s bank partners, overseeing investments, and leading the cash and cashless payments teams.

“I also oversee the field audit team and the in-house ATM program. We own our own ATMs and manage the logistics,” said Ahlert, explaining this program is unique because most companies outsource their ATMs, partnering with banks. The in-house program differentiates RaceTrac and brings in millions in profits.

“Most people partner with a bank, but the in-house has been a very successful program for us,” she noted.

“We do have half of our stores with a bank partnership because we really wanted to see what it was like and

and Succession Planning Committee. She has been recognized by RaceTrac CEO Allison Moran and others in the company for her ability to guide junior team members to gain confidence as they are given opportunities for professional development.

“I was chosen for the Talent and Succession Planning Committee because I was recognized as a good recruiter for people who can be leaders and grow in the organization,” Ahlert shared. “Human resources asked me to do it because they wanted me to help others learn.”

Bringing in top talent and ensuring they are trained the “RaceTrac way” and able to be successful leading other areas of the organization is the one thing she is most proud of during her career so far. Many of the individuals she has worked with have gone on to be leaders throughout the company, she explained.

In addition to committees within the RaceTrac organization, Ahlert is a member of NACS, the Association for Convenience & Fuel Retailing, and is very active in NACS’ visits to Capitol Hill. She is also a member of the Association of Finance Professionals and the Merchant Advisory Group, which includes 80-plus retailers from a number of industries, focused on payments. She has gone to Washington, D.C. three times in the past three months to help stop the repeal of debit card reform.

— Tammy Mastroberte

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Convenience Store News’

Women of the Year

2017 ELISA GORIA Global Head of Cold Dispensed Beverages Circle K Stores Inc.

RUTH ANN LILLY Senior Category Manager Tobacco, Beer & Wine Sunoco

KARLA AHLERT VP of Finance & Treasurer RaceTrac Petroleum

LESLEY SAITTA Chief Executive Officer Impact 21

we are inspired by your ability to

your business

ALICIA LOGAN District Sales Manager Chevron ExtraMile

©2017 Altria Group Distribution Company | For Trade Purposes Only

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lisa Goria was pricing products and stocking shelves at general stores owned by her uncles during summer vacations as a young girl, and while attending college, she took the third shift at a local convenience store. Today, she is Global Head of Cold Dispensed Beverages at Circle K Stores Inc., owned by Alimentation Couche-Tard Inc., based in Laval, Canada, and operating more than 10,000 locations globally.

“While pursuing my degree to become a teacher, I caught the retail bug. There was something about the d dynamic of the 24-hour environm ment,” Goria told CSNews. “My ffavorite thing about the industry is

the operations teams.”

Right now, her goal is to set the stage for continued growth, looking beyond the foundation of the cold dispensed offering — including Fuller Pop and Froster — to the next evolution, which will include better-for-you options.

Consumer insights are always at the forefront for Goria, and today’s consumers are very experiential so it’s more than just the product offering, she said.

“It’s also the delivery of the product, from the lighting in the store, to the sounds in the store, to the look and feel of what you are presenting,” she said. “All of those nuances mean so much, so we are focused on figuring out what the next evolution of that is.”

WOMAN OF THE YEAR: W

Elisa Goria

Global Head of Cold Dispensed Beverages, Circle K Stores Inc. G the fast-paced, high-energy environment that feeds my passion. You never know what to expect.”

She started with Circle K as a store manager 22 years ago and advanced over the years through information technology roles in operations; and marketing manager and sales manager roles, which included working in foodservice as the foodservice director, and also the center-of-the-store categories. She then served as marketing director from 2010 to 2015 in the Florida division during Couche-Tard’s The Pantry acquisition, and in 2016, she had the opportunity to join the newly formed global team.

Today, Goria manages a team of three people in Canada, the United States and Europe who are the day-to-day face of cold beverages and call on category managers directly. She also interfaces with the marketing directors and vice presidents across the organization.

“I am responsible for everything in the category, including units per day, sales and margin results, and providing category management and program development for the entire network,” she explained. “We are developing global brand support for the category managers — who are the feet on the street — collecting consumer insights, research and all elements of POP [point of purchase] and media, down to the equipment they need so they have a toolkit to really work with

While she says the best part of her job is the people she works with, especially all the new people she is now meeting in her global role, she is most proud of the opportunity to coach and develop others. She has mentored people who are now vice presidents, and also gets satisfaction from developing and promoting her own team members.

“There is nothing like seeing someone grow and leave your nest to move on to other things in the organization,” she said. “You are only as strong as your team, and when you can help someone grow and take on new roles, it’s absolutely fantastic to see.”

When it comes to women in the convenience store industry, Goria has seen more recognition and awareness of female leadership over the years, as it’s changed from being mostly at the store level to having women in management.

Her advice to women is make sure their voice is heard, especially when they have a solution or a perspective on an issue in the business.

“Don’t be afraid to give your opinion if you are surrounded by men,” she said. “Always look for the opportunity to coach and train others because that makes you even stronger. Be proud of your accomplishments, never stop learning, and find your passion because it makes going to work every day fun.”

— Tammy Mastroberte

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Congratulations 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!

Monica Hayes Senior Director, Convenience Channel

Kimberlee Padilla National Accounts Executive, Foodservice/Dispensed Beverages

Š 2017 The Coca-Cola Company

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W

hile she started her career right out of college in the convenience store industry, taking an administration role in the merchandising department for Crown Petroleum, Ruth Ann Lilly eventually left to spend some time in the grocery industry.

“I started in an administration role and then went to operations and project management, where I developed a drive-thru concept in Georgia,” she told CSNews.

She then made her way to marketing and merchandising at Crown Petroleum, but when the company was sold, she moved into the grocery channel, working for Ukrop’s and then SuperValu. However, she missed tthe c-store industry.

“I realized how much I preferred tthe c-store industry to grocery, and

When she first started managing tobacco, there were some major players. But the category has changed a lot over the years and become much more complex, both with government involvement at the federal and state levels, and with tobacco suppliers creating different programs to “outwit each other for additional share,” she said.

“They make the category flexible enough for me that I can choose the programs that best fit my strategies, but the more programs to choose from, the more complex it is,” Lilly said. “But it’s an important category in the industry, and I like having my hand in it.”

She is active in industry organizations, with roles on the Altria Retailer Council and the MillerCoors Retailer Council. She is also a member of the National Association of Tobacco Outlets (NATO) and NACS.

WOMAN OF THE YEAR: W

Ruth Ann Lilly

Senior Category Manager, Tobacco, Beer & Wine, Sunoco LP S some of the supplier partnerships in grocery were the same as c-store, so I found out Mid-Atlantic Convenience Stores [MACS] in Richmond, Va., was hiring and I contacted the senior leadership and got a job,” she explained.

Sunoco LP (at the time, Sunoco Inc.), based in Dallas and operating 1,300 stores with 250 franchise locations, bought MACS in 2013 and brought Lilly on to manage tobacco. She later took on the beer and wine categories as well.

During Sunoco’s acquisition of the Stripes chain, she played a role in integrating the new stores into the Sunoco framework, managing the tobacco for those stores, and taking the time to get to know the locations to understand the business, find opportunities and address them — all while maintaining Sunoco’s APlus c-stores on the East Coast, including Florida, Georgia, South Carolina, North Carolina, Tennessee, Virginia, New York, Maine, Massachusetts and New Hampshire.

“I only manage the beer category for APlus stores.

Someone else manages beer for the Stripes locations,” which has seen year-over-year growth for more than five years in a row, she noted. “I try to leverage relationships with bigger brewers and make sure I have them support me with data, consumer trends, and marketing programs.”

The networking opportunities are important, allowing her to meet suppliers in her category, and other categories as well.

“The events always offer something new to learn, and I love being able to take away a new trend, idea or understanding for how the category is changing,” Lilly said, pointing out the events she attends also provide a network of retailer friends to call on. In fact, her favorite thing about the industry is the people.

When it comes to her current job, her least favorite part is the tobacco price increases, but she enjoys developing the relationships with suppliers and the company’s operations group, while seeing the programs she envisioned get created and brought through to success.

“Our stores are now being sold to 7-Eleven, so my goal right now is to keep our people motivated and working during this time, moving forward with all our plans,” she said.

Her advice to other women in the industry is simple: find a culture they feel comfortable in and have a voice. She also recommends finding a strong mentor — a man or a woman — and taking advantage of their expertise, advice and skillset.

“Never lose touch with that mentor, even if you go your separate ways, because that person will be important to you in every step of your career,” she said.

— Tammy Mastroberte

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Congratulates

Kellie Janssen Congratulations from Henry’s Foods Inc. to Kellie Janssen for her recognition as

2017 CSNews Top Women in Convenience Her dedication, hard work & passion are truly outstanding & are important assets to our company.

MISSION STATEMENT “DEDICATED TO EXCEEDING THE EXPECTATIONS OF OUR CUSTOMERS, VENDORS, AND TEAM MEMBERS IN ALL THAT WE DO.” VISIT US ON THE WEB AT WWW.HENRYSFOODS.COM OR CALL US AT 800.726.5299 P.O. BOX 1057 | MCKAY AVENUE NORTH | ALEXANDRIA MN 56308

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or the past 26 years, Alicia Logan has worked her way up the ladder at Chevron Corp., starting as a manager for a network of 50 Chevron company-owned and -operated sites in Dallas.

Today, she is district sales manager, responsible for Chevron’s ExtraMile franchise development and also managing a district of more than 900 retail stations, including 284 ExtraMile locations in the Los Angeles Basin, the largest gasoline market in the United States.

“We are currently working on a refresh of our ExtraMile store concept, which has been out in the market now for almost 10 years, and we are very focused on growth,” she shared with CSNews. “We have great demand pull from retailers h looking l to maximize their backcourt offering, and we anticipate having o

results and have a lot of fun. We also have excellent customers dedicated to representing and growing the ExtraMile brand.”

When it comes to the convenience store industry, she enjoys how much fun it offers, and the fact that it is always changing and presenting new opportunities, especially with new offers in-store. “If an offering fails, you swap it out for something else,” she said. “Our ExtraMile franchise is growing quickly, and we continue to experience strong growth in our same-store sales.”

Logan takes great pride in the mentoring she does at Chevron. Developing her team is one of her most important and rewarding accomplishments. She strives to be the best role model she can — a working mom who is respected for voicing her opinion and delivering results.

“I love helping employees expand their capabilities

WOMAN OF THE YEAR: W

Alicia Logan

District Sales Manager, Chevron ExtraMile, Chevron Corp.

D over 900 ExtraMile sites by the end of the year.”

Chevron, based in San Ramon, Calif., is working on growing from 800 sites to 1,500 or more as quickly as possible, Logan noted. Another area of focus is the recent launch of the ExtraMile Extras loyalty program, and continuing to enhance it.

After joining Chevron in the management role, Logan became the operations manager, where she oversaw processing development and training for 800 company-owned and -operated sites in the U.S. She transitioned into a district sales manager role responsible for more than 200 sites in Southern California and Arizona, and then in 2002, moved into the district sales manager role in retail for the company, managing its relationship with retailer-owned and -operated Chevron stations.

She also held the position of property manager, working on the reorganization of the retail team in 2008, but returned to the retail district manager role in 2015, assuming responsibility for the ExtraMile franchisees in Southern California. In 2016, she took on the additional responsibility of the ExtraMile franchise development, focused on the continued evolution of the franchise offering.

“My favorite thing about my job is the people.

We have a great team that supports ExtraMile,” Logan explained. “We work hard. We enjoy strong

and improve their performance. I am always proud to see them advance in their careers,” she said.

THE ROLE OF WOMEN

Over the years, Logan has watched as the role of women continues to expand in the convenience store industry, with many more women in key, decision-making positions today than when she first started in 1991.

The field teams at Chevron are very diverse, not just in terms of gender, but other types of diversity as well.

“I am fortunate to work for a company that stresses the importance of inclusion as one of its core values,” she said. “[When I first started], I was often the only woman in the room for meetings. Now, I attend meetings where there are just as many women as men, if not more.”

Her best advice for fellow women in the industry is to work hard, knowing that your results speak for themselves. She also recommends finding a strong mentor and networking with other managers in the company and industry.

“Ask them for career advice and don’t be afraid to tell people what you want,” she shared. “Have a passion for what you do and if you don’t love your job, find something else. Life is too short to be miserable in your job.”

— Tammy Mastroberte

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congratulates the Top Women in Convenience.

You’re setting the gold standard.

Š2017 CSC Brands LP

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I

n 1998, Lesley Saitta took her 15 years of work in the chemical industry, and several years working as vice president of marketing for Speedway LLC, and started the consulting company Impact 21 with her partner Lisa Stewart. Impact 21 predominately offers consulting for the convenience store industry, but also works with other retail segments, including foodservice and technology.

Saitta has gained the reputation of “loyalty queen” over the years.

“I have a passion for loyalty and have done it a long time,” she told CSNews. “Even back before [Speedway’s] S Speedy Rewards was done, we were t toying with it, but the technology was n available to do what we needed. not

INDUSTRY INVOLVEMENT

In addition to her industry role in consulting, Saitta is very involved in trade organizations, including NACS, the Network of Executive Women, and the National Retail Federation. She co-authored NACS’ Category Management Framework Basic and Advanced, and the online training program for both.

“I was on the NACS Convention Committee for seven years, and was a track chair for several years. I have been on the NACS Supplier Committee for five years. I’ve also been a moderator and speaker at every NACS Show, and we do a lot with Connexus,” she said.

In fact, her favorite thing about the industry is its willingness to share. Many retailers in other channels don’t want to share what is working for them with

WOMAN OF THE YEAR: W

Lesley Saitta

Chief Executive Officer, Impact 21 C For me, it’s beyond loyalty and more about customer engagement. How do we engage the customer?”

Saitta holds a bachelor’s of science degree in marketing/management from Indiana University’s Kelley School of Business and an Executive MBA. After working at Dow Chemical and Ashland Chemical, and working with Speedway where she was responsible for marketing, branding, category management, foodservice, customer engagement, merchandising and distribution, she decided to take some time off. However, she began receiving calls from several CEOs of other companies asking if she could help them the way she did Speedway. That was the beginning of Impact 21.

“Lisa and I manage the company as equal partners, and my role is focused on strategic direction, sales and business development. I also work with third-party companies and sponsor many of our larger clients with big projects,” Saitta explained. “I mostly focus on customer engagement, digital, loyalty, payments and data analysis because that is my passion.”

Currently, she is heavily engaged in acquisition integration because of the heavy activity within the c-store industry in this area, as well as payments-related new product development on the technology side — specifically looking at loyalty data and how to leverage it to create more relevant messaging to customers.

others, but the convenience store industry is not that way at all — which is why those who get into the industry usually stay, Saitta noted.

“People may change companies, but they often stay in the industry,” she said. “It’s shocking to me that I can talk to a retailer and if they want to benchmark how they are doing, I can go to five other companies, noncompeting, and they want to share their information.”

Saitta has an “intense desire for learning,” and her current job allows her to do that. Her favorite thing about her role is offering the people who work for Impact 21 the ability to do what they love, while living where they want to live, with a group of people who enjoy working together. Her greatest accomplishment is building that team of 32 people so far.

Since starting in the industry, she has seen a positive shift with more women in leadership roles, which she finds encouraging. Her advice for other women is to accept as many jobs as they can to get the experience they need to be well-rounded.

“The more well-rounded you are in the business, the more opportunities will open up for you,” she said. “Get a mentor within your company and outside, network like crazy, work harder than everybody else, and don’t be afraid to shift gears.”

— Tammy Mastroberte

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CONGRATULATIONS! Convenience Store News

Top Women in Convenience Honorees Mentor

Rising Star

Rising Star

Treasa Bowers

Marisa Bertha

Emily Stegman

Vice President,

Senior Portfolio Manager,

Merchandiser

Human Resources

Business Development & 7-Ventures

THANK YOU! FOR YOUR CONTINUED DEDICATION TO 7-ELEVEN

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Senior-Level Leaders CARLA BOYINGTON Corporate Director, Category Management, Core-Mark International • Boyington has 29 years of convenience store industry experience, with 19 years at Core-Mark.

• She is responsible for development and merchandising programs for implementation in independent and small chains, as well as category management for center store including trend analysis, set analysis with recommendations, and chainspecific recommendations.

• She is a two-time Manager of the Year winner at Core-Mark.

KRIS CONDON Director of Human Resources, Family Express Corp.

• Condon is responsible for the company’s robust hiring and training process, which includes the implementation of industrial psychology and more than 50 computerbased training modules in a state-of-theart learning center.

• Her leadership led to the opening of a state-of-the-art fitness center with a personal trainer on staff at Family Express’ corporate campus for the health and well-being of employees and their families.

• Condon serves on the board of directors for her local Boys and Girls Club.

SUZANNE CRAMER Director of Recruitment & Human Resources, Rutter’s Farm Stores • Cramer is known for her strategic acumen combined with strong marketing skills, and helped Rutter’s quickly evolve its social, mobile and loyalty initiatives.

• Whenever a new Rutter’s store opens, she travels there and recruits for new employees herself.

• She received the 2015 Making a Difference Award, which recognizes individuals who go above and beyond to help position Rutter’s at the forefront of the industry.

KATHY CUNNINGTON Vice President, Shared Services, North America, Circle K Stores Inc. • Cunnington has been with Circle K since 2003 and has

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more than 20 years of experience in the c-store industry in various financial leadership positions.

• Her current responsibilities include: internal and external operational financial reporting; all aspects of general ledger accounting for store, fuel and transactional accounting; accounts payable; accounts receivable; payroll; supplier rebates; and global insurance and risk programs.

• She is leading the integration of the CST Brands acquisition, and led the integration of 1,500 The Pantry locations into Circle K.

JENNIFER EATON Tobacco Category Manager, GPM Investments LLC • Eaton, who received her MBA from East Carolina University, oversees all tobacco categories for GPM, managing 979 stores covering 16 states.

• She works with the price model and pricebook personnel closely to run programs in the tobacco space; manages the planograms for all tobacco categories; and effectively decides which promotions to run and how to best align GPM’s inventory with little administrative assistance.

• She previously worked as the cigar category buyer for The Pantry.

JOAN ELSING Zone Leader, Kwik Trip Inc. • Elsing oversees all retail operations in north central Wisconsin, which includes 116 stores in seven districts, where she is responsible for the leadership, sales, success and direction of those stores.

• She joined Kwik Trip in 2000 as a certified assistant store leader, and held positions including district leader and foodservice director before becoming zone leader.

• With the current and rapid growth of Kwik Trip, Elsing has successfully opened 48 new stores and 14 rebuilds.

JODI GEHRTS Tobacco Category Manager, Kum & Go LC • Gehrts has been in her current role for nine years and transformed the tobacco category at Kum & Go, yielding doubledigit volume growth for moist snuff tobacco and cigars, as well as grown market share.

• She is responsible for the design of the tobacco set at all new Kum & Go Marketplace stores, and the design of the tobacco offers within the &Rewards app, launched in 2016.

Congratulations

Joan!

Thank you for treating others as you would like to be treated and for making a difference in the lives of our coworkers and guests. – Your Kwik Trip Family

Joan Elsing Named a Top Woman in the Convenience Store Industry in 2017

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• She leads the United Way fundraising effort for Kum & Go and participates in fundraising events for St. Jude Children’s Hospital.

MONICA HAYES Senior Director, Convenience Channel, The Coca-Cola Co. • Hayes’ responsibilities include leading the development of a comprehensive annual business plan for Coca-Cola customer teams; overseeing the creation of retail price package promotion plans for all categories; and setting the vision for implementing the principles of trade spend optimization across the convenience channel.

• She received the Woodruff Cup, an award given internally to recognize company business units that achieve their metrics while driving transformational change in the market, along with a 2016 Best of the Best National Retail Sales Award from Coca-Cola, which honors individuals and teams for delivering against revenue, volume and gross-profit goals.

• Hayes serves as a board member and treasurer of Jack and Jill of America, an organization dedicated to nurturing future African-American leaders.

KIM JAMES Global Director of Brand Management, Alimentation Couche-Tard Inc. • Early in her career, James solidified herself as a brand leader when she pioneered a private label cosmetic brand launch. For more than 25 years since, she has been an influential leader in brand management and retail.

• She has led multiple projects as part of the Circle K global brand launch, including conducting key supplier surveys/ interviews, developing initiatives to support the stores, and aligning efforts between the senior leadership team and each of the Circle K business units.

• James developed a successful and comprehensive training and development curriculum that is taught through classroom training held at the Anheuser-Busch St. Louis Brewery.

She has begun to give classes in other countries to support Couche-Tard employees who cannot travel to St. Louis.

KELLIE JANSSEN President, Henry’s Foods • Jenssen previously worked in the financial industry, where she gained experience in business development, strategic planning and leadership, before joining

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Henry’s Foods five years ago.

• In her current role, she is involved in all aspects of the company and oversees the departments of purchasing, marketing, operations, logistics, sales, warehousing, business development, customer relations, and finance.

• Her goal is for Henry’s to be a company built on commitment and dedication, accomplished by providing a work environment that focuses on individual happiness and building skills for the future.

NATALIE JONES President, Jones Petroleum Co. • Jones oversees all retail store operations at 26 locations that include multiple quick-service franchises, including Dunkin’ Donuts, Dairy Queen, Burger King and Subway.

• She is known for her passion for foodservice and for continually seeking ways to improve every aspect of the business.

• She currently serves on the board of the Georgia Association of Convenience Stores.

KIM LAZERUS Vice President of Human Resources, Maverik Inc. • Lazerus oversees all human resources functions for Maverik. These responsibilities include policy development, pay structures, performance appraisals, training, and personal interaction with all departments for employee progression and review.

• Since joining Maverik four years ago, she’s overseen the building of the company’s training program, implemented strategies and tactics for improved employee retention, and advocated for all employees while executing her duty to Maverik.

• In 2016, Maverik’s operations group presented Lazerus with the Defender of the Legend Award in recognition of outstanding support for the stores group.

LISA LUBEN Foodservice Director, Country Fair, United Refining Corp. of Pennsylvania • Luben started her career with Country Fair at age 17 and was continually promoted until she reached her current role, where she is responsible for the operations, marketing, training and financial well-being of the foodservice department.

• During her time as an operations area manager, Luben’s area was often used as a test bed for new programs and procedures. Another accomplishment in her career was discovering and resolving a pricebook problem, easing shrink

A RECOGNITION WELL DESERVED SENIOR LEVEL LEADER CASSANDRA MATOS, PRODUCT DIRECTOR

RISING STAR HOLLY VEALE, PRODUCT DIRECTOR

Congratulations to our own Cassandra Matos and Holly Veale on being recognized by Top Women in Convenience 2017.

With their determined work ethic, dedication to customers and unwavering commitment to the industry, we are proud of their accomplishments and honored to celebrate this recognition with them.

© 2017 McLane Company, Inc. All rights reserved.

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problems across the company.

• She is a two-time Country Fair Manager of the Year.

CASSANDRA MATOS Director, Confections, McLane Co. Inc. • Matos is accountable for category development and related strategic initiatives on a national scale, overseeing 15 teammates and collectively managing more than $7 billion in annual revenue.

• Under her leadership, the confections team in 2016 successfully managed more than 13,000 items — a 16-percent increase from 2015 — and increased total purchases and subsequent outbound sales by 4 percent.

• She is a member of the National Confectioner Sales Association, on the Editorial Board for the National Confectioners Association (NCA), and on the NCA’s Sweets and Snacks Expo’s Innovative New Items Tasting Panel.

ABBEY MITCHELL Zone Manager, General Mills Convenience • Mitchell has been with General Mills Convenience for 10 years and oversees a team of seven employees.

• She developed and implemented a new trade strategy for General Mills Convenience to help it evaluate and assess spending and identify ways to save time through continuous improvement and automation efforts.

• She is an active member of the General Mills Women’s Mentor Circles and has served as General Mills’ Ambassador for the Women in Foodservice Forum.

JULIE MONTAGUE Vice President, Stores & Marketing, Jr Food Mart • Montague has been with Jr Food Mart for 33 years and in her current role, oversees overall store operations, store resets, planograms, and supplier agreements.

• Among her accomplishments are streamlining the manager training program and implementing an office organization infrastructure.

• She is in her second year as director of the Mississippi Petroleum Marketers and Convenience Store Association, is on the Convenience Store Sales Committee, and serves on the board of the Petal YMCA.

TONIA PETTERSON Vice President, Convenience, Hy-Vee Inc. • Beginning her Hy-Vee career as a part-time checker and

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stocker in 1989, Petterson moved up the ranks, eventually joining the corporate side in 2014. She is a graduate of the Hy-Vee Management Training Program and Hy-Vee University Leadership Course.

• In the year since she took on her current role, she’s achieved her goal of standardizing the convenience store budget process and documenting the length of life of convenience store assets. She also oversaw the remerchandising of all Hy-Vee c-stores to add more healthy, fresh and hot food options in easy-to-access locations.

• Petterson was named a Progressive Grocer Top Women in Grocery in 2013.

BECKY SCHALL Director of Operations Systems, CST Brands Inc. • Schall leads a team of 18 employees, and is responsible for the store accounting system, operational reporting, quality assurance, system interfaces and pricebook.

• With a passion for automation, she received a bachelor degree in Information Systems from American Intercontinental University College, where she is currently working on her masters with a concentration on Project Management.

• In her spare time, she dedicates herself to her family and shares her knowledge and experience with Girl Scouts to encourage them to be future strong leaders.

NANCY TOSTO Payment Systems Manager, BP • After working in BP’s Direct Retail Operations Group, Tosto moved to her current role 10 years ago. Her focus on improving the performance of BP’s legacy hardware and software has resulted in marked improvement in the number of problem calls and hardware failures.

• Her achievements include securing the first PCI-certified report on compliance among all of the major oil brands and introducing a dispenser security program that has been used as a model for other programs.

• She serves on the Conexxus Data Security Standards Committee, and is well-respected internally at BP and externally by its customer operators.

JACKIE TRESSITO Area Vice President, Trade Marketing Services, Reynolds American Inc. • Tressito is one of nine executive members of the Trade Marketing Leadership Team.

A HERITAGE OF BRINGING GOODNESS TO THE WORLD. A long history of iconic brands, innovative products and a dedicated sales team equates to optimum day-to-day sales, but for our customers, it equates to day-to-day goodness in their lives. And that’s what we’ve always been about.

The Hershey Company is proud to support Convenience Store News’ Top Women in Convenience.

thehersheycompany.com

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• She is accountable for the commercial business and people development for the Southeast sales area, overseeing six senior directors and 450 people.

• She participates in various industry associations, such as the Michigan Distributors and Vendor Association, and several petroleum marketers and convenience associations.

NICOLE UPSHAW Executive Director of Human Resources, RaceTrac Petroleum Inc. • Upshaw began her RaceTrac career 12 years ago as a staffing coordinator. She now leads the Field HR Teams and various HR functions at the Store Support Center, including talent acquisition, talent management, employee experience, and The Learning Center.

• She leads a team of more than 30 and has a companywide sphere of influence as she manages teams in Georgia, Louisiana, Florida and Texas. Initiatives she has spearheaded include implementation of parental and bereavement leave policies, and updated benefits for store teams.

• She is actively involved in the Network of Executive Women, and serves on the Georgia Chamber of Commerce’s HR Council and the NACS Convention Committee.

ALLISON WROE Director of Marketing, PriceAdvantage • Wroe joined PriceAdvantage in 2014 and in less than two years, launched a new company brand, website, and strategic marketing programs.

• She spends countless hours putting together educational information through white papers, webinars and case studies to engage the convenience store industry and help promote the latest thinking.

• She is part of the Pikes Peak Ad Federation, a local chapter affiliated with the American Advertising Federation.

Rising Stars MEGAN BACCAM Director, Hot Beverages, U.S., Circle K Stores Inc. • Baccam, who joined Circle K in December 2008, has served in her current role for two years.

• She is responsible for product development, training, and achieving sales and margin targets within the hot bever-

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ages category.

• She played a key role in the rollout of Circle K’s Simply Great Coffee program.

MARISA BERTHA Senior Manager, Portfolio Management, 7-Eleven Inc. • Bertha joined 7-Eleven in 2013 after completing her MBA at Duke University.

• She is responsible for identifying emerging players in consumable goods, new services that expand customer convenience, and venture opportunities to invest in future vendors.

• She is a C200 Scholar, as well as being a member of the Junior League of Dallas and the Network of Executive Women.

AMY DASILVA HR Communications & Systems Specialist, QuickChek Corp.

• DaSilva is a 14-year veteran of QuickChek. She worked in the IT Department for seven years before transitioning over to the Human Resources Department last June.

• She is responsible for implementing and managing store operations solutions, including workforce management, inventory control and training initiatives.

• The workforce management solutions she implemented have improved operational efficiency, inventory accuracy, quality of team member work life, labor operations accuracy, and compliance with food handling and freshness regulations.

ERIKA ESCOBAR Key Account Manager, GSP • Escobar started at GSP in 2012 as an account manager, and now manages a team of seven that stretches from Utah to the East Coast.

• She has earned multiple awards for excellence in customer service and project management.

• Escobar counts Sunoco LP as one of her accounts, one of the industry’s biggest players and GSP’s largest client.

HEATHER JOHNSON Customer Business Manager, Convenience, U.S. Sales, National Accounts, Mondelez International Inc. • Johnson, who has 16 years of experience in the CPG industry, currently leads the team for Mondelez’s largest convenience customer, 7-Eleven.

• Under Johnson, the team earned 7-Eleven’s Center Store

CONGRATULATIONS TO OUR TOP WOMEN IN CONVENIENCE! Woman of the Year Elisa Goria Global Head, Cold Dispensed Beverages

Senior-Level Leaders

Kathy Cunnington

Kim James

Becky Schall

VP Sh VP, Shared dS Services i North orth America

S Di Sr. Director, t Global Gl b l Brand Management agement

Director Retail Director, Accounting Systems Acc

Top Mentor

Rising Star

Cindy Rehwaldt

Megan Baccam

S M Sr. Manager, T Training i i & Development

Di Director, t H Hott Beverages U.S.

Thank you for all you do on our journey to become the world’s preferred destination for convenience and fuel!

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Vendor of the Year award.

• Johnson was responsible for the largest c-store event in Mondelez International history, aligning 7-Eleven and Slurpee to the Sour Patch Kids and making it a success.

SHELBY KEMP Marketing Specialist/Project Manager, Royal Farms Inc. • Kemp, who joined Royal Farms in October of last year, took over as project lead to launch the retailer’s RoFo Rewards app.

• For the launch, Kemp worked with the operational team to create store-level engagement materials to increase awareness and education for store leaders and their staff.

• She is currently working on going back to school to earn her MBA.

ROSIE MANZANAREZ Marketing Category Manager, Kwik Chek Food Stores • Before joining Kwik Chek, Manzanarez graduated from the University of Texas at Austin and began her career in convenience stores at Stripes.

• At Kwik Chek, Manzanarez is responsible for handling all inside store categories for marketing and category management.

• She’s made an impact on the company with fresh ideas for the business, including new programs and promotions.

JENNIFER MEGISON Director of Hot Beverage, S&D Coffee and Tea • Prior to her current role, Megison served as a category manager in several different categories and in various business units/divisions for Circle K. • She is now responsible for the entire category of hot dispensed beverage for Circle K United States, including the 11 business units and all franchisees.

• Megison helped implement the self-serve specialty coffee program, Simply Great Coffee, that lets customers make their own specialty drinks at Circle K.

KRISTI MORRIS Senior Manager, Food & Beverage, RaceTrac Petroleum Inc. • In her 18-year tenure with RaceTrac’s Georgia operations, Morris has served as a mystery shopper, marketing specialist, event planner, and community marketing manager.

48 Convenience Store News | AUGUST 2017 | WWW.CSNEWS.COM

• She is now responsible for driving execution, processes, profitability and safety standards for RaceTrac’s proprietary food and beverage offers.

• Morris has a Preventative Control Qualified Individual (PCQI) certification and an instructor certification in ServSafe.

SHANNON MORTON Senior Store Leader, GetGo, Giant Eagle Inc. • Morton came to GetGo in 2012, starting as an assistant store leader at a Pittsburgh store.

• In her current role, she is responsible for her location’s budget and sales, and oversees a team of 34 GetGo team members.

• Morton was selected to open the first GetGo Café and Market in Verona, Pa.

KELLY NAUDAIN Senior Account Manager, Altria Group Distribution Co. • After graduating from Rutgers University in 2003, Naudain began working at Altria as a sales manager, advancing to sales development associate and then unit manager over the next several years.

• Naudain now leads a support team that services AGDC’s top customers.

• She was recognized for account leadership and people development in 2016 and 2017.

KIMBERLEE PADILLA National Account Executive, Foodservice, Coca-Cola North America • Padilla leads the foodservice/dispensed beverage partnerships between The CocaCola Co. and convenience retail national accounts in the western United States.

• She worked with a national customer to negotiate a seven-year deal that made Coca-Cola the virtually exclusive supplier of frozen carbonated beverages across the retail operator’s store network.

• Padilla was recognized with Coca-Cola North America’s “Act Like an Owner” Leadership Behavior Award in 2015.

MIREYA ORTIZ RIVERA Franchise Business Consultant, California, Chevron Corp.

• Ortiz Rivera has worked for Chevron for 16 years, serving as a retail data quality analyst, COCO business consultant, and merchandising coordinator before taking on her current role.

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• She is responsible for developing business relationships with 27 franchisees in the South Bay area of California.

• She is a member of the Somos Latin American and Hispanic Employee Network and the Chevron Women’s Network.

EMILY STEGMAN Merchandiser, Tobacco, 7-Eleven Inc. • Among Stegman’s primary responsibilities are understanding market conditions, and identifying and implementing bestin-class merchandising.

• She works with 7-Eleven category managers to offer perspective on what categories and markets need focus and additional resources.

• Her colleagues say she is great to work with, and open to new ideas and tests to continually enhance ways of going to market.

HOLLY VEALE Product Director, McLane Grocery, McLane Co. Inc. • Veale has been with McLane for 11 years, during which time she’s worked in asset management and category development in both center of store and foodservice.

• As product director, she was behind the design and implementation of McLane’s foodservice platform, McLane Kitchen, and fresh produce program, Produce Plus.

• She oversees 12 teammates with whom she manages over $1 billion in annual volume.

Mentors TREASA BOWERS Vice President of Human Resources, 7-Eleven Inc. • Bowers leads the human resources generalist activities in the field and at the 7-Eleven Store Support Center, and also spearheads talent acquisition.

• She started her career at 7-Eleven as a store operator in 1983.

• She is involved in the Network of Executive Women and Women’s Foodservice Forum.

MISHA CLARK Convenience Store Manager, Hy-Vee Inc. • Clark has successfully opened two new Hy-Vee convenience stores in Illinois: one in Peoria and her current store

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in Galesburg.

• Since opening the Galesburg location one year ago, she has achieved doubledigit increases in inside sales and gallons each week.

• She manages 12 employees.

CAROLINA FELICI Corporate Area Trainer for Southern California Districts 11A, 11B & 11D, Chevron Corp.

• As a corporate area trainer, Felici schedules, coordinates and delivers the classroom and on-site portions of the Chevron Stations Inc. training.

• She was named the company’s Top Manager of the Year for 2016.

• Felici began her career with Chevron as manager of Store No. 1988 in Valencia, Calif.

MONIQUE HORN Chief Accounting Officer, Family Express Corp.

• Horn has overseen the addition of 60-plus stores during her 30-year tenure at Family Express.

• Under her leadership, Family Express has become one of the most noted technology-driven small chains in the convenience store industry.

• The accounting office has seen virtually zero turnover in the past two decades.

RHONDA JOHNSTON Section Sales Director, Altria Group Distribution Co. • Johnston leads an organization of 130-plus employees in Texas and New Mexico, and is responsible for more than $1 billion in business.

• She has held 15 positions during her 30-year career with Altria.

• She currently serves as chair of the largest Altria Employee Resource Group called “Women in Sales.”

JENIFER MORGAN District Manager, Maverik Inc. • Morgan manages a district of nine Maverik stores in central Utah.

• Many of the Adventure Guides that Morgan hired have been promoted to higher-level positions in her district and beyond.

• She began her career with Maverik as a foodservice

CONGRATULATIONS TO OUR PROGRESSIVE LEADERS IN CONVENIENCE.

Misha Clark C-Store Manager, Galesburg #1

Tonia Petterson Vice President, Convenience Stores

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manager in Cedar City, Utah, in 1997, and received her 20-year service award this year.

SANDY O’DONNELL Professional Development Consultant, RaceTrac Petroleum Inc. • O’Donnell is the most-tenured member of RaceTrac’s Talent, Learning and Development Team, working nine years at the company.

• She’s supported several new leader transitions with a New Leader Assimilation process.

• She is a registered corporate coach who is certified in DISC and Emotional Intelligence.

CYNTHIA REHWALDT Senior Manager, Training Delivery, CST Brands Inc. • Rehwaldt manages a team of 16 training specialists and instructional design specialists.

• Her responsibilities include managing and directing the rollout of training for all new retail processes, systems

and applications.

• She takes pride in having developed a comprehensive management development program that provides a career path for assistant managers and store managers.

JOIN IN THE CELEBRATION! The 2017 Convenience Store News Top Women in Convenience will be honored at a special reception held during the NACS Show* in October. The event will take place Wednesday, Oct. 18 at the Hyatt McCormick Place Hotel in Chicago, right after the NACS Show floor closes for the day.

Business leaders, solution providers and consumer packaged goods firms may participate as sponsors. For sponsorship information, contact Brand Director Ron Lowy at (330) 8409557 or rlowy@ensembleiq.com. *Convenience Store News is not affiliated with, endorsed by or approved by the National Association of Convenience Stores or the NACS Show® trade show.

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Convenience Channel Sales Lagging Behind Last Year’s Growth Soft spots emerge in the 2017 Convenience Store News Midyear Report Card

By Don Longo

A

bout halfway through the year, it appears that convenience store sales are tracking somewhat softer than a year ago, according to the 2017 Convenience Store News Midyear Report Card. However, the industry’s performance is about in line with CSNews’ 2017 forecast, which was published in the January issue.

The forecast predicted a good year for the c-store industry, but warned of a few weak spots that tempered the strong sales growth of recent years. Citing high consumer confidence, healthy consumer spending and low unemployment, CSNews’ consulting economist Maureen Maguire provided an upbeat 2017 forecast with some reservations.

Retailers and suppliers, also polled in CSNews’ exclusive Forecast Study, gave positive forecasts for sales, store count and product category growth, with nearly nine out of 10 retailers anticipating their sales per store would increase this year, by a mean average of 4.6 percent.

CSNews’ 2017 Forecast Snapshot predicted strong dollar sales and unit volume gains for the following categories: other tobacco products, salty snacks and packaged beverages; relatively flat sales and volume

Forecast 2017 Snapshot PER STORE DOLLAR SALES UNIT VOLUME

Other tobacco products Salty snacks Packaged beverages Alternative snacks Candy Beer/malt beverages Edible grocery Cigarettes

6.1% 5.0% 4.5% 4.0% 1.8% 1.4% -0.6% n/a

Source: Convenience Store News Market Research, January 2017

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3.8% 2.8% 4.1% 1.3% -0.3% 0.0% -0.8% -0.6%

Cigarettes Bonnie Herzog, managing director of tobacco, beverage and convenience store research at Wells Fargo Securities LLC, in her report on first-half performance, described cigarette dollar sales as positive, with solid pricing offsetting weak volume. According to the CSNews Midyear Report Card, cigarette dollar sales are running about a half-percent better than the first six months of 2016, but unit volume has fallen back into its historic 3-percent-per-year decline. Subgeneric/private label 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

Total Branded discount Fourth tier Imports Premium Subgeneric/private label

0.5% -2.28% -0.55% 8.36% 0.66% 12.67%

UNIT VOLUME % CHANGE

-2.8% -7.02% -1.56% -2.53% -2.54% 15.55%

Source: Convenience Store News 2017 Midyear Report Card; Nielsen C-store Track, June 2017

Packaged Beverages So far this year, packaged beverages have underperformed their 2017 forecast. Through the first six months, the total category is running flat to slightly down in both dollar sales and unit volume. The biggest culprits appear to be carbonated soft drinks, bottled water, juice/juice drinks, and sports drinks. The star of the category this year so far is enhanced water, which is up more than 15 percent over the year-ago six-month period in dollars, and up more than 13 percent in units. Energy drink dollar sales, meanwhile, were up 2.4 percent on a unit-volume gain of 2.09 percent.

However, Herzog noted that energy drink sales remain under extreme pricing pressure.

DOLLAR SALES % CHANGE

Total Energy drinks Bottled water Carbonated soft drinks Enhanced water Iced tea (ready-to-drink) Juice/juice drinks Other packaged beverages Sports drinks

-0.13% 2.40% -1.89% -2.68% 15.37% 3.46% -4.87% 2.21% -1.64%

UNIT VOLUME % CHANGE

-1.8% 2.09% -4.18% -4.54% 13.33% 3.39% -4.79% -0.79% -3.43%

Source: Convenience Store News 2017 Midyear Report Card; Nielsen C-store Track, June 2017

for candy and beer/malt beverages; and declines for edible grocery. Cigarette unit volume was also projected to decline by a moderate 0.6 percent.

“C-store channel sales remain soft, but outperforms other channels in key categories,” Bonnie Herzog, senior analyst at Wells Fargo Securities LLC, reported in her analysis of first-half 2017 performance.

Commenting on the most recent four-week period, Herzog noted, “U.S. convenience store channel dollar sales were flat … [however] c-store sales outperformed other channels in beer, snacks and cigarettes, but lagged in nonalcoholic beverages.” CSN

Beer/Malt Beverages

Total Budget Flavored malt Imports Malt liquor Microbrew Nonalcoholic Popular Premium Super premium

Edible grocery has lived down to its lackluster forecast. Through the first six months of this year, dollar sales are down 1.29 percent, while unit volume dropped off 2.77 percent. Breakfast cereal, packaged coffee and tea, and water beverage enhancers were all in negative territory, while condiments saw a slight dollar and volume gain in the first six months.

DOLLAR SALES % CHANGE

Total Breakfast cereal Condiments Other edible grocery Packaged coffee/tea Water beverage enhancers

-1.29% -6.63% 0.35% 1.43% -11.91% -19.78%

UNIT VOLUME % CHANGE

-2.77% -6.43% 2.12% -1.38% -15.15% -15.48%

Source: Convenience Store News 2017 Midyear Report Card; Nielsen C-store Track, June 2017

As forecasted by CSNews in January, beer category sales have been flat compared to the same six-month period a year ago. For the first six months of 2017, 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 strongest in super premium and import brands.

DOLLAR SALES % CHANGE

Edible Grocery

UNIT VOLUME % CHANGE

0.7% -4.1% 2.8% 11.5% -5.1% 1.3% -2.9% -0.6% -3.5% 22.9%

0.97% -4.25% 4.78% 10.61% -4.7% 3.56% 10.87% -0.39% -2.17% 23.75%

Candy The candy category so far this year is underperforming CSNews’ flat forecast. Total candy category dollar sales are running almost 1 percent below last year’s levels, while unit volume is down about 3 percent.

Bright spots within the category have been bagged/repackaged/pegged candy (up 6 percent) and novelties/seasonal candy (up nearly 7 percent).

DOLLAR SALES % CHANGE

Total Chocolate bars/packs Non-chocolate bars/packs Rolls/mints/drops Gum Bagged/repacked/pegged Novelties/seasonal

-0.73% -8.05% -7.76% -6.01% -5.68% 6.10% 6.53%

UNIT VOLUME % CHANGE

-3.31% -9.67% -8.14% -7.00% -8.59% 4.34% 1.00%

Source: Convenience Store News 2017 Midyear Report Card; Nielsen C-store Track, June 2017

Source: Convenience Store News 2017 Midyear Report Card; Nielsen C-store Track, June 2017

Salty Snacks

Other Tobacco Products As CSNews forecasted, other tobacco products (OTP) is off to a rousing start in 2017. Through the first six months, the total OTP category is up nearly 9 percent in dollar sales and a little more than 8 percent in unit volume. Cigars and electronic cigarettes experienced solid dollar sales and unit volume growth in the first half, while the smokeless tobacco subcategory is running about 4 percent higher in dollar sales this year on flat unit volume. “Smokeless tobacco dollar sales remain a bright spot as consumers continue to respond positively to brand extensions,” said Herzog, who also attributed the electronic cigarette sales growth to gains

by VUSE, MarkTen XL, and overall pricing increases.

Total Cigars E-cigarettes Other OTP Papers Pipe/cigarette tobacco Pipes Smokeless tobacco

DOLLAR SALES % CHANGE

UNIT VOLUME % CHANGE

8.84% 12.30% 38.28% 521.49% -3.99% -6.91% -99.31% 4.09%

8.09% 14.68% 22.96% 581.82% -5.62% -12.2% -95.01% -0.98%

Source: Convenience Store News 2017 Midyear Report Card; Nielsen C-store Track, June 2017

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Salty snack sales and volume have slightly underperformed pre-year predictions. Dollar sales are up about 3 percent so far this year, about two percentage points below forecast, while unit volume is down 2 percent, about five points below forecast. However, there are several bright spots in the category. Potato chips, a huge subcategory, were up more than 7 percent in dollar sales on a slight volume gain for the first half.

Puffed cheese is up 10 percent in dollar sales over the first half of the year. Unit volume appears to be off throughout the category, however, indicating that most of the dollar gains are through pricing elasticity.

DOLLAR SALES % CHANGE

Total Crackers Mixed Nuts/seeds Other salty snacks Packaged RTE popcorn Potato chips Pretzels Puffed cheese Tortilla corn chips

3.05% 2.24% -0.75% -5.44% 4.10% 3.19% 7.29% -1.83% 10.00% 1.95%

UNIT VOLUME % CHANGE

-2.04% 0.86% -1.72% -6.63% -1.33% -3.72% 1.44% -5.68% -0.37% -4.19%

Source: Convenience Store News 2017 Midyear Report Card; Nielsen C-store Track, June 2017

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FOODSERVICE

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How to Raise the Bar at Your Coffee Bar

If you really want to jam with java, sip on these elevated best practices

By Renée M. Covino

D

oes life begin with coffee? The theme of a coffee rebranding project at Kroger convenience stores says yes. The rebranding incorporates design elements of a simple color palette, white-washed wood, lifestyle imagery, and fun coffee statements.

For Kroger and many convenience stores these days, life begins with good coffee sales. Coffee generates more than 77 percent of the overall hot beverage sales at c-stores, according to NACS, the Association for Convenience & Fuel Retailing.

C-stores that serve the best cup of joe, according to consumer ratings data analyzed by technology company GasBuddy are: Wawa, Kwik Trip, QuikTrip, Hy-Vee and Sheetz. C-store coffee leaders like these have perfected the coffee bar. But how can others get there?

Here are some elevated coffee bar practices for those who truly want to jam with java:

and easy to access is a must for any serious coffee merchant, including those who happen to house a coffee bar in a convenience store.

“It must be out of the way of heavy traffic, so you can pour, stir and add a lid without interruption,” said Raj Shroff, vice president of brand, strategy and design for Dublin, Ohio-based WD Partners, customer experience consultants for global retail and consumer goods brands.

Once that space is achieved, it’s all about the attention to details within the space. Shroff highlighted some simple, but often-overlooked coffee bar elements: good cups (consider branding the cups); lids that don’t spill; having a trash can nearby; direct accoutrements like sweeteners, syrups and creamers; and also indirect accoutrements such as mints.

SHOUT OUT THE SOURCE

BECOME DEDICATED TO THE DETAILS

First off, a dedicated coffee space that is open, inviting

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Forward-thinking convenience stores are highlighting their coffee differentiator, which is often the source. If there is a source to be talked about, they are chatting it up.

7-Eleven Inc., for instance, recently announced its biggest product commitment to sustainability with the switch to a Rainforest Alliance Certified single-origin Colombian coffee. While the chain previously offered two limited-time Rainforest Alliance Certified coffees, this marks 7-Eleven’s first permanent coffee variety to switch to sustainable sourcing. The new brew debuted in June.

Carrying the Rainforest Alliance Certified seal with the little green frog means that the 100 percent Arabica beans for 7-Eleven stores’ new coffee are sourced from coffee growers whose farms are required to meet strict standards designed to protect the environment, conserve wildlife,

FOODSERVICE

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and promote the wellbeing of local communities.

With the addition of the certified single-origin Colombian coffee as a permanent offering and other sustainable limited-time varieties planned for the future, between one-third and one-half of the 7-Eleven coffee lineup will be Rainforest Alliance Certified.

MAKE IT A CO-BRAND LAND

Another way convenience store coffee leaders are highlighting their joe is by co-branding with those that have a consistently good coffee name, such as Dunkin’ Donuts.

“Consistency is a huge part of this,” stated Shroff.

He also suggests that a unique way for a c-store to be coffee-consistent through co-branding is to partner with “a start-up coffee shop and let them own that brand.”

BANK ON EQUIPMENT TECHNOLOGY

Can convenience stores go the way of barista-style coffee?

Consider the lesson learned by Varish Goyal, president of the 23-unit Loop Neighborhood Convenience Stores chain, owned by AU Energy in Fremont, Calif.

“We tried to do barista-style coffee and we really struggled as a company with consistency of product,” he said. “Two lattes were never quite the same.”

Instead, the chain decided to rely on technology instead of actual baristas — touchscreen hot beverage machines that can make espresso, lattes and many other options.

“The consistency is now spot-on,” Goyal relayed.

Loop Neighborhood Convenience Stores also started offering cold-brew coffee and nitro-infused coffee to cultivate a barista-like image. This is “really efficient and elevates the coffee perception” for c-stores, Shroff observed. “Retailers that do this can get a premium for it.”

And that’s what Loop is going for. The chain devotes six feet to its regular coffee set, two feet for the barista machines, and two more feet for condiments, so a 10-foot coffee bar set in total.

“I wish we could devote more space. I’d build refrigerated wells, with baskets of sweeteners and condiments on top. But we do the best we can with the space we have,” said Goyal.

CUSTOMIZE IT

Made-to-order specialty coffee drinks are part of the coffee bar allure at Tulsa, Okla.-based QuikTrip. The millennial generation especially values the “custom-

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Ricker’s recently upgraded its coffee offering by investing in high-end bean-to-cup machines and locally roasted coffee beans.

ization of everything, including coffee,” according to Brianne Henderson, Midwest Dairy Association’s foodservice program manager. In fact, she names “beverage variety” as one of the top five overall trends in convenience stores currently.

The customization of everything and the use of technology to place orders is synonymous with pleasing the millennial generation — a growing demographic at c-stores, agrees Maria Bailey, CEO of BSMMedia.com and author of eight books on marketing to moms and millennials.

“The average millennial mom will only wait 20 seconds for a mobile coupon to upload to their iPhone,

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but will wait, on average, three minutes for a good cup of coffee that’s been customized,” Bailey told Convenience Store News.

GET IN A COMFORT ZONE

Supplier Suggestions Convenience Store News asked three industry coffee suppliers — Randy Anderson, director of marketing at JoeTap; Jennie Jones, vice president of sales and marketing at S&D Coffee and Tea; and Patty Poole, brand manager for Nestlé Professional Beverages’ Coffee-mate — for their best advice on achieving a successful convenience store coffee offer.

What is the No. 1 must-do for a successful convenience store coffee offer?

Anderson: I believe the future of coffee in convenience stores must include the most trending coffee beverages across all markets segments. While it is apparent to me that many brands are making the leap and actually installing equipment to serve these trending beverages, the majority are in a wait-and-see pattern. One of these trending subcategories is nitro cold brew. Nitro makes cold brew taste better, adds theater and helps in stability. Many stores across the United States and Canada are market-testing nitro cold brew and finding that it’s hard to keep up with demand. Even if you don’t make the leap to install it in every store, get a pilot program going as quickly as possible.

Jones: Develop a coffee culture within the organization. The coffee offer is irrelevant if the program isn’t supported corporately. Don’t buy cheap coffee and don’t manage the category through P&L. It is not just about the cost of the coffee or the cost of the condiments, but rather the entire program and a strong core coffee offering.

Poole: Sixty-three percent of consumers agree that part of the fun of drinking coffee away from home is trying new creamer flavors. While traditional favorite flavors like chocolate, vanilla, caramel and mocha remain strong on beverage menus, other flavors such as pumpkin spice and hazelnut are increasing in popularity.

Broadening flavor appeal is a must-do to bring customers in the door and keep the cash register ringing.

Foodservice sales growth is predicted to significantly outpace that of in-store merchandise, but convenience stores that really want a competitive edge over quick-service restaurants (QSRs) and fast-casual restaurants are revamping their interior atmospheres to “make them more inviting and improve the customer experience,” explained Tom Cook, principal of King-Casey, a retail consulting and design firm for the c-store industry.

This means creating an environment “that’s more comfortable than transactional,” according to Don Stuart, a managing partner with Cadent Consulting Group in Wilton, Conn.

Convenience stores that have pushed forward in foodservice “have the basic infrastructure, they have the product, they just don’t have the ambiance,” Stuart reasoned.

Nitro cold brew is cold He envisions “comfortable chairs, art brew coffee that’s and pictures on the walls, music playing, charged with nitrogen to and an overall homey, ‘cocoony’ feel” give it a creamy head. for a dedicated coffee bar section that smells like good coffee.

DARE TO COMPARE

Combining many of these best practices and taking it even one step further, Ricker’s, a chain of 56 convenience stores in central Indiana, dared to compare its java to that of the Holy Grail, Starbucks. In fact, Ricker’s boasts its coffee is better — a marketing technique that has validity.

“We think our cup of coffee competes very well with the quality of Starbucks, and I think ours is actually fresher because [Starbucks] still brews in pots.

We are machine-to-cup,” President and CEO Quinn

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Ricker told CSNews.

Ricker’s recently did away with big brewing pots, opting instead to invest in high-end bean-to-cup machines and utilize fresh coffee beans roasted locally.

Each store sports two to five of these machines, depending on the store size and setup.

The coffee bar is now basically a “store within a store.” Ricker’s went as upscale as possible for the look — committing a large amount of its budget to the coffee machines, as well as to changing the design and branding with upscale glass mosaic tile, dark wood flooring, and a condiment area with granite countertops. In total, the coffee bar area is 12-15 linear feet. Ricker’s charges $1.69 for a 20-ounce cup of its coffee.

For marketing, the company has a television spoof that shows customers waiting in line at what is presumably a Starbucks. The commercial asks the question: Why wait in line when you can get the freshest cup of coffee at Ricker’s? CSN

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Wine Sales Uncorked

C-stores can raise the conversion rate of consumers who typically purchase wine elsewhere

By Renée M. Covino

T

raditionally, the alcoholic beverage synonymous with convenience stores has been beer. But there’s another four-letter libation that awaits in the wings: wine.

For many years, the wine category in the convenience channel has been stagnant. Research shows that 38 percent of c-store customers buy wine somewhere, but only four percent of them buy within the convenience channel, according to E. & J. Gallo Winery, the 2017 Convenience Store News Category Captain in the wine category.

Wine is not found in the typical c-store set, and Don Stuart, managing director of Cadent Consulting Group in Wilton, Conn., believes this only presents an opportunity.

“There is no reason c-stores couldn’t double their wine sales over the next five years with the right selection and merchandising,” Stuart told CSNews.

How can convenience store retailers raise their conversion rate of wine consumers to wine customers? Here are some insights and ideas to help c-store operators avoid whining about (low or no) wine sales: Know Your State Liquor Laws: There are several states that do not allow wine to be sold in c-stores.

As of press time, the list included Alaska, Connecticut, Kansas, Kentucky, Maryland, Montana, Oklahoma, Rhode Island and Utah. Pennsylvania used to be among that group, but

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not any longer, much to the delight of Rutter’s Farm Stores, which jumped on the opportunity. Rutter’s is a family-owned convenience chain operating more than 60 locations throughout central Pennsylvania.

Be Ready to Act on Changed Ordinances: In June 2016, Pennsylvania Gov. Tom Wolf signed into law a measure expanding retailers’ ability to sell beer and wine within the state. Rutter’s was ready. The first Rutter’s stores began selling beer last November and wine this April. In accordance with the new Pennsylvania Law Act 39, customers can purchase up to 3,000 milliliters, or 3 liters, of wine in one purchase.

This equates to four standard bottles (750 milliliters) or two large bottles (1.5 liters). Wine sale hours are Monday through Saturday 7 a.m. to 11 p.m. and Sundays 9 a.m. to 11 p.m.

“The passing of Act 39 was not only a huge deal for us as retailers, but also for our customers. We are now able to provide them with even more convenience,” said Derek Gaskins, Rutter’s chief customer officer. He also noted the chain is devoted to “responsible retailing” and has its own house rule to card everyone.

Make the Experience Count: Selection is critical when shopping for wine, which could be “a limiter” for c-stores, according to Cadent Consulting’s Stuart.

“It is often as much about the experience of shopping for wine as the ultimate purchase.”

That is why Wawa Inc., the 700-plus convenience store chain based in Pennsylvania, took an entirely different approach to its wine category when expanding into the Florida market (50 locations opened in the Sunshine State in 2016). Working with E. & J. Gallo, Wawa created a limited but thoughtful selection with innovative merchandising strategies, including alternative packaging to capture young, on-the-go alcohol beverage customers. Wawa’s Florida stores started out merchandising a single cold shelf of wine, accompanied by a one-case program rack of Gallo’s best-selling SKU, Apothic Red, within high-traffic

areas to generate awareness and trial. Wawa has since expanded to also include a 24-inch dry rack with red wine and 1.5-liter bottles. The chain’s Liberty Creek Tetra (500 milliliter) item is selling out so fast from the cold box that Wawa is looking to add extra stock on the dry shelf.

Wawa’s innovative category management and shopping experience methods are working as wine sales are up 49 percent in comparable stores, outpacing the overall Florida market, which was up only 5 percent in dollar growth for wine, according to IRI. Another wine shopping “experience” idea convenience stores could implement is wine/food pairings — a winery given, but a potential head-turner in a c-store.

While samplings may be out of the question budget-wise and lawwise, there’s no reason why pairings can’t be marketed and advertised in-store, especially utilizing local, regional wines with local farm cheese, chocolate, fruit and other food items.

Price It Right: Wine price points need to be “right” in c-stores; typically $10 or less, according to Stuart. Gallo research found price to be the most important factor to 53 percent of millennial drinkers when selecting a wine. So, when working with Wawa and other c-stores, the focus is on creating a limited assortment at the right price.

Market to Millennials: The millennial demographic is increasingly important to the convenience channel in many areas, and wine is no exception. In January 2016, millennials surpassed baby boomers as the largest generational group over the age of 21. Millennials represent 20 percent of Wawa’s Florida customers, larger than any other age group.

Given the growing spending influence that millennials have, a recent study of category shopping fundamentals by Nielsen delved into how impulsive their shop-

ping behaviors are when it comes to alcoholic beverages. Surprising to some, the study found millennials are not the most impulsive shopper group when it comes to

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COLD VAULT

Beer + Wine + CSDs + Energy + Water + Sports + Juice + Dairy

alcoholic beverage purchases — 18 percent of boomers who bought adult libations in the past 30 days had made an impulse purchase, compared to only 11 percent of millennials.

At the same time, 16 percent of millennials said that it wasn’t until they were in the store that they “recalled” the need to make a purchase. This is why targeting them specifically, with appropriate packaging and lingo, is recommended to increase wine sales.

Furthermore, since millennials were shown in the Nielsen study to have fewer planned brands in mind when heading to the store, this leaves “ample opportunity” for retailers and wine suppliers to influence their in-store purchases, the researcher stated.

Consider an Outrageous Marketing Angle: Earlier this year, Taco Bell announced a Love and Tacos Contest, whereby couples across America entered to win an all-expense paid trip to wed at its flagship Las Vegas Cantina. From more than 150 entries and nearly 17,000 votes, one happy couple wed at Taco Bell in June. While this was a great marketing campaign, the

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55%

restaurant chain has realThe percentage of wine ized a way to continue drinkers who are unaware the excitement: startconvenience stores even ing Aug. 7, Taco Bell sell wine. is offering the Taco Source: E. & J. Gallo Winery Bell Wedding Package on its Las Vegas Cantina menu. Ringing in at $600, the package includes a ceremony performed by an ordained officiant, a private reception area for up to 15 guests, custom merchandise for the bride and groom, Taco Bell-branded champagne flutes, a Taco 12-pack, a Cinnabon Delights cake, and a sauce packet bouquet.

If Taco Bell can become a wedding venue, there’s no reason why c-stores can’t become a wine destination, especially with some outrageous marketing campaign that gets people talking. Word-of-mouth would change the current Gallo research statistic that shows 55 percent of wine drinkers are unaware convenience stores even sell wine. CSN

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IN-STORE MERCHANDISING Grocery + General Merchandise + HBC + Periodicals

Getting Specific With General Merchandise

Capitalize on this high-growth category through attention to detail

By Renée M. Covino

F

unny thing about general merchandise: the key to success is anything but general. Rather, it lies in the specifics. While convenience stores are known to fulfill immediate needs with food and beverage items, immediate and impulse needs also can be satisfied with general merchandise items, depending on the specific item and where it is merchandised.

After all, there are many subcategories within the broad category of general merchandise. Most c-stores try out a handful of different items, aware that seasonal rotation and item innovation keep overall category sales moving. Utilizing a set number of subsets, the goal is not to be everything to everyone in general merchandise, but rather to be innovative and in-stock in your chosen segments.

The ability to get in and out quickly is the most cited reason why consumers purchase a general merchandise item at a convenience store rather than another retailer, according to industry research.

Convenience distributor McLane Co. Inc. identifies batteries and lighters as the mainstays of the c-store general merchandise category, but it also makes mention of gloves, school and office supplies, and novelty items.

Generally speaking, and just as

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with food and beverage categories, general merchandise in convenience stores should be highly relevant to consumers’ on-the-go lifestyles.

TOY WITH THEM

Sometimes, popular toy items will catch on first with adults and then find their way into children’s hands.

Such is the case of the Fidget Spinner, touted as a popular new toy designed to calm nerves, easy anxiety, and provide hours of entertainment. Designed for pointof-purchase impulse buys, fidget spinners were being marketed as an aid for people who are stressed or have conditions like ADHD, autism or anxiety. Now, they have caught on with kids, too.

Irving, Texas-based convenience store giant 7-Eleven Inc. is one retailer in the channel that’s on trend. “The fidget spinner is a very hot item right now and we know customers want it,” said Tony Stapleton, senior product director for the chain. “7-Eleven continues to innovate to give its customers what they want, when and where they want it.”

7-Eleven sources “quality Fidget Spinners from several suppliers to provide a variety of choices for its customers,” according to Stapleton. At any given 7-Eleven store, an array of spinners are being offered to fit a customer’s individual personality — including multiple colors, as well as glow in the dark, tie-dye and metallic options. Priced at $7.99 and above, Fidget Spinners are available in 7-Eleven stores nationwide.

GIFTING GREATNESS

Love’s Travel Stops & Country Stores Inc. takes aim at being a one-stop destination for holiday gifts each year. “We take pride in offering quality gift items for our customers because we want to meet as many of their needs as possible,” said Mark Romig, director of merchandising for Love’s, explaining that many professional drivers who are on the road at holiday time don’t have the chance to shop anywhere else.

Last year, Oklahoma City-based Love’s — with

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more than 400 locations in 40 states — offered everything from old-school turntables to futuristic virtualreality goggles. And the chain has since decided to continue its gift offering all year long.

MOBILE TO GO

According to Temple, Texas-based McLane, phone accessories is the chief subcategory contributing to the big growth in general merchandise being seen at c-stores lately.

In addition to its vast assortment of gifts, Love’s is big in this area, too. “More than 170 locations have Mobile To-Go Zones, which offer a wider variety of mobile accessories and electronics,” Romig noted.

“From a family who forgot their mobile phone charger, to a professional driver who needs to use a headset while driving, it’s another way we can serve our customers who are always on the go.”

GO AHEAD, BE A TOOL

Recent Nielsen data shows that tools and housewares delivered mid to high double-digit sales growth for

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convenience stores last year. For those operators that want to carry tools and housewares, the biggest challenge will be to let customers know they have them.

Industry experts suggest hanging one or two products near the register, placing the items on endcaps, or even putting them in “strange” spots like near the cooler doors.

LOCAL LEVERAGE

For independent c-stores, general merchandise opportunities are perhaps at their highest because of each store’s strong ties to its local community.

Take Boxcar Market Mercantile and Grocer in downtown Florence, S.C., for instance. This retailer wants to redefine the meaning of “convenience store” by also being a vendor for local artisans. In this vein, the store offers a variety of local-made goods: jewelry, soaps, jams, soups, sauces, handmade birdhouses, and more. CSN

Mining Millennial Prospects The millennial generation is already an increasing core target of convenience stores, and the channel is learning to reach out to this demographic with more than just improved foodservice offerings. General merchandise is becoming a bigger attraction thanks to this group.

However, there is a diverse range of preferences across the millennial generation based on shopper ethnicity. New Yorkbased market researcher Nielsen recently unveiled a multicultural millennial study that identifies consumer packaged goods (CPG) spending trends among various ethnic millennial groups.

Among the findings: • Asian-American millennials overindex in purchasing sewing supplies and skin care products. They are also increasingly spending their dollars on greeting cards and novelty party items.

• Hispanic millennials purchase more photographic supplies than the average consumer. They are also spending more of their retail dollars on wrapping materials and diet aids.

• African-American millennials overindex on purchases of ethnic hair and beauty products, hosiery socks, and feminine

hygiene products. These consumers are also spending more money on greeting cards and novelty party items.

A new startup convenience store chain New Stand is one of a growing bunch of businesses specifically targeting millennials in concept and product mix. New Stand is preparing for a New York City expansion by reimagining the corner store for a new generation of commuters. According to media reports, it plans to open 20 locations this year aboard citywide ferries that will connect Brooklyn, Queens and the Bronx.

New Stand plans to entice millennials with a product mix that includes not only better-for-you snacks, but also general merchandise items such as natural beauty products, headphones, and mini camera refills.

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WWW.CSNEWS.COM | AUGUST 2017 | Convenience Store News 71

Driving Demand in the e-Vapor Category Consumers are embracing vaping.

Can you make your c-store their preferred destination?

IF YOU’RE NOT CONVINCED that vaping products hold

“North America, with U.S. leading the way, will dominate the market throughout the forecast period,” the report predicts.

profit potential for your convenience store, one look at dollar growth in the e-Vapor category should quell any doubt.

Yet as promising as overall sales have been, many c-stores are struggling to succeed with e-Vapor.

The category grew from $2.5 billion in 2014 to $4.4 billion in 2017, with dollar growth driven by vapor rather than e-cigarette products. In 2014, vapor sales totaled $1.1 billion vs. $1.4 billion for e-cigarettes; in 2017, vapor sales reached $3 billion compared to $1.4 billion for e-cigs, data from Wells Fargo show. Those numbers are only expected to rise.

“There has been a lack of strong category management in the space,” says Jacopo D’Alessandris, CEO and President of E-Alternative Solutions (EAS), distributor of the patent-pending Cue™ Vapor System, which debuted in July 2016. “Many retailers are dealing with too much inventory and an excess number of SKUS.”

Vapor and E-Cig sales, 2014-2017 $4.1B $3.5B TOTAL

$2.5B TOTAL

$2B

E-CIGS

$1.6B

$1.4B E-CIGS

E-CIGS

An Overview of Vaping

$3B $2.5B

$1.5B

Understanding the nuances of the e-Vapor category, then taking steps to properly manage it, can help c-stores become the preferred stop for vaping products and profit in the process.

TOTAL

TOTAL

E-CIGS

$1.4B

$4.4B

Vaping, in simple terms, is the act of inhaling water vapor through a battery-operated vaporizer or e-cigarette designed with a cartridge that holds liquid made of flavorings, other chemicals and often nicotine. A heating device turns the liquid into vapor, which vapers (consumers who vape) inhale.

VAPOR

VAPOR

VAPOR

$1.1B VAPOR

Source: Wells Fargo

There are myriad vaping products on the market — hence the inventory challenges c-stores face. Yet many of those products aren’t meeting consumers’ expectations.

The “Global E-cigarette & Vaporizer, Device and Aftermarket, Analysis and Forecast, 2016-2025” report from BIS Research shows the global e-cigarette market is poised to grow over $47 billion by 2025 at a double digit CAGR from 2015 to 2025. The report is a snapshot of revenue generated from sales of products including e-cigarettes, e-liquids, atomizers, and batteries.

“There have been complaints about things including the poor performance of e-cigarettes, complicated and messy vaping devices, and the fact that there are just too many choices out there,” D’Alessandris explains. “Customers aren’t getting the satisfaction they’re looking for, and they’re unsure what the best option is for them.”

2014

2015

2016

2017

CUE VAPOR SYSTEM

1

DRIVING E-VAPOR DEMAND

WHAT IS SUB-OHM?

The term ‘sub-ohm’ refers to a situation in which the resistance of the coil is less than 1 ohm. It reflects more efficient power transfer from the battery to the atomizer, which produces as much vapor as possible by reproducing as closely as possible the effect of dripping without the inconvenience.

Enter Cue™, a vapor system that delivers full-flavor, all-day sub-ohm performance with the press of a button. There are no coils to change or tanks to fill. The system works with a click-in, pre-filled, spill-proof disposable cartridge available in three nicotine levels (0 milligrams, 3 milligrams and 6 milligrams) and five flavor categories (tobacco, fruit, dessert, drinks and mint).

Projected Nicotine Category Dollar Trends TOTAL US – BILLIONS OF DOLLARS 60

40

20

“Cue™ cartridges have two air flow holes to customize vapor flow — that means the system offers the simplicity of an e-cig with the benefits of sub-ohm vaping,” D’Alessandris explains.

“It produces more vapor than an e-cigarette, and gives adult cigarette smokers the kind of robust and satisfying experience e-cigarettes don’t deliver. And it is super simple to use: just choose, click and vape.”

2016

2018 Cigarettes

2019

2020

Heat not Burn

2021

2022

E-Cigarettes

2023

2024

2025

VTM

Source: Wells Fargo Securities, LLC Estimates and Internal EAS Forecasts – February 25, 2017

Merchandising and Marketing Support A variety of category management support is available for c-stores that want to tap into the vaping trend but need assistance with implementation.

C-stores: An Ideal Outlet

For in-store visibility, EAS offers retailers POS materials and trade education pieces to educate consumers and staff about vaping, along with coupons designed to entice customers.

Demographic information about Cue™ consumers reveals that the average Cue™ customer is above 50 years old, and equally split between men and women — traits that align more with cigarette smokers than with traditional vapers, EAS data show.

“We suggest placing the POS materials near light areas, as the white visual cue — no pun intended — really pops to catch the eye. And we suggest placing the coupons near the products to drive purchase,” Brown says.

That is important to note, especially since the sales volume in the combustible cigarette category is declining.

A national advertising campaign for Cue™ — with placements on 59 channels including ABC, CBS, Fox, ESPN and Comedy Central — kicked off in February 2017. In total, the company has earmarked more than $10 million for advertising and marketing support to drive brand awareness and sales this year.

“Cue™ provides a recurring revenue stream for c-stores, because the cartridges drive adult smokers back to buy more,” says Jeff Brown, VP Sales at EAS. “The majority of adults buying Cue™ have tried and were not satisfied with a cig-a-like experience.”

In fact, repeat sales of Cue™ have exceeded the industry average to date.

With the ever-shifting regulatory landscape, compliance issues are (or should be) top of mind for c-store retailers who inventory vaping products.

“Since we launched Cue™, we’ve had 3 times more repeat customers than the average repeat [rate] for e-cigs in the U.S.,” Brown reports. “The first two orders are an average of six cartridges every two weeks, as customers try different flavors and nicotine levels to decide what’s best for them. Once they figure out what they want, they start ordering more than eight cartridges on average every 10 days, almost one a day.”

EAS will ensure that all packaging and advertising related to Cue™ complies with the new FDA Deeming Regulations in advance of the prescribed deadlines. The company is also currently helping retailers stay up to date on compliance related changes, and if needed, provides assistance with compliance activities currently in effect.

“By carrying Cue™, c-stores can become a regular, convenient destination for vapers who currently go to vape shops for their refills,” Brown adds.

“EAS has an experienced, full-time in-house staff dedicated to meeting all regulations,” stresses Chris Howard, VP, General Counsel and CCO at EAS. “Our top-notch team is positioned to take the necessary steps to file Premarket Tobacco Applications (PMTAs), advocate for consumer and retailer rights on both the state and federal levels, and stay on top of new legislation.”

Profit margin is another plus.

“The profit margin for vapor products is better than the CPG average and much higher than that for cigarettes,” Brown reports. “Also, the recurring revenue model drives market basket and recurring trips back to the store. This is all incremental for the c-stores.”

CUE VAPOR SYSTEM

2017

For more information about the Cue™ Vapor System and the opportunities it provides retailers, visit cuevapor.com.

2

DRIVING E-VAPOR DEMAND

MOTOR FUELS

Gasoline + Diesel + Ethanol + LNG/CNG + Electric

The Pump-to-Store Conundrum

Exclusive research shows frequent shoppers key to building conversion rates

By Don Longo

S

ince 2011, convenience stores have greatly improved their ability to lure consumers from the fuel dispensers at the forecourt into the store to buy food, drinks and other merchandise.

This year, nearly a third of consumers who purchased gas at a convenience store said they go inside the store to make additional purchases. That’s more than twice the rate of only six years ago, when just 15 percent of shoppers said they go from the tanks to the store, according to the annual Convenience Store News Realities of the Aisle Consumer Study.

Since 2011, that conversion rate improved steadily until plateauing at 33.1 percent in 2015. Last year, the rate of converting fuel consumers to in-store shoppers was 33 percent. In this year’s Realities of the Aisle study, the conversion rate dipped slightly to 31.4 percent.

Similarly, the percentage of consumers who buy gas but rarely or never go inside the store fell from 47.6 percent in 2011 to 15.6 percent in 2015, before inching up again to 18.2 percent in 2017.

This year’s research findings suggest that c-store retailers can get past this 31- to 33-percent conversion plateau by focusing on increasing their number of frequent or heavy shoppers. More than half of consumers who stopped at a c-store on a daily basis (55.1 percent) this year went inside the store to make a purchase every — or almost every — time they stopped for gas. Even weekly shoppers went into the store more often than average (35.1 percent).

About 42 percent of gas shoppers who did go in the store said they did so due to some kind of promotional element that drew them inside. The largest percentage (17 percent) were drawn in by a frequent buyer or loyalty program. Another 12.5 percent were lured by banners or window signs on the store, and

74 Convenience Store News | AUGUST 2017 | WWW.CSNEWS.COM

How often do you buy any in-store merchandise when you stop for gas at a convenience store?

Every time Almost every time

Some of the time Rarely

TOTAL

Never

DAILY SHOPPERS

0.6%

0.9% 17.3%

4.4%

10.2% 12.5%

27.0%

34.1%

42.6%

50.3% Base: 1,299 respondents who purchased gasoline at a c-store in the past month Source: Convenience Store News Realities of the Aisle Consumer Study, 2017

The Seven-Year Stretch

How often do you buy any in-store merchandise when you stop for gas at a c-store?

50%

Rarely/Never Every/Almost Every Time

40% 30% 20% 10%

2011

2012

2013

2014

2015

2016

Base: Respondents who purchased gasoline at a c-store in the past month Source: Convenience Store News Realities of the Aisle Consumer Study, 2011-2017

2017

11.9 percent were attracted by promotional signage.

Other promotional elements mentioned by consumers included gasoline nozzle display ads (7.5 percent), pumptoppers (5.8 percent), and car wash promotions (5.7 percent).

Surprisingly, despite the trend today for increased use of mobile technology, only 5.5 percent of consumers said getting a promotion on a mobile app lured them into the store. However, that figure rises to 8.6 percent among 18- to 24-yearolds, and up to 10 percent among 35- to 44-year-olds. Less than 2 percent of consumers aged 55 or older cited an app promotion. CSN

Did any promotional elements influence your decision to buy in-store products on a recent trip to purchase gas at a c-store?

Influenced by promotional elements (net) Frequent buyer/loyalty programs Banners/window signs Promotional signage Gasoline nozzle display ads Coupons dispensed from pump Pumptoppers (print advertisements on pump) Car wash promotions Mobile app promotions/deals Video displays on pump Audio music feed with messages Other Not influenced by promotional elements

42.3% 17.0% 12.5% 11.9% 7.5% 6.6% 5.8% 5.7% 5.5% 4.3% 2.3% 1.4% 57.7%

Base: 1,299 respondents who purchased gasoline at a c-store in the past month Source: Convenience Store News Realities of the Aisle Consumer Study, 2017

WWW.CSNEWS.COM | AUGUST 2017 | Convenience Store News 75

A

to food purchasing behaviors: s millennials make their move into the convenience • Health-Focused Buyers — concerned about the channel, are convenience store operators ready for the processes used to produce their foods and the effects millennial movement? of consuming particular foods.

Recent industry figures reported by Convenience • Socially Concerned Shoppers — often express concern Store News show that millennials currently represent about the environment and/or animal rights, and about a third of all convenience store traffic — with emphasize the importance of sustainability. many in this generation reportedly possessing a strong • Thrifty Buyers — concerned with saving money; interest in the fresh, healthy and transparent. however, “some people in this group are willing to “Depending on whose definition you use to define pay more for foods they consider to be healthy, often millennials, they will represent more than half of the organic, as long as the working consumer base within price does not greatly the next few years,” said Dr. exceed the price of conBilly McKim, a professor ventionally produced at Texas A&M University foods,” McKim said. in College Station, Texas.

• Particular “Millennials are on the move Shoppers — primarily and many of them are conconcerned with cerned with being efficient appearance, brand, with their time. Obviously, selection, taste and c-stores meet the convenience part, freshness. “Many people in but the question becomes: How do this group value small, they fill other needs?”

Convenience stores are viewed Representing a third of convenience intimate shopping environments,” as well as

by McKim as being in a better store traffic, this generation is a force interacting with people position than supermarkets to who provide in-store meet the specific needs of millenBy Renée M. Covino demonstrations and information, nials while on the go. The idea of going according to McKim. to the grocery store once a week is not From another research vantage as common with this generation as Gen point, Brianne Henderson, busiX and baby boomers. ness development manager “They want more frequent at the Midwest Dairy interaction with retailers and Association — who also they tend to be influenced happens to be a millenby more than price; they nial mom — recently tend to have a examined the dairy more defined set of category through the needs,” the profeseyes of millennials sor explained. to better understand In a recent study how dairy products conducted by McKim meet the needs of and his colleagues the growing demoJackie Hill and Dr. graphic. According Holli Leggette, four to Henderson’s notable groups of milresearch, millennilennials were disals are currently covered in relation

Are You Appealing to Fresh & Healthy Millennials?

76 Convenience Store News | AUGUST 2017 | WWW.CSNEWS.COM

the largest demographic group at 30 percent, holding 17 percent of the purchasing power and this figure is expected to grow to 30 percent by 2020.

Henderson identified the top five millennial trends to be: • Transparency in food; • Convenience/snacking; • Connected to technology; • Fresh and local; and • Health and wellness.

Similarly, on the supplier side, Del Monte identified that millennials not only have $200 billion in annual buying power, but they also now have the highest consumption of fruits and vegetables.

“Growth of fresh produce consumption among millennials has been phenomenal over the past few years. There is a large increase in healthy snack item consumption, and fresh fruits and vegetables are ideally positioned to address their needs,” said Dionysios Christou, vice president of marketing for Del Monte Fresh Produce N.A. Inc. Christou identifies single-finger bananas and freshcut fruit and vegetable lines as attracting a lot of millennial attention, especially with on-the-go packaging features such as non-spill containers, resealable containers, and packaging that fits in cupholders.

Craft brands that are transparent are also part of the millennial mix, and this includes traditionally indulgent items like ice cream. “Millennial consumers are driven by the story behind the brands they support,” stated George Denman, vice president of sales for Graeter’s, a producer of craft ice cream based in Cincinnati. “They have a deep desire to feel as though they are part of a company and the people behind it. And despite a strong interest in fresh and health, they are also interested in finding an ideal balance between health and indulgence.”

LEADING-EDGE LEVERAGE

Unless the convenience channel is paying attention to these cues and making new moves to specifically attract this generation, “convenience stores run the risk of losing the fresh millennial target to alternate channels,” cautioned Don Stuart, managing partner of Cadent Consulting Group. He points out that leadingedge convenience stores, such as Wawa and Sheetz, have built up a significant healthy presence in foodservice, which they should leverage.

Henderson agrees that Pennsylvania-based Wawa is a millennial magnet with its healthy grab-and-go salads.

She similarly praises the “healthy food islands” of La Crosse, Wis.-based Kwik Trip; the variety of beverages, including made-to-order specialty coffee drinks, at QuikTrip in Tulsa, Okla.; and the fresh foodservice meal solutions of Casey’s General Stores in Ankeny, Iowa.

Specifically regarding the dairy side of things, Henderson suggests c-stores attract the millennial generation by providing signage near items that are “local” in the store. “For instance, milk is always local — produced on average 100 miles away, it travels from farm to store in about 48 hours, and is produced 365 days per year,” she told CSNews. “Cheese from a local cheesemaker is another great way to attract this customer who places high value on fresh and local.”

Appealing to millennial affinity for transparency is another strategy c-stores might tackle. Henderson suggests the possibility of using a QR code on the milk case to allow the shopper to: view a family farm and their sustainability and animal care practices; listen to an interview with a dairy farmer; and/or learn information about milk’s journey from the farm to the store.

“We know that millennials are utilizing convenience stores as a quick trip for purchasing staples, like bread and milk. An increase in foodservice offerings could elevate the relevancy to this busy mom or young adult as a one-stop shop for staples, plus meal solutions for the family,” Henderson said. “This means providing fresh food and beverage items for easy consumption such as fresh salads, made-to-order pizzas, grilled cheese sandwiches, protein smoothies, and more.”

Because millennials are also known for blurring dayparts and frequent healthy snacking, she also offers up the opportunity for c-stores to merchandise a “Protein Station,” which could include yogurt and granola parfaits, stick cheeses, chocolate milk, and hardboiled eggs.

TAILORED COMMUNICATIONS & TECHNOLOGY

When it comes to marketing and merchandising to the millennial generation, the name of the game is “tailored communications,” according to McKim. “The one-size-fits-all approach does not work with

WWW.CSNEWS.COM | AUGUST 2017 | Convenience Store News 77

millennials because they are more information-diverse than any generation preceding them,” the professor pointed out.

C-stores can attract millennials by being “authentic and real” in both their marketing efforts and the products they merchandise, according to Maria Bailey, CEO of BSMMedia.com and the author of eight books on marketing to moms and millennials.

“When it comes to fresh and healthy millennials, they desire unique flavors served in the freshest manner possible and sourced from socially responsible countries/companies,” she said.

Brands that have a philanthropic and good social commitment also appeal to millennials, both the younger and older of the cohort, according to Bailey.

She cites Chobani as a brand that not only has a commitment to sourcing, but also a commitment to its employees (they give free college tuition to the children of their employees). “Chobani has strong loyalties with millennials,” she said.

Regarding retailers in the convenience channel, Bailey agrees with Stuart and Henderson that Wawa is a strong resonator with millennials — but she sees it going beyond the offering.

“I believe their success is the transparency they have in preparing their foods right there in front of the customer,” Bailey told CSNews. “Millennials can customize their foods and order on iPads, which play to two things they expect: customization of everything, and the use of technology to place orders.”

Technology definitely comes into play when millennials are making a purchase, according to recent Cadent Consulting shopper research that compared millennials and boomers. The September 2016 study found that millennials are two times more likely than boomers to look for sales online and/or to use apps;

78 Convenience Store News | AUGUST 2017 | WWW.CSNEWS.COM

they are three times more likely to consult product reviews or go to a brand’s website; and they are four times more likely to engage in other social media when involved in a purchase, including Facebook, Snapchat and Twitter.

Along these lines, Del Monte strongly advises its convenience store partners to promote fresh produce consumption and usage on their social media pages by sharing recipes, tips and videos. “Another popular tactic is to develop a customized mobile app and customer loyalty program,” added Christou.

To market to millennials through social media technology, Bailey makes a few distinctions. She shared that millennial moms will follow a brand/company on Facebook in order to get coupons and exclusive deals.

“So for c-stores, Facebook is a good place to list specials and exclusive discounts,” she advised.

For younger millennials, Bailey suggests Snapchat filters. “They communicate with each other via Snapchat, and having a way to be a part of that conversation when they are in the store is a valuable way to create a buzz about your store and the products in it.”

Both older and younger millennials like to discover new flavors, whether the products are fresh and healthy or not, Bailey observed. “This makes it important for c-stores to merchandise new flavors like coconut waters, chips made with coconut oils, seasonal Oreo flavors, and craft beers.”

And Bailey especially wants millennial-minded c-stores to be aware that the generation isn’t fond of carrying cash. “They use cards and online payment apps like Veemo,” she said. “So, having a cash-only c-store is a bad way to attract a millennial.”

Ground zero in attracting millennials is through digital means (including social, mobile, virtual, web, etc.) because that is “where they often engage first,” offered McKim. “However, I believe millennials are also becoming more aware of targeted advertisements and, therefore, immune to passive appeal. Also, I believe interactive multimedia is becoming an expectation of many millennials. They want to engage with people who are, and brands that are, genuine,” McKim continued.

Many millennials access social media at least once per day, and access digital forms of media — web audio, video, multimedia and on-demand services — at least once per week, he cited. Few millennials consume print media more than occasionally.

McKim’s research further showed that regardless of form (social, print, web or digital), millennials are not decidedly convinced of the credibility of information they find or receive. “Therefore, it is important to form a relationship with them and establish trust,” he said. CSN

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EXPERT’SVIEW NEW Horizons

Out, But Still Not Always Equal, in Retail The LGBT community has talent and purchasing power

C

orporate America tends to avoid controversy. But when it came time for the Supreme Court to rule on marriage equality in 2015, 379 major companies and business organizations filed an amicus brief in support.

“To reap the rewards of diversity,” the brief read, “employers need to be

By Nancy Krawczyk, able to recruit and retain top talent …

Network of through equitable and competitive benExecutive Women efits packages.”

For retailers, lesbian, gay, bisexual and transgender (LGBT) equality is a talent issue — and a marketing opportunity. The LGBT community’s global buying power is enormous: $3.7 trillion in 2016, according to one estimate.

NEW partner Target Corp. is an industry leader in supporting LGBT rights and outreach to the community. The retailer’s #TakePride campaign, now in its fifth year, includes LGBT-themed merchandise online and at select stores.

DESPITE BACKLASH

Target’s commitment to marriage equality and the federal Equality Act has remained strong despite backlash from some interest groups and consumers. (The Equality Act, which protects the LGBT

Convenience Store News is pleased to continue this series of exclusive educational columns by the Network of Executive Women (NEW), coinciding with the annual CSNews TOP WOMEN IN Top Women in Convenience CONVENIENCE awards given out each fall.

Fifty female managers, executives and directors who work in the convenience store industry will be honored in our 2017 program. In addition to being a presentation sponsor for the Top Women in Convenience program, NEW and

80 Convenience Store News | AUGUST 2017 | WWW.CSNEWS.COM

community from on-the-job discrimination, is also supported by NEW partners Chevron, The CocaCola Co., Delhaize America, CVS Health, General Mills, The Hershey Co., Johnson & Johnson, Kellogg Co., Office Depot, PepsiCo, Procter & Gamble, SAP and Unilever.)

Last year, Target became the first national retailer to weigh in on North Carolina’s far-reaching “bathroom bill,” and faced a boycott for its transgenderfriendly restroom and fitting room policy. At the time, Target announced, “We stand for equality and equity, and strive to make our guests and team members feel accepted, respected and welcomed in our stores and

CSNews have partnered to develop this series of columns directed at helping corporate leaders drive more inclusive company cultures.

Sponsored by:

Lisa Ling Producer and host CNN

Grace Killelea Career guru and executive coach

Julie Sweet North America CEO Accenture

Dr. Victoria Medvec Management expert Kellogg School

Michael Kimmel Author, SUNY Stony Brook

Mita Mallick Director, D&I Unilever

Avis Jones-DeWeever Terrence Gargiulo Career strategist and Chief Storyteller diversity consultant Accenture

Tracey Wood Vice President Mars Chocolate NA

Natalie Nixon Design thinking expert and author

Come to the NEW Summit Sept. 27-29 in D.C. and let’s thrive together

J

oin more than 1,200 retail and consumer goods executives ready to transform their companies and themselves at the NEW Leadership Summit, September 27-29 in D.C. The industry’s No. 1 women’s leadership event has eye-opening keynotes, top career strategists, lessons from industry executives and networking with today’s — and tomorrow’s — leaders. Let’s thrive together. Visit our website to get started.

newonline.org/summit

EXPERT’SVIEW NEW Horizons

workplaces every day.” Target CEO Brian Cornell told Fortune the decision had not hurt sales.

The retailer’s stance is in line with progress inside the country’s largest companies. Twenty years ago, just 4 percent of the Fortune 500 included sexual orientation in their nondiscrimination policies; today, 92 percent do, according to Out and Equal Workplace.

Transgender-specific protections also have become the norm. The percentage of Fortune 500 companies that include gender identity in their nondiscrimination policies has grown from 3 percent to 82 percent in the past 15 years.

BEYOND POLICIES

Still, legal protections, company policies and good intentions alone do not create change.

Nearly half of those surveyed by The Human Rights Campaign (HRC) said they believe enforcement of their company’s nondiscrimination policy depends on the supervisor’s personal feelings toward LGBT people.

While more than 80 percent of non-LGBT people say LGBT people “should not have to hide” who they are at work, less than half report being comfortable hearing a LGBT coworker talk about their dating or social lives, according to the HRC study.

The type of speech deemed “acceptable” sends a message to all employees about who is likely to be respected, well-regarded and offered leadership opportunities (and who is “fair game”).

When negative stereotypes — often defended

The percentage of Fortune 500 companies that include gender identity in their nondiscrimination policies has grown from 3 percent to 82 percent in the past 15 years.

82 Convenience Store News | AUGUST 2017 | WWW.CSNEWS.COM

as “just a joke” — go unchallenged, the message is clear: the workplace is not equal or safe for LGBT employees. Consider this: Nearly two-thirds of LGBT workers (62 percent) reported they hear jokes about lesbian or gay people at least “once in a while.”

More than 40 percent reported hearing jokes about bisexual people at work, and nearly as many said they hear jokes about transgender people. It’s no surprise, then, that more than half of all LGBT workers nationwide say they hide who they are in the workplace.

INCLUSION UPSIDE

When openly gay and transgender employees are welcomed by their company and coworkers, employee morale improves — and so do profits.

LGBT-supportive policies and cultures are linked to greater job commitment, improved workplace relationships, increased job satisfaction and improved health outcomes among LGBT employees, according to research by The Williams Institute at UCLA. Those findings are supported by the HRC research, which revealed 26 percent of LGBT employees surveyed have stayed at a job because the environment was accepting. Nearly 10 percent said they have left a job because the environment was not.

Chances are, your workplace and stores can be more supportive of LGBT employees and customers.

Out and Equal Workplace outlines steps that have helped many companies create LGBT-inclusive environments. How many has your company taken?

Company policies and benefits • Include sexual orientation and gender identity and expression in nondiscrimination and anti-harassment policies.

• Recognize same-sex couples and their families with full, equal benefits.

• Ensure that health coverage includes complete benefits for transgender employees.

Talent management • Recruit, hire and offer mentoring to LGBT employees.

• Establish and support LGBT and ally employee resource groups.

• Track recruitment and advancement metrics for LGBT employees who self-identify.

Workplace environment • Provide LGBT-specific diversity training.

• Use climate surveys to measure effectiveness of diversity policies and programs.

• Include LGBT diversity objectives in management performance goals.

• Communicate to all employees how the organization supports its LGBT workforce.

Commitment to community • Support nonprofit groups working for LGBT equality.

• Sponsor and encourage visible participation in LGBT cultural events.

• Develop and implement LGBT-inclusive marketing and advertising strategies.

• Include LGBT-owned businesses in supplier diversity program objectives.

Advocacy • Be a visible role model for LGBT workplace equality in the community.

• Support public policy efforts that protect — and actively oppose attempts to restrict — LGBT workplace equality.

Target’s strong commitment to LGBT inclusion syncs with the type of corporate culture that today’s young employees and future leaders prefer (and expect) — one that embraces diversity and offers equal opportunity for all. CSN Nancy Krawczyk is vice president, corporate partnerships and engagement, for the Network of Executive Women, Retail and Consumer Goods, a learning and leadership community representing more than 10,000 members, 950 companies, 100 corporate partners and 20 regional groups in the United States and Canada. Learn more at newonline.org.

Editor’s note: The opinions expressed in this column are the author’s and do not necessarily reflect the views of Convenience Store News.

STORESPOTLIGHT Street Corner Urban Superette

From Corner to Corner

Street Corner is on a mission to meet the needs of the urban market

By Melissa Kress

S

treet Corner has long been associated with mall locations. Now, the convenience store franchisor is adding another focus to its portfolio. In addition to building up its mall presence, Street Corner is pursuing opportunities in urban areas with its new “urban superette” concept.

The chain’s first urban superette, Street Corner Fresh Market, began welcoming customers last August in the historic The Clemons Building in downtown Chattanooga, Tenn. A second urban superette, Street Corner Market The urban superette concept (seen here and below) is designed for downtown, at The Banks, threw open its doors in downdensely-packed areas and is meant to be a joining of convenience, grocery and town Cincinnati on April 12. Within just six quick-service food. weeks of opening, the Cincinnati superette had urban superette is designed to set up shop in downbecome the top store in sales throughout the town, densely packed areas. Fitting areas will have entire Street Corner franchise organization. a significant residential population, significant office The urban superette concept is the project Street population, and likely some type of mass transit nearCorner CEO Peter LaColla is most excited about. by. There will also be surrounding entertainment, such “We think there is going to be a tremendous as bars, restaurants, and perhaps a park or museum. amount of growth for the urban superette,” he told “It will be in the type of neighborhood where peoConvenience Store News. ple are starting to move back to; that hasn’t had much Street Corner defines the urban superette as the of a residential component for years but the millennijoining of grocery, convenience and quick-service als are moving back,” LaColla said, adding that fitting food. The stores offer Wi-Fi and encourage customers neighborhoods will also be food deserts. to linger while they enjoy a snack or beverage. The “There might be sit-down restaurants; there might be a couple of quick-serves. But not grocery, not a quality convenience store, and not certainly all combined in one,” he explained.

According to LaColla, the urban superette is designed to be of particular appeal to millennials. One of the signature items offered in the store is a significant selection of craft beers. The Cincinnati superette goes a step further and features a beer cave.

“The second store, opened in Cincinnati in The Banks, is in a neighborhood I basically just described: lots of residential, lots of office, two sporting stadiums anchoring the property, a park, a museum and a trolley.

It has all those components,” the chief executive noted.

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While Street Corner is still doing mall locations, the franchisor sees the urban superette as a major growth area. “They will be, by nature, higher volume stores for us. They are also a higher investment level, so we are dealing with a different type of investor,” LaColla said.

UPPING THE ANTE

Compared to Street Corner’s mall locations, the urban superette is a more sophisticated operation and it will have exacting demands on performance. These stores will be maintained in a precise way, and the food component will bring a new set of demands for operators.

The Street Corner Fresh Market in Chattanooga is the first of the company’s stores to feature a fullservice Boar’s Head deli, plus hot food offerings. In the Cincinnati urban superette, the foodservice component is similar to the types of sandwiches and paninis that customers would find in Europe — an area where LaColla has spent a lot of time.

“In these types of stores, they will typically make the sandwiches in the morning on a high-quality roll, bun or bread with a very flavorful few slices of protein like salami, prosciutto or ham, and they are displayed in a deli case beautifully,” he explained. “When people want them, they are simply served; they are already prepared. They are high-quality and extremely fast.”

This approach, vs. the full-service deli, will accommodate smaller footprints. The first store in Chattanooga was 2,900 square feet, The Cincinnati store is only 1,500 square feet.

“I think we can still provide an exceedingly highquality food offering faster and with less space using this format,” LaColla said. “And I think the European feel will be very appealing.”

URBAN APPEAL

When asked why Street Corner has decided to turn to urban areas now, LaColla told CSNews that qualified franchisees have shown interest in opening stores in urban markets.

Mid-sized cities like Nashville, Memphis, Phoenix and Seattle are perfect places for Street Corner, he explained. “All are having a renaissance. All of these cities are doing very well with people moving back in,” he said. “As it turns out, we think these mid-sized cities might be the sweet spot for this type of use.

The rents are still reasonable and the demand is high, as opposed to going to New York or Washington, D.C. They are good markets too, but the rents there are going to be many times more and they might not

The urban superette is a more sophisticated operation in both design and product offering than Street Corner’s traditional mall locations.

do many times more in sales. We think these B and C cities really might hit the sweet spot better than a Chicago or New York or Boston.”

LaColla shared how Cincinnati blew him away with a downtown that’s become active and developed.

During one visit, his hotel was across from a theater, restaurants, and retail at the street level. “The city has a new tram. There are all sorts of things converging together,” he added. “It’s happening in these cities. It makes living in the city very livable. There is just so much need for this use in downtown cities.”

So far, the reaction to the urban superette concept has been positive.

Speaking about the Chattanooga location, LaColla said, “People love it; it’s becoming an institution down there. People, especially office workers, are thrilled they have quick access to quality food. We offer catering, which is sorely needed, and we offer other amenities they can’t get at all — we offer fresh flowers.”

The Clemons Building is in an old factory that has been converted to apartments. As an added service to the building’s residents, half of the Street Corner Fresh Market remains open at night to allow the residents access to the grocery department.

“They can access it at 10:30 p.m., if they wish,

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Legal Notice

 IF YOU PURCHASED SHELL EGGS IN THE U.S. FROM 9/24/2004 - 12/31/2008 DIRECTLY FROM DEFENDANTS, YOU MAY BE A MEMBER OF A CERTIFIED LITIGATION CLASS AND A CLASS MEMBER IN A PROPOSED CLASS ACTION SETTLEMENT.  IF YOU PURCHASED SHELL EGGS OR EGG PRODUCTS IN THE U.S. FROM 1/1/2000 12/19/2014 DIRECTLY FROM ANY PRODUCER, YOU HAVE THE OPPORTUNITY TO SUBMIT A CLAIM IN CONNECTION WITH CERTAIN PREVIOUSLY-APPROVED SETTLEMENTS. This legal notice is to announce certification of a Litigation Class; to provide information regarding a new settlement with Michael Foods, Inc. (“MFI”); and to provide information for submitting claims in connection with previously-approved settlements with National Food Corporation (“NFC”), Midwest Poultry Services, L.P. (“Midwest”), United Egg Producers and United States Egg Marketers (“UEP/USEM”), NuCal Foods, Inc. (“NuCal”), and Hillandale Farms of Pa., Inc. and Hillandale-Gettysburg, L.P. (“Hillandale”) in In re Processed Egg Products Antitrust Litig., No. 08-md-2002 (E.D. Pa.).

What is this lawsuit about?

Plaintiffs allege that Defendants conspired to decrease the supply of eggs which caused the price of eggs to artificially increase and direct purchasers to pay more for Shell Eggs and Egg Products than they would have otherwise paid. Defendants have denied all liability for this conduct and asserted that their conduct was lawful and/or exempt from the antitrust laws, among other defenses.

Who is included in the Litigation Class?

The Litigation Class includes individuals/entities that purchased Shell Eggs in the U.S. directly from Defendants from 9/24/2004 through 12/31/2008. If you exclude yourself, you will not be entitled to share in any future distributions if Plaintiffs obtain money from a trial or future settlements. The deadline to exclude yourself is October 9, 2017.

Who/what is included in the MFI Settlement?

The MFI Settlement Class includes individuals/entities that purchased Shell Eggs in the U.S. directly from Defendants from 9/24/2004 through 12/31/2008. MFI will provide the Class with $75 million and cooperation. Plaintiffs will release all claims against MFI. The deadline to submit a claim, submit an objection, or submit an exclusion is October 9, 2017.

Who may submit a claim in connection with the NFC, Midwest, UEP/USEM, NuCal & Hillandale Settlements?

If you did not previously exclude yourself from these Settlements, and you purchased Shell Eggs and/or Egg Products in the U.S. from 1/1/2000 through 12/19/2014 directly from any Producer, you may be entitled to submit a claim form postmarked no later than October 9, 2017.

Who represents you?

The Court appointed Stanley Bernstein (Bernstein Liebhard LLP); Michael Hausfeld (Hausfeld LLP); Mindee Reuben (Lite DePalma Greenberg, LLC), and Stephen Susman (Susman Godfrey LLP) as Class Counsel. You do not have to pay them to participate. You may hire your own attorney at your expense.

When will the Court decide whether to approve the MFI Settlement?

A hearing to determine the fairness and adequacy of the MFI Settlement is scheduled for 10:00 a.m. on November 6, 2017 at the U.S. District Courthouse, 601 Market Street, Philadelphia, PA 19106-1797. The Court will also consider a motion for attorneys’ fees and costs and any objections. The Court may change the date/time of the hearing without notice.

Check www.eggproductssettlement.com for updates and more information. This notice is a summary only.

1 (866) 881-8306 • www.eggproductssettlement.com 86 Convenience Store News | AUGUST 2017 | WWW.CSNEWS.COM

to get eggs, toilet paper. It has a self-checkout. They enter through a door in the back of the store with a thumb reader, collect whatever they want, and then check out on their own. That store is 24/7 for them,” LaColla explained.

COMING DOWN THE PIKE

Street Corner does not have a set number of stores in mind for its urban superette concept.

Recently, the company announced the signing of its first territory representative to expand the chain in the San Diego metropolitan area. The first area store will be an urban superette offering convenience items, deli and fresh grocery offerings in the under-development Shift complex in East Village. It is slated to open next year.

“

We think these mid-sized cities might be the sweet spot for this type of use. The rents are still reasonable and the demand is high, as opposed to going to New York or Washington, D.C.” — Street Corner CEO Peter LaColla

Vikram Dhillon, the master franchisee for the San Diego metropolitan area, plans 12 and possibly as many as 19 more stores in San Diego and Imperial counties over the next five years. They will be a combination of additional urban superettes, standalone convenience stores with gas, and the traditional mall stores upon which Street Corner was built.

Street Corner is looking to expand into the arena of traditional c-stores with gas, LaColla acknowledged. “We think there is a market there too, but for different reasons. The superette is because we are seeing a shifting demographic, a dynamic change going on there,” he said. “That is not the same reason for the gas station. The gas station is because there are very few players in the gas station arena for franchise opportunities.”

Topeka, Kan.-based Street Corner currently has more than 40 franchise stores in operation, with a future inventory of 100 potential mall locations and 30 potential urban superette locations, according to LaColla.

“We’ve been doing convenience stores for 30 years.

We have a very strong back-office system as far as construction, design and fulfillment. We have these systems in place, so we are ready to grow,” he said. CSN

FACT: One in 10 QSR visits are sourced to c-stores With detailed, product-level consumer information from NPD, you’ll always know where people are visiting, what they’re buying, how much they’re paying, and a whole lot more. Discover the hidden c-store consumer motivations that inform successful strategies.

Source: The NPD Group/CREST®, Year Ending June 2017

Make winning decisions with facts.

Contact The NPD Group at 866-444-1411 or email contactnpd@npd.com

OUTABOUT &

Spotlighting major industry events

Elevating the Future of Foodservice

Foodservice @ Retail Summit returned to the 2017 National Restaurant Association Show

By Angela Hanson

R

etailers, distributors and manufacturers came together to share insights, make deals and take the next steps into a promising future for the foodservice industry at the 2017 National Restaurant Association (NRA) Show, which took place May 20-23 at Chicago’s McCormick Place.

The general show floor featured a wide variety of demonstrations and educational sessions for all segments of the industry. Businesses with a mature foodservice program had the opportunity to learn how to best capitalize in the digital world through a Tech Talks presentation.

“The mobile phone is the primary communication device that we all share today,” Jim Steinberg, director of enterprise partnerships at LoyaltyPlant, noted during the session entitled “How to Achieve a 12% Sales Increase National Restaurant With a Mobile Loyalty App.” Association Show According to Steinberg, Chicago effective mobile apps should May 20-23, 2017 have digital ordering, but that shouldn’t be the only function they offer. Apps should be tied into a loyalty program; provide relevant personal content and an enjoyable user experience; offer incentives to use the app; and make use of strong images, as food is extremely visually compelling.

The 2017 NRA Show also hosted the second-annual Foodservice @ Retail Summit, which highlighted a variety of ways that convenience store owners, grocers and other retail foodservice operators can elevate their prepared food programs.

Tre Musco, CEO of Tesser Inc., pointed out that “everyone eats with their eyes” and in the case of design, “perception really is reality,” during a session on the “Evolution of Restaurant Design in Supermarkets & C-stores.” Panel attendees listed several key things to think about during the design process, advising retail-

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ers to lead with the change they’re making, using as an example a Sheetz Inc. design that reoriented the kitchen to display food being made. Following redesigns, operators must be sure to deliver on three core consumer needs: care, convenience and quality.

Another resource where foodservice-focused retailers can turn to elevate their prepared food programs is the suppliers whose products they sell, according to the participants in a panel titled “Manufacturers and Retailers Working Together: The Recipe for Success.”

The Coca-Cola Co.’s Group Director, Strategic Initiatives, Randy Raymond noted that while the company is not a culinary expert, it has a deep well of knowledge on the merchandising side and can be very helpful when it comes to thinking about digital menuboards, communicating the product, building bundles, designing the path to purchase, and more.

“Our expertise is really helping to build that basket,” Raymond said.

The 2017 Foodservice @ Retail Summit also tackled social media and closed with a panel on talent acquisition, during which culinary students from Chicago’s Kendall College shared their thoughts on how retail foodservice operators can build a strong, skilled team by leveraging their unique strengths and properly reaching out to foodservice professionals who don’t just want to work in restaurants. CSN

All Things Candy & Snacks The 2017 Sweets & Snacks Expo celebrated 20 years with a sold-out show

By Danielle Romano

T

he 2017 Sweets & Snacks Expo, hosted by the National Confectioners Association (NCA), showcased the latest trends in the confectionery and snacking categories, from transparency to technology and everything in between. Here’s what Convenience Store News editors spotted on the show floor: Commitment to Transparency & Sustainability This year’s Sweets & Snacks Expo centered on the “groundbreaking” commitment from leading confectionery companies in conjunction with the Partnership for a Healthier America. Mars Chocolate North America, Wrigley, Nestlé USA, Ferrero, Lindt, Ghirardelli, Russell Stover and Ferrara Candy Co. collectively committed to providing consumers with inforSweets & Snacks mation, options and support Expo as they enjoy their favorite Chicago treats. Chris Gindlesperger, May 23-25, 2017 vice president of public affairs and communication for NCA, said the initiative is at the “cornerstone of transparency,” showing consumers how candy can play a role in a happy, balanced lifestyle.

A Bunch of Crunch Laura Renaud, associate manager, content and editorial strategy for The Hershey Co., told CSNews editors that the overall theme of this year’s Sweets & Snacks Expo was “crunch.” Hershey showed off its latest innovation, Reese’s Crunchers, while other companies showcased their crunchyand crispy-coated products like Trolli Sour Gummi Crunchers from Ferrera Candy Co., and Sugar Babies Caramel Crunch from Tootsie Roll Industries.

Spicy: The New Sour While sweet and sour flavor combinations have been around for a while, a new avenue of sweet and spicy has been adopted with Skittles Sweet Heat and Starburst Sweet Heat from Wrigley; Genius Jerky’s honey habanero beef jerky; and mango chipotle and honey sriracha macadamia nuts from Hawaiian Host’s Mauna Loa brand.

Impact Confections also broke into a sour-sweet-heat realm with Hotheads Extreme Heat Worms.

Healthy Snacking A walk through Skyline Hall’s Innovation Avenue at the expo introduced numerous new companies in the confection and snack world that boast unconventionally healthy items. New products spotted included Porta Bela mushroom chips, The Daily Crave Quinoa Chips, and Vegan Rob’s, whose certified-vegan snacks are also certified gluten-free and kosher and include products like Asparagus Chips, Brussel Sprout Puffs, and Organic Spinach Strips.

New Packaging Innovations in packaging and design are popping up on convenience store shelves from companies like Mars Chocolate North America, whose core line of M&M’S will begin rolling out in the coming months in stand-up, resealable packs for future consumption and take-home, on-the-go portability. Perky Jerky also showed off the next evolution in its portfolio: “protein pal” packs.

With a shelf life of six to nine months, these easy and convenient packs feature portion-sized compartments filled with dried fruit, jerky and a salty snack.

Riding the Technology Wave NCA introduced Destination Retail to its annual show, highlighting digital point-of-purchase displays and solutions that build shopper loyalty. The technology wave is being ridden by Jelly Belly Candy Co., which unveiled its Beanboozled mobile app that allows friends to play on a virtual spinner remotely via a video feed.

Wrigley is currently working with “brick-and-click” partners to grow confection sales online. In particular, Ecommerce Director Chuck Van Hyning told CSNews the company is collaborating with c-store retailers to create a digital shopping trip in which consumers place a confectionery order online and then pick it up instore. In-store pickup could lead to impulse buys and incremental basket sizes, he noted. CSN

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OUTABOUT &

Spotlighting major industry events

More Than a Trade Show IDDBA 17 transforms to feature several new initiatives

By Don Longo

“T

o be more than a trade show.” That’s how Mike Eardley, president and CEO of the Madison, Wis.-based International Dairy Deli Bakery Association (IDDBA), explained the evolution of the trade group’s annual expo, IDDBA 17, which took place in Anaheim in June.

The Show and Sell Express area was set up like a mini convenience store.

Rather than being a mere gathering of buyers and sellers, the show is aiming to educate and 30 countries gathered at the sold-out IDDBA 17 expo, held at the Anaheim Convention Center, to retailers and their trading partners on new and better partake in educational sessions about current trends ways of serving consumers in and to view new products in the dairy, deli and baksearch of delicious, wholesome ery categories. and convenient retail meal soluIDDBA 17 Eardley, in his opening comments, noted how little tions.

As Eardley puts it, “If Anaheim, Calif. loyalty consumers have to traditional supermarkets. we’re going to be a resource for June 4-6, 2017 “One in six shoppers have switched their main superthe industry, we’ve got to bring market in the past 12 months,” he said, adding that in people that are resources.” participation in supermarket loyalty programs has This year’s expo featured several new initiatives declined from 50 percent of Americans in 2010 to just designed to meet that goal: one-third in 2015. He also pointed out that the United • Expert Neighborhood: 25-minute by-appointStates is on track for a historic high of 12,000 store ment sessions that matched attendees with closings this year. experts to address questions, industry challenges However, he noted the growing importance of conand business problems. venience stores, particularly in the fresh food category.

• New Product Showcase: A way for exhibitors “There are over 150,000 convenience stores in the U.S. to highlight items that might otherwise be overThat’s one for every 2,000 people,” said Eardley. “And looked in large show booths. one out of every two Americans visit a c-store every • “Social Wall”: Collects attendees’ social media day. Food is becoming a foundational element of every posts about exhibits, new products and session speakers. “We’re excited by the future potential of convenience store’s strategy.”

In the midst of the show floor, the Show and Sell this,” Eardley said.

Express area was set up like a mini convenience store, • Show & Sell Express: An adjunct to the expo’s with fixtures filled with products from sponsors. The annual Show & Sell center, geared toward convearea included creative ideas for merchandising fresh nience store operators, which Eardley said have foods, including a f’real milkshake vending machine, been attending the show in greater numbers as doughnut merchandiser, soup and coffee stations, and they enhance their fresh food offerings. numerous cold case merchandising units. CSN More than 10,000 attendees from 825 companies

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Matt Iris (left), Mechanical Engineer, Avista Sean Hurley (center), Maintenance Supervisor, Cenex Zip Trip Ann Carey (right), Regional Account Executive, Avista

kilowatt hours. The energy-cost savings were so remarkable that when Avista again approached Zip Trip four years later, offering new rebates on the most recent advances in LED technology, Zip Trip was more than willing to do a second upgrade.

It was estimated that the new LED lights would cut Zip Trip’s energy use by nearly 600,000 kilowatt hours, qualifying for over $50,000 in rebates. “Avista’s rebate program offset much of the cost for newer LED technology,” said Hurley.

Avista helped us save over $ 150,000 in energy costs.

H

eadquarterd in Spokane, WA, Cenex Zip Trip is among this region’s leaders in fuel-stop convenience stores with 70 locations across Washington, Idaho, Montana, Wyoming, North Dakota, South Dakota and Minnesota. The chain is a subsidiary of CHS Inc., a leading global agribusiness owned by farmers, ranchers and cooperatives across the United States.

Zip Trip focuses on setting itself apart by providing great service and offering customers the convenience items they want most, such as fresh grab & go sandwiches and salads and high-quality coffees. Nonetheless, competition in their markets is growing. To improve its brand positioning, the chain has been updating the interior of their stores, while continually working to cut operating costs, energy use being one of the biggest. That’s why Zip Trip partners with Avista for ways to make their stores more energy efficient.

has provided Zip Trip with more than $280,000 in energy efficiency rebates.

“Avista comes to us regularly with ideas and recommendations of how we can save energy,” said Zip Trip maintenance manager Sean Hurley.

“And their rebates have enabled us to make these improvements in a costeffective manner.” Since 2011, Avista

About a year after completing refrigeration upgrades, Zip Trip took advantage of Avista’s energy efficiency rebates to change out the interior lighting at area stores and their main office. They swapped T-12 bulbs for T-8s, cutting energy consumption by more than 198,000

“Their upgrades have so far resulted in Zip Trip saving more than 1.9 million kilowatt hours of electricity and over $150,000 in energy costs,” said Avista regional account executive Ann Carey.

About five years ago, Avista began by helping Zip Trip complete a project to upgrade cooler fan motors in its refrigerated beverage and sandwich cases.

Old evaporator motors were replaced with electronically commutated motors that feature blades made of lightweight plastic vs. metal. Zip Trip also received rebates to replace cooler-door gaskets for a tighter seal and add anti-sweat heat controls in the doors to prevent condensation of the glass and door frames. The changes not only save energy, they put less strain on the refrigeration compressors.

In this second phase, Zip Trip also updated the lights inside their refrigerator cases with brighter, low-heat LEDs. “All of our stores now have a cleaner, brighter look inside as well as outside,” said Hurley.

“That not only gets customers to stop for gas, it’s more inviting for them to come inside. That’s a good thing, as industry statistics say only 35% of convenience store customers venture inside.” The brighter lighting over the gas pump islands is good for security, too, and will also save on maintenance because they last so much longer. “We were always getting service orders for individual canopy lights being out,” Hurley added, ”we were changing bulbs on a weekly basis… but we have not had any of these issues at the sites that have been upgraded.”

Zip Trip also installed new LED lighting inside their warehouse and its accompanying parking lot. Avista helped pay for these upgrades, as well as for motion sensors that automatically turn off lights whenever work areas become unoccupied. Since completing the entire project, Zip Trip has seen their sales volume increase. The company is so pleased with the overall changes that they plan to make the same updates at other Zip Trip locations, even those outside Avista’s service territory.

For more information on Avista’s energy efficiency programs for commercial and industrial customers, visit myavista.com/bizrebates or email accountexecs@avistacorp.com.

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ADINDEX

7-11......................................................................................................39 Advance Pierre Foods ........................................................................108 Altria Group Distribution Company .................................................2-3,31 Avista ...................................................................................................91 Regional BakenJoy .............................................................................................63 BIC .......................................................................................................7 Campbell’s ..........................................................................................37 Cash Depot..........................................................................................27 Coca Cola ............................................................................................33 Cookies United ...................................................................................61 Couche – Tard Circle K ......................................................................47 Del Monte Fresh Produce ..................................................................17 E Alternative Solutions ......................................................................72-73 E & J Distillers ....................................................................................65 Fini Sweets Inc. UA............................................................................11 Forte Products .....................................................................................66 Garden City Group .............................................................................86 Hershey’s ............................................................................................5,45 Henry’s Foods Inc...............................................................................35 Home Market Foods ...........................................................................107 Hy-Vee .................................................................................................51 Imageworks Tobacco Displays .........................................................55 Impact 21 ............................................................................................49 Industrial Vacuum Systems...............................................................75 InLine Plastics.....................................................................................70 Kretek/Djarum ....................................................................................57 Kwik Trip Inc. .....................................................................................41 John Middleton...................................................................................23 Krispy Krunchy Chicken....................................................................53 Mars Wrigley Confectionery .............................................................13,15 McLane Co. .........................................................................................43 Micro Matic .........................................................................................71 MTI Products, Autofry ........................................................................83 New Leadership Summit ...................................................................81 NPD ......................................................................................................87 Paytronix .............................................................................................25 Premier Manufacturing, Inc. .............................................................67 Procter and Gamble ...........................................................................69 Renewable Energy ............................................................................19 RJ Reynolds Tobacco Company .......................................................9 S&D Coffee ..........................................................................................59 Tillamook Country Smoker, Inc. .......................................................79 Universal Merchant Services ............................................................Outsert White Castle .......................................................................................21

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Convenience Store News (ISSN 0194-8733; USPS 515-950) is published 12 times per year, monthly, by EnsembleIQ, 570 Lake Cook Rd. Deerfield, IL 60015.

Copyright © 2017 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.

WWW.CSNEWS.COM | AUGUST 2017 | Convenience Store News 105

GETTINGTOTHECORE

3.4%

Fizzy Feelings

The percentage of c-store shoppers who say they purchase a beverage for immediate consumption from a convenience store multiple times a day.

C-store shoppers offer insights into their beverage path to purchase

B

everages, along with cigarettes and foodservice, are the lifeblood of convenience stores. But with so many beverages to choose from and so many beverage retailers out there today, EnsembleIQ Research, sister company of Convenience Store News, wondered how consumers make their purchasing decisions. Roughly 500 U.S. consumers who shopped at a convenience store in the past month were surveyed. Price appears to be the most compelling factor in the beverage path to purchase, as more than 61 percent of those surveyed said if they’re craving an immediate-consumption beverage, they tend to go where they know prices are lower.

Midwesterners are especially price-conscious when it comes to buying beverages — 74.3 percent said they tend to go where they know prices are lower, vs. 47.7 percent of Northeast c-store shoppers, 56.9 percent of West Coast consumers, and 62.8 percent of Southerners.

68.8% The percentage of c-store shoppers aged 18-34 who say they like trying new types of beverages.

Indicate your level of agreement with the following statements regarding your feelings about beverages you purchase for immediate consumption.

Females show I am more likely to purchase a beverage from a place that has a drive-thru. far more of a I prefer fountain drinks over bottled or canned alternatives. preference for buying beverages If I’m craving a beverage, I tend to go where I know prices are lower. at a drive-thru I like trying new types of beverages. than males.

I seek out beverages that I think are beneficial to my health.

I like to be able to customize fountain drinks (e.g., combine flavors, add syrups, etc.).

I would be more likely to patronize a store or restaurant that offers a loyalty program with rewards for beverages (e.g., buy four, get the fifth free).

I would go out of my way to patronize a store or restaurant that offers fountain drinks for $1.

When it comes to fountain beverages, the bigger the portion size, the better.

I am more likely to buy a beverage from a place that offers unique types of drinks.

TOTAL

MALE

FEMALE

41.0% 41.6% 61.2% 44.8% 48.0% 41.8%

29.6% 37.2% 56.3% 44.9% 42.9% 41.3%

52.2% 45.8% 66.0% 44.7% 53.0% 42.3%

58.8% 50.8% 39.4% 35.0%

54.3% 50.2% 43.7% 33.2%

63.2% 51.4% 35.2% 36.8%

Base: Consumers visiting a c-store at least once a month Source: Convenience Store News Market Research, 2017

How often do you purchase a beverage for immediate consumption from a convenience store?

TOTAL

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.

Multiple times a day Once a day Multiple times a week Once a week A few times a month Less often than once a month

3.4% 6.6% 21.4% 12.8% 30.4%

BY AGE: 18-34

35-44

45-54

55-64

25.4% 17.5% 18.0% 19.8% 39.7% 39.8%

Base: Consumers visiting a c-store at least once a month Source: Convenience Store News Market Research, 2017 Survey respondents sourced via ProdegeMR, a leading provider of data collection solutions for the research industry.

Visit www.prodegemr.com for more info.

106 Convenience Store News | AUGUST 2017 | WWW.CSNEWS.COM

65+

3.2% 6.7% 2.2% 3.8% 1.1% 11.0% 7.9% 7.7% 2.6% 0.0% 26.6% 30.3% 20.9% 15.4% 9.1% 14.3% 13.5% 16.5% 6.4% 11.4% 27.3% 23.6% 33.0% 32.1% 38.6%

C-store shoppers aged 35-44 are the most likely to buy immediate-consumption beverages multiple times a day.

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Editor’s Note

Taking Its Knocks, But Still Standing Despite getting legislative pressure from all angles, tobacco remains steady

I

n early 2016, Convenience Store News began an online feature called Tackling Tobacco. This monthly compilation takes a look at tobacco regulation — both proposed and approved — across the thousands of municipalities in the United States.

The birth of Tackling Tobacco came at the same time as the National Association of Tobacco Outlets (NATO) revealed that its 2016 NATO Show would be its last trade show so that the association could hone its focus on the growing patchwork of regulation targeting the tobacco industry.

Despite the increasing changes on the federal, state and local regulatory fronts, tobacco remains a strong category for the convenience channel. At a time when more municipalities are embracing Tobacco 21 efforts, and numerous local governing bodies are enacting flavor bans, cigarettes account for the largest merchandise category in convenience stores when it comes to in-store sales, according to the latest CSNews Industry Report (June 2017).

Specifically, cigarettes captured 30.11 per-

cent of all industry in-store sales in 2016.

Over the past five years, in the face of heavy and yet-still-increasing pressure, cigarette sales have either stayed relatively flat or dipped just slightly. During the same 2012-2016 timeBy Melissa Kress, frame, the category saw its Senior News Editor (201) 855-7618 margin percentage increase mkress@ensembleiq.com from 14.21 percent in 2012 to 15.2 percent last year.

Other tobacco products (OTP) — likewise a target of regulation — occupies the No. 5 spot among the largest merchandise categories in c-stores when it comes to in-store sales. The category accounted for 5.16 percent of all industry in-store sales in 2016, with a margin percentage of 25.06 percent.

So, while some in the tobacco retailing world may think tobacco is entering a prohibition-by-legislation period, the numbers indicate we shouldn’t count the business out just yet.

Contents 6 | Cover Story

Here, There, Everywhere

From the Tobacco 21 movement to flavor bans, tobacco legislation moves beyond taxation.

24 | What’s New in Tobacco

SEGMENT SNAPSHOTS

10 | Cigarettes 12 | Smokeless Tobacco 14 | Cigars 16 | Electronic Cigarettes 18 | Vaping/Liquid Products 20 | Pipe & Cigarette Tobacco 22 | Tobacco Accessories

WWW.CSNEWS.COM | Guide to Tobacco 3

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Cover Story

Here, There, EVERYWHERE From the Tobacco 21 movement to flavor bans, tobacco legislation moves beyond taxation

By Melissa Kress

Rocky Mountain High On June 12, Aspen became the first municipality in Colorado to adopt a Tobacco 21 ordinance prohibiting the sale of tobacco products — including electronic cigarettes — to anyone under 21 years old. The measure takes effect Jan. 1, 2018, and also requires any tobacco retailer to obtain a license.

Aiming for E-Cigarettes Six states have introduced legislation this year to include electronic cigarettes in their existing smoking bans. So far, such measures have died in three states — Arizona, Iowa and Utah — and was tabled in New Mexico.

6 Guide to Tobacco | WWW.CSNEWS.COM

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Cigarettes

First in Line With a May 3 vote by its city council, Edina, Minn., became the first locality in the state to ban the sale of tobacco products to anyone under the age of 21.

43.5% The percentage of Massachusetts’ population who live in municipalities that restrict the sale of flavored other tobacco products to adultonly retailers, as of April 21.

18 Moving Violations Hawaii, Illinois and Mississippi lawmakers tried passing bills that would prohibit smoking in vehicles where minors are present. All three measures died.

O

nce upon a time, the New Year would trigger a new round of proposed state excise tax hikes on cigarettes. You could almost set your watch to it, as lawmakers across the United States looked to balance budgets at the expense of tobacco consumers.

While states still look to raise the levy annually — to fund everything from healthcare programs to anti-tobacco efforts to universal Pre-K — other tobacco legislation is sweeping the country.

Just look at Massachusetts to get a snapshot of what forms these measures are taking. Over the past two years, the Bay State has been referred to as “ground zero” for tobacco regulation: • A total of 142 municipalities in the state had measures setting minimum pricing for cigars, covering 56.8 percent of the state’s population, as of April 21.

• A total of 92 municipalities in the state limit the num-

The number of states that have never had statewide Tobacco 21 measures introduced. Another two states have seen unsuccessful past efforts, Pennsylvania (in 2015) and Colorado (in 2014), but nothing more since then.

ber of tobacco sales permits, covering 26.8 percent of the state’s population.

• A total of 152 municipalities in the state ban tobacco sales in pharmacies, affecting 739 store locations.

In addition, more than 150 cities and counties in Massachusetts have passed Tobacco 21 legislation, covering more than 60 percent of the state’s population. And Massachusetts is not the only state making moves to increase the minimum legal age to buy tobacco products — 25 states overall have introduced legislation in 2017 to raise the legal buying age to 21. To date, Hawaii and California remain the only ones with statewide legislation. New Jersey’s age increase from 19 to 21 goes into effect Nov. 1 The increased activity aimed at the tobacco industry has even led the National Association of Tobacco Outlets (NATO) to give its full attention to legislative and regulatory issues. From a quick look at some of the hot-button issues, the association has its hands full.

WWW.CSNEWS.COM | Guide to Tobacco 7

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Cover Story

San Francisco Takes Menthol Into Its Own Hands This California city is doing what the Food and Drug Administration (FDA) has been reviewing for several years: prohibit the sale of menthol cigarettes.

The San Francisco Board of Supervisors unanimously voted in favor of a measure to ban the sale of flavored tobacco products — including menthol cigarettes — at city retail outlets.

The ban applies to the sale of flavored tobacco products like menthol cigarettes, flavored cigars, flavored smokeless tobacco, and flavored e-liquids. It’s slated to go into effect in April 2018. Retailers that violate the law could have their tobacco sales permit suspended.

A similar measure was approved in nearby Oakland, Calif. It will face a second vote in September and if passed, go into effect next year.

Currently, federal regulation prohibits the sale of flavored cigarettes, excluding menthol. This was one of the first moves the FDA made after receiving regulatory authority over tobacco products as a result of the Family Smoking Prevention and Tobacco Control Act of 2009.

The agency took up the issue of menthol, and the FDA’s Tobacco Product Scientific Advisory Committee endorsed the ban of menthol in a report in 2011.

However, U.S. District Court Judge Richard Leon in Washington, D.C., barred the agency from using the report due to conflict of interest concerns. A threejudge panel overturned Leon’s ruling on appeal in January 2016. However, to date, the FDA has not taken any further action around menthol.

New York City Fires at Tobacco Five Ways New York City legislators are reviewing a five-pronged series of tobacco measures, including raising the minimum prices for all tobacco products. The goal of the five proposals is to reduce the number of smokers in the city by 160,000 over the next three years.

The legislation package was introduced by council members Corey Johnson, Brad Lander, Fernando Cabrera and Ritchie Torres — joined by Mayor Bill de Blasio — on April 19.

According to the mayor’s office, the measures would put the Big Apple “at the forefront of smoking and tobacco control nationally.” The proposals are to: 1. Raise the minimum prices for all tobacco products,

2.

3.

4.

5.

including cigarettes, and impose a new 10-percent local tax on other tobacco products; Reduce through attrition the number of tobacco retailers citywide; Create a retail license for electronic cigarettes, and cap the number of e-cigarette retailers; Require all residential buildings to create a smoking policy and disclose it to both current and prospective tenants; and Ban the sale of tobacco products at pharmacies.

Saying No to Tobacco 21 While efforts to raise the legal minimum age to buy tobacco products to 21 are taking the country by storm, not everyone is on board. Through June 2, measures in 13 states have either failed or stalled this year, according to the National Association of Tobacco Outlets: • Arizona: HB2335 died without possibility of reinstatement by missing a procedural deadline on March 24.

• Arkansas: HB1711 failed to pass the state House of Representatives on March 27.

• Connecticut: HB6491 and companion bill SB448 pertaining to the purchase of cigarettes failed the joint favorable deadline on March 29. (A separate proposal in Connecticut, HB5384, to raise the legal age to purchase and use all tobacco products to 21 is still alive.)

• Idaho: SB1106 failed on March 3.

• Illinois: HB3208 died on adjournment on May 31.

• Indiana: HB1578 failed upon adjournment on April 22.

• Iowa: SB5 died by missing a procedural deadline on March 3.

• Maryland: SB669 was received unfavorably by the state Senate Finance Committee on March 17 and failed upon adjournment on April 10.

• Mississippi: HB87 and HB190 died in committee on Jan. 31.

• New Mexico: SB319 failed on March 18.

• North Dakota: HB1312 failed to pass the state House of Representatives on Feb. 7.

• Utah: HB406 failed in the state House Committee on Business and Labor on March 6.

• Vermont: SB88 failed to pass the state Senate on April 25.

8 Guide to Tobacco | WWW.CSNEWS.COM

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Cigarettes

Cigarette Sales & Units Gone are the cigarette volume rebounds of two years ago. Last year saw the market settle back down to deceleration rates, with a little bit better than flat growth in dollar sales and the start of a decline in unit volume. One analyst calls it “an industry in secular declines.” In the early part of this year, an uptick in sales was said to be driven by price increases and a slight moderation in volume deceleration, but that uptick flattened out by mid-year.

2016 2016 FIRST HALF 2017 FIRST HALF 2017

DOLLAR SALES % CHANGE UNIT VOLUME % CHANGE DOLLAR SALES % CHANGE UNIT VOLUME % CHANGE

(in millions) VS. YEAR AGO (in millions) VS. YEAR AGO (in millions) VS. YEAR AGO (in millions) VS. YEAR AGO

Premium Branded discount Subgeneric/private label Fourth tier Imports TOTAL

$42,967.5 2.0% 6,371.6 -0.4% 8,659.6 -0.4 1,480.9 -4.7 1,471.2 9.0 266.2 6.7 213.5 -12.0 36.7 -16.6 1.59 -4.2 0.2 -4.5 $53,313.4 1.7% 8,155.60 -1.0%

$19,412.2 0.7% 2,809.4 3,825.9 -2.3 632.0 720.6 12.7 132.4 94.1 -0.6 15.9 0.8 8.4 0.1 $24,053.6 0.5% 3,589.8

-2.5% -7.0 15.5 -1.6 -2.5 -2.8%

Source: Nielsen; Convenience Store News Market Research, 2017

Cigarette Segment Share Last year saw tobacco consumers still trading up to premium brands, which made up 80.6 percent of the dollar-share pie and 80.7 percent of the unit-volume pie. Subgeneric/private label also experienced growth from the year prior, though overall share was only 3 percent. The growth of those two segments was at the expense of branded discount. Of course, that all changed this year when premium brand price increases hit, lowering the premium share down to 78 percent in both dollars and units. Branded discount also posted a slight decline in share, while subgeneric/private label benefitted with share growth on both sides.

Premium DOLLAR SALES

Branded discount

Subgeneric/private label

Fourth tier

UNIT VOLUME

2016

0.4% 2.8% 16.2%

UNIT VOLUME

FIRST HALF 2017

0.4% 3.3%

0.4% 3.0%

18.2%

15.9%

0.4% 3.7%

17.6%

78.3%

78.1%

80.7%

80.6%

Imports

DOLLAR SALES

Source: Nielsen; Convenience Store News Market Research, 2017

Cigarette Share by Region (First Half 2017)

Cigarette Competitive Channel Market Share

Did the California cigarette tax increase (which kicked into full gear April 1) contribute to the West losing the most unit share of all the regions recently? Probably so, but it wasn’t the only region that lost unit share the first half of this year. In fact, the dominant region in cigarette sales, the South, is the only region that did not lose unit share. All the regions with the exception of the Midwest, the second-largest region in cigarette sales, gained share in dollar sales for the first half of this year, thanks primarily to the manufacturer price increases.

The convenience channel reigns as the destination stop for cigarettes, especially in these times of overall category volume deceleration. Convenience has steadily picked up additional share in dollars (inching closer to 90 percent) and units (over 90 percent). This comes at the expense of the drug and food channels, which continue to lose more of their already single-digit share.

Northeast

South

Midwest

DOLLAR SALES

13.3%

Convenience

88.82%

89.13%

West

Food

Drug

90.31%

90.06%

UNIT VOLUME

12.7%

18.4%

25.8%

14.6%

25.5% 42.5%

6.30%

47.2%

Source: Nielsen; Convenience Store News Market Research, 2017

4.57%

FIRST HALF 2017 DOLLAR SALES

6.57%

4.61%

FIRST HALF 2016 DOLLAR SALES

5.56%

4.13%

FIRST HALF 2017 UNIT VOLUME

5.71%

4.23%

FIRST HALF 2016 UNIT VOLUME

Source: Nielsen; Convenience Store News Market Research, 2017

10 Guide to Tobacco | WWW.CSNEWS.COM

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Smokeless

Moist Smokeless Sales & Units Moist smokeless tobacco, cigarette’s backbar neighbor, remains a bright spot for c-stores, despite gains in 2016 that were not quite as good as those in 2015. For the first half of this year, gains dipped even a bit more in dollar sales, and unit sales even showed a slight decline. This is partly attributed to U.S. Smokeless Tobacco Co.’s voluntary recall in February of certain smokeless tobacco products (select cans of Copenhagen, Husky and Skoal), which has since been resolved.

2016 2015 % CHANGE FIRST HALF 2017 FIRST HALF 2016 % CHANGE

Dollar Sales (in millions) Unit Volume (in millions)

$5,249.3 $4,974.3 1,119.2 1,112.0

5.5% 0.6%

$2,483.7 509.4

$2,386.1 4.1% 514.5 -1.0%

Source: Nielsen; Convenience Store News Market Research, 2017

Moist Smokeless Sales & Units by Month The first two months of 2017 saw the biggest dips in dollar sales and units, thanks to U.S. Smokeless Tobacco’s recall, but results have since risen and leveled out, reflecting continued customer loyalty to the segment and acceptance of the latest line extensions, such as Grizzly Dark.

4

Dollar sales Unit volume

3 2 1 0 -1 -2 -3

06/03/17

05/06/17

04/08/17

03/11/17

02/11/17

01/14/17

12/17/16

11/19/16

10/22/16

09/24/16

08/27/16

07/30/16

07/02/16

06/04/16

05/07/16

04/09/16

03/12/16

02/13/16

01/16/16

12/19/15

11/21/15

10/24/15

09/26/15

08/29/15

08/01/15

07/04/15

06/06/15

05/09/15

04/11/15

03/14/15

02/14/15

-5

01/17/15

-4

Source: Nielsen; Convenience Store News Market Research, 2017

Moist Smokeless Share by Region (First Half 2017)

Moist Smokeless Competitive Channel Market Share

The Northeast might be the weakest region of the country in moist smokeless dollar sales and unit volume, but it continues to gain a larger foothold at the expense of the country’s strongest region, the South. To a lesser extent, the Midwest also loves its smokeless tobacco, with a regional share holding steady for the first half of this year compared to the first half of last year. The West is maintaining a steady share as well in third position.

Convenience is the darling channel in the moist smokeless world, hands down.

It is the most smokeless-friendly, with a loyal on-the-go core consumer, as well as a reputation for rapid rotation meaning fresh cans and new brands.

Northeast

South

Midwest

DOLLAR SALES

15.4%

Convenience

95.01%

West

Food

94.61%

Drug

95.08%

95.41%

UNIT VOLUME

13.9%

12.4%

46.5%

10.9%

25.9%

25.7%

4.63% 0.36%

49.3%

Source: Nielsen; Convenience Store News Market Research, 2017

FIRST HALF 2017 DOLLAR SALES

5.02% 0.37% FIRST HALF 2016 DOLLAR SALES

4.60%

4.28% 0.31% FIRST HALF 2017 UNIT VOLUME

0.32% FIRST HALF 2016 UNIT VOLUME

Source: Nielsen; Convenience Store News Market Research, 2017

12 Guide to Tobacco | WWW.CSNEWS.COM

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Cigars

Cigar Sales & Units Look at cigars go! The segment was a very healthy one in 2016, up 7.6 percent in dollar sales and nearly 12 percent in unit volume. And it just keeps getting better. For the first half of this year, dollar sales were up by nearly 12 percent and unit volume up nearly 15 percent — though unit growth that is larger than dollar growth implies a drop in price. Still, the segment in general continues to shift away from intense BOGO deals and toward higher-retail single SKUs, especially from top players like Middleton and Swisher.

2016 2015 % CHANGE FIRST HALF 2017 FIRST HALF 2016 % CHANGE

Dollar Sales (in millions) Unit Volume (in millions)

$2,421.7 $2,251.5 7.6% 1,687.7 1,507.7 11.9%

$1,211.6 858.1

$1,078.9 12.3% 748.2 14.7%

Source: Nielsen; Convenience Store News Market Research, 2017

Cigar Sales & Units by Month Analyzing results since January 2015, the greatest spikes in cigar dollar sales and unit volume were felt this past February and March.

Despite monthly ups and downs, solid gains are expected to continue as long as legislation doesn’t throw a curve ball.

06/03/17

05/06/17

04/08/17

03/11/17

02/11/17

01/14/17

12/17/16

11/19/16

10/22/16

09/24/16

08/27/16

07/30/16

07/02/16

06/04/16

05/07/16

04/09/16

03/12/16

02/13/16

01/16/16

12/19/15

11/21/15

10/24/15

09/26/15

08/29/15

08/01/15

07/04/15

06/06/15

05/09/15

04/11/15

03/14/15

02/14/15

Dollar sales Unit volume

01/17/15

8 7 6 5 4 3 2 1 0 -1 -2 -3 -4 -5 -6

Source: Nielsen; Convenience Store News Market Research, 2017

Cigar Share by Region (First Half 2017)

Cigar Competitive Channel Market Share

The South has the climate to grow cigar leaves, so it makes sense that it would command the highest share in dollars and units, which for the first half of this year, were over 55 percent and right on the mark of 60 percent, respectively. The Midwest, Northeast and West (in second, third and fourth spots, respectively) all lost slight share in either dollars or units to the South.

Convenience stores like cigars and vice versa. Meanwhile, the supermarket and drug channels are inching away from the cigar game, with both channels losing share for the first half of this year compared to the first half of last year.

Northeast

South

Midwest

DOLLAR SALES

12.9%

13.6%

Convenience

West

94.15%

Food

93.58%

Drug

96.24%

96.50%

UNIT VOLUME

11.8%

10.8%

17.4%

18.3%

55.2%

3.52% 2.33%

60.0%

Source: Nielsen; Convenience Store News Market Research, 2017

FIRST HALF 2017 DOLLAR SALES

3.99% 2.43% FIRST HALF 2016 DOLLAR SALES

2.67%

2.49% 1.01% FIRST HALF 2017 UNIT VOLUME

1.09% FIRST HALF 2016 UNIT VOLUME

Source: Nielsen; Convenience Store News Market Research, 2017

14 Guide to Tobacco | WWW.CSNEWS.COM

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E-Cigarettes

E-Cigarette Sales & Units The “E” in the e-cigarettes segment certainly does not stand for “easy.” The business is difficult to decipher, having been up, down, and now up again. Not that long ago, industry observers were on the verge of predicting the end of the e-cigarette boom, as many consumers turned back to combustible cigarettes. But don’t blink — because all that has turned around. E-cigarette dollar sales increased nearly 9 percent last year while unit volume improved by more than 14 percent, indicating a streamlining of lines and prices.

Even more impressive is the first half of this year, when those increases were 38-plus percent and nearly 23 percent, respectively, driven by “exceptionally strong pricing and volume,” according to analysts.

2016 2015 % CHANGE FIRST HALF 2017 FIRST HALF 2016 % CHANGE

Dollar Sales (in millions) Unit Volume (in millions)

$732.7 89.6

$672.8 8.9% 78.5 14.1%

$437.6 47.2

$316.6 38.2% 38.4 22.9%

Source: Nielsen; Convenience Store News Market Research, 2017

E-Cigarette Sales & Units by Month The segment’s downward trajectory in the fourth quarter of 2016 (which saw its worst month in December) was met with an equal and opposite upward trajectory during the first quarter of 2017 (which saw its best month in March). Strong pricing and volume is expected to continue, much to the surprise of last year’s predictions.

10 8 6 4 2 0 -2 -4 -6 -8 -10

06/03/17

05/06/17

04/08/17

03/11/17

02/11/17

01/14/17

12/17/16

11/19/16

10/22/16

09/24/16

08/27/16

07/30/16

07/02/16

06/04/16

05/07/16

04/09/16

03/12/16

02/13/16

01/16/16

12/19/15

11/21/15

10/24/15

09/26/15

08/29/15

08/01/15

07/04/15

06/06/15

05/09/15

04/11/15

03/14/15

02/14/15

01/17/15

Dollar sales Unit volume

Source: Nielsen; Convenience Store News Market Research, 2017

E-Cigarette Share by Region (First Half 2017) The United States is not divided in its love for e-cigs, as indicated by an evening-out of the segment share by regions of the country for the first half of this year. Since its inception, the e-cigarette segment has been much more evenly divided than traditional tobacco categories, but now it is even more so as the Northeast, Midwest and West all hover around the 22-percent to 23-percent mark in dollar share. The South does lead with 31.7-percent share, but this is down from 34.5 percent in the first half of last year. The South and Northeast both lost previous share gains to the West and Midwest, which gained share in dollars and units.

Northeast

South

Midwest

DOLLAR SALES

22.2%

23.5%

E-Cigarette Competitive Channel Market Share

Compared to drugstores and supermarkets, the convenience sector is the e-cig power player, capturing over 91 percent of both dollar sales and unit volume for the first six months of 2017. This was at the expense of the two other channels’ share. Drug looked like it was going to continue to gain ground following last year, but instead dropped from 9 percent to 7.5 percent in dollar share. Its unit share dropped slightly, too, to barely in the 7-percent range.

Convenience

91.10%

West

31.7%

20.2%

91.44%

90.65%

21.6%

7.56% 1.34%

34.5%

Source: Nielsen; Convenience Store News Market Research, 2017

Drug

UNIT VOLUME

23.7%

22.6%

88.94%

Food

FIRST HALF 2017 DOLLAR SALES

9.13% 1.93% FIRST HALF 2016 DOLLAR SALES

7.02% 1.54% FIRST HALF 2017 UNIT VOLUME

7.37% 1.98% FIRST HALF 2016 UNIT VOLUME

Source: Nielsen; Convenience Store News Market Research, 2017

16 Guide to Tobacco | WWW.CSNEWS.COM

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Vaping

Vaping/Liquid Product Sales & Units The relatively new segment of vaping/liquid products, which includes electronic cigarette liquids, electronic cigarette liquid capsules, electronic hookah liquids and vaporizer pen e-juices, posted solid gains of 27.9 percent in dollar sales and 34.2 percent in unit sales for the first half of this year.

2016 2015 % CHANGE FIRST HALF 2017 FIRST HALF 2016 % CHANGE

Dollar Sales (in millions) Unit Volume (in millions)

$117.7 $102.1 14.8 12.2

15.2% 21.9%

$64.5 8.2

$50.5 6.1

27.9% 34.2%

Source: Nielsen; Convenience Store News Market Research, 2017

Vaping/Liquid Product Sales & Units by Month This segment could be in for more “spikey” times as reduced-risk products (RRPs) emerge onto the scene. The highs and lows could get even higher and lower than they have in recent times, such as when last year’s largest spike in June was immediately followed by its biggest dip in July. Stay tuned for why volatility and vapor have become synonymous.

35 30 25 20 15 10 5 0 -5 -10 -15

06/03/17

05/06/17

04/08/17

03/11/17

02/11/17

01/14/17

12/17/16

11/19/16

10/22/16

09/24/16

08/27/16

07/30/16

07/02/16

06/04/16

05/07/16

04/09/16

03/12/16

02/13/16

01/16/16

12/19/15

11/21/15

10/24/15

09/26/15

08/29/15

08/01/15

07/04/15

06/06/15

05/09/15

04/11/15

03/14/15

02/14/15

Dollar sales Unit volume

Source: Nielsen; Convenience Store News Market Research, 2017

Vaping/Liquid Product Share

by Region (First Half 2017)

Vaping/Liquid Product Competitive Channel Market Share

The regional share pie for the first half of this year looks a bit different than it did this time last year, likely due to the mixed bag of local legislation on one hand, and increasing experimentation and popularity on the other. The Northeast has made a sizeable gain on the South, particularly in dollar sales where both are nearly tied for 35-percent share. The Midwest gained a point to reach 18 percent.

Meanwhile, the West dropped nearly three percentage points to under 13-percent-share. Unlike traditional tobacco category shares, these shares are not set by any means, as the segment is new and rapidly evolving.

The convenience channel commands the lion’s share of vaping/liquid product sales when compared to drugstores and supermarkets. But better than that, it is keeping consistent in a segment otherwise filled with volatility. C-stores have hovered around the 94-percent mark in dollar share, and moved up to nearly 95 percent in unit share. As with e-cigarettes, the drug and supermarket channels are keeping a low profile. For supermarkets, it is becoming almost non-existent, with under 1-percent dollar share for the first half of this year.

Northeast

South

Midwest

DOLLAR SALES

93.60%

West

Food

Drug

94.83%

93.49%

93.20%

UNIT VOLUME

12.8%

14.3% 27.5%

34.4%

18.0%

Convenience

20.5%

34.8% Source: Nielsen; Convenience Store News Market Research, 2017

37.7%

5.56% 0.84%

FIRST HALF 2017 DOLLAR SALES

5.38% 1.13% FIRST HALF 2016 DOLLAR SALES

4.08% 1.09% FIRST HALF 2017 UNIT VOLUME

5.08% 1.72% FIRST HALF 2016 UNIT VOLUME

Source: Nielsen; Convenience Store News Market Research, 2017

18 Guide to Tobacco | WWW.CSNEWS.COM

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Pipe & Cigarette Tobacco

Pipe & Cigarette Tobacco Sales & Units It seems c-stores struggled with pricing in pipe and cigarette tobacco in 2016, as dollar sales were down almost 10 percent, but unit volume was up more than 12 percent. For the first half of this year, pricing and profit is a lot better, with dollar sales up almost 7 percent and unit-volume gains staying consistent at over 12 percent.

2016 2015 % CHANGE FIRST HALF 2017 FIRST HALF 2016 % CHANGE

Dollar Sales (in millions) Unit Volume (in millions)

$78.5 14.0

$86.9 -9.7% 16.0 12.1%

$34.0 5.7

$36.6 6.9% 6.5 12.2%

Source: Nielsen; Convenience Store News Market Research, 2017

Pipe & Cigarette Tobacco Sales & Units by Month Pipe and cigarette tobacco got its groove back — it saw the largest upswing of the past two years this past May, even though last year saw more consistent upswings in April, May and June in the convenience channel. Prior to May of this year, however, the segment stayed consistent in the first half with no large downturns as it had right before the upswings of 2016.

06/03/17

05/06/17

04/08/17

03/11/17

02/11/17

01/14/17

12/17/16

11/19/16

10/22/16

09/24/16

08/27/16

07/30/16

07/02/16

06/04/16

05/07/16

04/09/16

03/12/16

02/13/16

01/16/16

12/19/15

11/21/15

10/24/15

09/26/15

08/29/15

08/01/15

07/04/15

06/06/15

05/09/15

04/11/15

03/14/15

02/14/15

Dollar sales Unit volume

01/17/15

6 5 4 3 2 1 0 -1 -2 -3 -4 -5 -6 -7 -8

Source: Nielsen; Convenience Store News Market Research, 2017

Pipe & Cigarette Tobacco Share

by Region (First Half 2017)

Pipe & Cigarette Tobacco Competitive Channel Market Share

The regions with the highest cigarette tax states are still capturing the biggest share in pipe and cigarette tobacco sales. The Northeast leads at almost 40-percent share of dollar sales and more than 32 percent in unit volume. The next highest region in dollar-sales share is the Midwest (over 24 percent), although the West is the next highest region in unit-sales share (over 30 percent). The South lags greatly in this segment, indicating stronger cigarette sales there.

Convenience stores dropped three points from their two-thirds share in dollar sales for the first half of this year. Supermarkets gained two points and drugstores gained one percentage point, while unit volume kept pretty consistent thus far in 2017.

Northeast

South

Midwest

DOLLAR SALES

Convenience

30.4%

32.6% 29.6% 7.60%

24.1% 13.1% Source: Nielsen; Convenience Store News Market Research, 2017

22.0%

71.69%

71.35%

65.87%

62.82% 39.3%

Drug

West UNIT VOLUME

23.5%

Food

15.0%

FIRST HALF 2017 DOLLAR SALES

27.5%

23.4%

23.4% 6.67%

FIRST HALF 2016 DOLLAR SALES

5.21% FIRST HALF 2017 UNIT VOLUME

4.90% FIRST HALF 2016 UNIT VOLUME

Source: Nielsen; Convenience Store News Market Research, 2017

20 Guide to Tobacco | WWW.CSNEWS.COM

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Accessories

Smoking Accessories Sales & Units Smoking accessories are a fickle bunch these days. While lighters are typically a solid bet for c-stores, this segment has branched out considerably into alternative accessories and more, resulting in a lot of volatility month by month and translating into lower dollar and unit gains than the channel has seen the prior two years. Last year and the first half of this year saw slight unit volume declines, in fact. Last year’s dollar sales only grew 2.4 percent, less than half of what it was in 2015. The first half of this year, that gain dipped to under 2 percent.

2016 2015 % CHANGE FIRST HALF 2017 FIRST HALF 2016 % CHANGE

Dollar Sales (in millions) Unit Volume (in millions)

$570.2 347.0

$557.0 348.4

2.4% -0.4%

$259.0 153.8

$254.5 1.8% 156.0 -1.4%

Source: Nielsen; Convenience Store News Market Research, 2017

Smoking Accessories Sales & Units by Month They’re up. Oh wait, they’re down. Smoking accessories are going wild in the last three months, with both the largest dip and largest leap in sales occurring during this time. This volatility could have to do with the fact that more c-stores are experimenting with alternative accessories.

06/03/17

05/06/17

04/08/17

03/11/17

02/11/17

01/14/17

12/17/16

11/19/16

10/22/16

09/24/16

08/27/16

07/30/16

07/02/16

06/04/16

05/07/16

04/09/16

03/12/16

02/13/16

01/16/16

12/19/15

11/21/15

10/24/15

09/26/15

08/29/15

08/01/15

07/04/15

06/06/15

05/09/15

04/11/15

03/14/15

02/14/15

Dollar sales Unit volume

01/17/15

12 10 8 6 4 2 0 -2 -4 -6 -8

Source: Nielsen; Convenience Store News Market Research, 2017

Smoking Accessories Competitive Channel Market Share

Smoking Accessories Share

by Region (First Half 2017) Where there are more tobacco products purchased, there are more smoking accessories purchased. Case in point: The South, which holds nearly half the accessories market, regionally speaking. The Midwest and West each command about a fifth of the share, while the Northeast claims what’s left — about 12 percent each in dollars and units.

Northeast

South

Midwest

DOLLAR SALES

20.1%

12.3%

Convenience stores practically own the smoking accessories market (over a 99-percent share in dollar sales and even more in unit volume). Buying lighters with a tobacco purchase is a common add-on at c-stores, which leverage lighters at the front counter of virtually every location.

Convenience

West

99.26%

46.0%

19.7%

99.71%

99.69%

11.5%

0.53% 0.21%

47.8%

Source: Nielsen; Convenience Store News Market Research, 2017

99.27%

Drug

UNIT VOLUME

21.0%

21.6%

Food

FIRST HALF 2017 DOLLAR SALES

0.16%

0.51% 0.22% FIRST HALF 2016 DOLLAR SALES

0.17% 0.13%

FIRST HALF 2017 UNIT VOLUME

0.14% FIRST HALF 2016 UNIT VOLUME

Source: Nielsen; Convenience Store News Market Research, 2017

22 Guide to Tobacco | WWW.CSNEWS.COM

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What’s New in Tobacco

Optimo Natural Leaf Grape Cigarillos Optimo Natural Leaf Cigarillos are now available in a grape blend, finished in first-class candela leaf wrappers. Each Optimo Natural Leaf Cigarillo pairs a natural leaf wrapper with a blend of imported tobaccos. The Optimo Natural Leaf Grape Cigarillo is the only cigar with the classic grape filler blend wrapped in green candela leaf, according to the brand. Optimo Natural Leaf Grape Cigarillos are packaged in two-count, resealable foil pouches, and available in “2 for 99¢,” “Save on 2” and “2 for $1.49” price formats.

Swisher International Jacksonville, Fla. (800) 874-9720 swisher.com

Smart Toothpicks

New smoking alternative Smart Toothpicks are large, flavored, nicotine-infused toothpicks. Containing the same amount of nicotine as a cigarette (3 milligrams), Smart Toothpicks come in three flavors: Wintergreen, Peppermint Ice, and Cinnamon. According to the company, Smart Toothpicks are a healthy alternative for smokers and chewers because there is no tar or smoke. Each pack contains 20 individually wrapped toothpicks, and they are available in 18-count counter boxes.

Smart Toothpicks Tempe, Ariz.

(602) 832-3756 gregj@smarttoothpicks.com smarttoothpicks.com

Lost Art Liquids Strawberry Strike

Strawberry Strike was born out of a partnership between Lost Art Liquids and Next Generation Labs.

It is the first brand from Lost Art Liquids that is crafted using TFN Nicotine. According to the company, TFN Nicotine is a non-tobacco derived synthetic nicotine that is virtually odorless and tasteless, allowing for better flavors for adult vape consumers. Strawberry Strike comes in zero milligram (mg), 3 mg, 6 mg or 12 mg nicotine strengths per 120-milliliter bottle.

Lost Art Liquids Los Angeles (213) 816-2988 info@lostartliquids.com lostartliquids.com

Cheyenne Cigars Strawberry 100’s JOB Organic Hemp Cigarette Papers Cheyenne International’s Cheyenne Cigars brand unveiled a Strawberry SKU. The Strawberry 100’s, made at the company’s manufacturing facility in Grover, N.C., joins 11 other styles in the Cheyenne Cigars roster. According to CEO David Scott, “The addition of Strawberry 100’s was a natural next step for the brand.

Our adult consumers are looking for both quality and variety in this segment, and we intended to deliver.”

The Strawberry 100’s come 20 cigars per pack, and are accompanied by attractive point-of-sale and customized retail and wholesale programs to fit individual market needs, the company noted.

Cheyenne International LLC Grover, N.C. (866) 254-6975 contactus@cheyenneintl.com cheyenneintl.com

JOB Organic Hemp Cigarette Papers from Republic Tobacco will appeal to the highend consumer and their desire to follow an eco-friendly, environmentally conscious lifestyle, according to the maker. The cigarette papers are made from organically farmed hemp, grown free from pesticides and fertilizers; are unbleached; and gummed with vegetarian/ GMO-free acacia. JOB Organic Hemp Cigarette Papers feature a pale brown color and a fine texture that supports comfortable, smooth rolling every time. They are available in 1-1/2, Single Wide, 1-1/4 and Slim sizes, packed 40 boxes per case. A four-box counter display is also available for merchandising.

Republic Tobacco Glenview, Ill. (847) 832-9700 ocb.net

24 Guide to Tobacco | WWW.CSNEWS.COM

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naturally un-sweet F O R M O R E I N F O R M AT I O N C O N TAC T YO U R S W E D I S H M AT C H R E P R E S E N TAT I V E 800-367-3677 • CUSTOMERSERVICE@SMNA.COM

© 2017 SMCI Holding, Inc.

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What’s New in Tobacco

Method Cali Berry E-Liquid Frisco Vapor introduces Method Cali Berry E-Liquid with Next Generation Labs’ TFN Nicotine. TFN Nicotine is a test-verified non-tobacco derived synthetic nicotine created for the vape industry that provides virtually odorless and tasteless nicotine.

Method Cali Berry E-Liquid is the first TFN Nicotine brand from Frisco Vapor. The e-liquid contains strawberry and mango flavors, and can be purchased in zero milligram (mg), 3 mg or 6 mg nicotine strengths per 60-milliliter glass bottle.

Frisco Vapor San Francisco (415) 299-8300 sales@friscovapor.com friscovapor.com

JM Tobacco Española Cigars

JM Tobacco is celebrating 20 years of growth by spotlighting its original flagship cigar, Española. These cigars come in four wrappers: Gold Label (Ecuadorian-grown Connecticut), Red Label (Sumatra), Green Label (Connecticut Shade) and Black Label (Maduro). Española cigars are also available in four classic Cuban shapes: Corona, Robusto, Toro and Churchill.

Cello-tubed and presented 25 in a coffin-style Spanish cedar box, each cigar has a suggested retail price of $7 to $8.

JM Tobacco Co. Los Angeles (888) 377-2667 info@jmtobacco.com jmtobacco.com

Sailor Pipe Line

Arango Cigar Co. introduces the “Sailor” pipe line from Danish master carver Erik Nording. Sailor pipes feature a briar bowl that is encased in a polished aluminum sleeve and the assembly, which covers the sleeve’s lower half, is permanently attached to the base. The base’s open bottom also has a “Made in Denmark” stamp.

The aluminum sleeve and matching stem for the Sailor pipe line are available in red, blue, black, silver and gold. Each pipe comes with a 5-inch aluminum stem and black plastic bit, with an optional 10-inch stem/bit available separately in all colors. The wholesale cost per pipe is $20, and the optional 10-inch stem/bit is $15.

Arango Cigar Co. Northbrook, Ill. (847) 480-0055 sales@arangocigarco.com arangocigarco.com

White Owl Emerald & White Owl Platinum White Owl Emerald and White Owl Platinum cigars are unflavored, unsweetened and made with an all-natural, premium blend of tobacco. While White Owl Emerald cigars have a distinct green wrapper, White Owl Platinum cigars have a traditional brown wrapper. Both products come in packaging designed to catch the eye of consumers, the company noted. The cigars are available in “2 for 99 cents,” “2 for 1.49” and “Save on 2” formats.

Swedish Match North America Inc. Richmond, Va. (804) 787-5100 info@smna.com swedishmatch.com

Swisher Sweets Tropical Ice

Swisher Sweets released limited-edition Tropical Ice cigarillos for the summer season.

Swisher Sweets Tropical Ice cigarillos feature an icy tropical fusion that blends coconut and pineapple flavors with an icy blast, according to the brand.

The cigarillos are available in three pricing options: “2 for 99¢,” “2 for $1.49” and “Save on 2.” The resealable foil pouches carry the brand’s “Sealed Fresh” guarantee.

Swisher International Jacksonville, Fla. (800) 874-9720 swisher.com

26 Guide to Tobacco | WWW.CSNEWS.COM

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Give your customers the cool sensations of the tropics with this limited edition blending pineapple, coconut, and cooling mint. Available in 2 for 99¢, 2 for $1.49, and Save on 2 pouches to deliver fast turns for your store at an affordable price for your customers.

swishersweets.com 800.874.9720

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TASTE

VALUE

SALES 24-28-TOB_whatsNEW.indd 28

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A COMPREHENSIVE GUIDE TO BUILDING THE BEER BUSINESS ACROSS MULTIPLE CHANNEL S

2 017

3 4 6 12 PAG E

PAG E

PAG E

PAG E

40 PAG E

An Update from Kevin Doyle

MillerCoors Advantage

Industry Overview

Off-Premise 12

30

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

e CO M M E R C E

18

34

L I QU O R S TO R E S

D R U G S TO R E S

24

38

G R O C E RY S TO R E S

D O L L A R S TO R E S

On-Premise 40 O N - PR E M I S E OV E R V I E W

S P O R T S BA R S

46

50

N E I G H B O R H O O D BA R S

2

48

C A SUA L D I N I N G

A new approach to selling beer.

The beer game is changing. We see it every day. More brands. More styles. New flavors. More places to shop and dine. New occasions.

Today’s consumers have more options than ever before when choosing a beer.

Retailers who truly understand the trends and business drivers for beer in their store – and not just the hype – have a huge advantage in this new beer landscape.

That’s where this Building with Beer® publication comes into play.

The following strategy guide will give you a look at how beer contributes to the overall success of your store and the satisfaction of your consumers. 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 the value of your total beer category. A growing category benefits everyone – including your consumers. This strategic guide reflects this 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

3

MillerCoors Advantage

Brands

Distributor Services

Innovation Profitable Category Growth

People

4

Business Building Solutions

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

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

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

Distributor Services In addition to MillerCoors brands, our network of distributors brings 67% of Import, 68% of Hard Ciders and 86% of Craft brand volumes to the U.S. marketplace. They are constantly looking for new ways to help retailers build their beer business.

5

C R E AT E T R A F F I C • I N C R E A S E CO N V E R S I O N • B U I L D P R O F I T

INDUSTRY OVERVIEW

TOTAL BEER SALES $105.5 BILLION (2)

Beer is the alcohol beverage of choice for most American consumers.

Whether people are relaxing at home, reconnecting with friends or enjoying a casual meal, they choose beer more often than either wine or spirits.

B E E R CO N SU M P T I O N VS . W I N E & S PI R I T S SHARE OF SERVINGS

BEER (12oz.)

WINE (5oz.)

SPIRITS (1.5oz.)

50.6%

15.2%

34.2%

BEER

WINE

SPIRITS

6,431

805

543

2016

NUMBER OF BREWERIES (1)

2016: 4,981 20 07: 1,619

Beer represents >50% of total alcohol beverage servings.(2)

6

GALLON CONSUMPTION (MM) 2016 MillerCoors Industry Sales Estimates, December 2016

It’s an exciting time to be in the beer

way beer sales have grown to more than

business.

$105.5 billion.

It’s also a challenging one.

But despite all this excitement, beer volume has actually declined. Between

The United States is enjoying a beer

2007 and 2016, beer sales declined by

renaissance. Nearly 5,000 brew pubs and

more than 7 million barrels. Per-capita

brewers were in business in 2016 – with

consumption has declined as well.

new ones emerging all the time. More

Meanwhile, beer has lost share to wine

brands are on store shelves or behind

and hard liquor.

the bar than ever before. Consumers are interested in learning more about beer,

Brewers have been hard at work trying to

brewing beer at home and, of course,

win back drinkers, including introducing

sampling different beers. And along the

new innovation, new packaging and more

C R E AT E T R A F F I C • I N C R E A S E CO N V E R S I O N • B U I L D P R O F I T

contemporary marketing. But getting

handle for Coors Light, Miller Lite and

beer right at retail is a critical part of

Bud Light is incredibly powerful, and

the puzzle. Amid all the excitement

that these brands make an impact

over the past few years, it’s been easy

when they’re displayed on the floor.

Beer’s

to lose track of some beer basics. The

opportunity:

conversation has been focused on Craft,

This Building with Beer ® publication

but it’s important to remember that a tap

details the strategies necessary in each

Expand into new

NUMBER OF U.S. BREWERIES

4,981

5,000

occasions, recruit new drinkers

3,920

4,000 3,373

54%

2,846

3,000 2,430

1,688

1,778

1,814

shoppers account for 2016

2015

2014

2013

2012

2011

2010

2009

75% of 2008

1,000

1,619

2007

2,000

of beer

2,093

all beer sales.(3)

Alcohol and Tobacco Tax and Trade Bureau (TTB), December 2016

7

C R E AT E T R A F F I C • I N C R E A S E CO N V E R S I O N • B U I L D P R O F I T

FOUR MEGA OCCASIONS

DIFFERENT OCCASIONS CALL FOR

CONNEC T

SOCIAL

C E L E B R AT E

RELA X

DIFFERENT BEERS.

UNTAPPED

POTENTIAL: Recruit new consumers

class of trade for retailers to win the

All segments are important. Consumers

business of the beer consumer.

enjoy a wide range of beer styles, and different beers serve different roles. So

While every class of trade is different,

it’s important to look at the big picture

some common themes emerge.

when looking at which beers to carry and promote.

CORE CONSUMERS purchase

3X MORE BEER than non-core consumers.(3)

Core brands and packs matter. The vast majority of the business is driven

Premium American Light Lagers –

by a very small percentage of items that

including Coors Light, Miller Lite and

carry very high consumer demand. And

Bud Light – make up the largest portion

many consumers are loyal to specific

of beer sales and are the go-to beers for

packs. Retailers who don’t recognize

many consumers and many occasions.

these factors risk losing sales.

Take small-format stores. Capturing the

B E E R CO R E S H O PPE R

business here means focusing efforts

74.0%

on the packages that consumers desire most. Most consumers enter beer through small packs (12-pack or smaller),

56.7%

which also give people the opportunity to experiment with new flavors and trade up to new experiences. Singles, in particular, are growing and represent WOMEN ACCOUNT FOR

a huge opportunity.

Meanwhile in the on-premise, it’s

17 BILLION

important to keep core items available

BEER/YEAR. (3)

and profit can grow through the power

SERVINGS OF

8

to consumers and not get caught up in the “long tail.” This way topline sales of velocity.

% of Malt Based/ Hard Cider

SHOPPERS

% of Malt Based/ Hard Cider

DOLLARS

Nielsen Homescan Panel through Aug. 27, 2016

C R E AT E T R A F F I C • I N C R E A S E CO N V E R S I O N • B U I L D P R O F I T

Above Premium segments – including

The right assortment is necessary

Imports, Crafts and Flavored Malt

to maximize the beer category.

Beverages – are in demand with

Building the right assortment starts

consumers who are seeking the everyday

with understanding what items are

indulgences they have come to expect

purchased at similar outlets. The use

in other categories (think gourmet ice

of demand-based clustering identifies

cream or that $3.99 cup of coffee).

items that have a high chance of success and more precisely pinpoints

Economy beer is an important segment

the core of the business. While

that has gotten lost in the mix amid

everyone wants to be first with new

the growing popularity of higher-end

news, remaining focused on core is

offerings. In recent years, brewers have

the best way to drive sales success

lost focus and retailers have reduced

and customer satisfaction over the

space. What was forgotten is that

long haul.

Economy beer drinkers are the most valuable shoppers in the business. They

Core shoppers matter … but new

make more trips, spend more annually

consumers are critically important.

and are more loyal to their brands.

More than half of beer shoppers –

Brewers once again are recognizing the

nearly 57% – account for almost 75%

importance of the Economy segment,

of all beer sales. These core shoppers

including in attracting new consumers.

purchase at a rate three times greater

So the time is right to win back this

than other shoppers.(5) So it’s important

shopper by offering the right brands,

to keep these important shoppers in

the right packs and a good value.

mind.

(5)

ECONOMY BEER DRINKERS HAVE VALUE • Highest annual spend • Most trips • Highest trip frequency(5)

AMERICAN LIGHT LAGERS are the LARGEST portion

S H A R E O F B E E R SA LE S BY CH A N N E L

6.3% 6.5%

of sales.(4)

5.9% 32.3%

Convenience Grocery Liquor

2.2%

Mass Merch

3.3%

Drug

19.9%

MAJORITY OF BEER

Bar Tavern

SALES ARE

Restaurant

DRIVEN

Other On-Pemise 23.6%

THE

MillerCoors Industry Estimates, December 2016

BY A FEW ITEMS.(3)

9

C R E AT E T R A F F I C • I N C R E A S E CO N V E R S I O N • B U I L D P R O F I T

Understand

VO LU M E PR O D U C T I O N

BY N U M B E R O F I TE M S

the right amount of

BEER.

is critical to the health of the category. For instance, beer has a big

20,000

SPACE for

That said, bringing in new consumers

15,000

13,564

15,101

16,038

17,518

opportunity with women, especially with women who think beer “is not for them.” Right now women account for 17 billion servings of beer per

11,673

year – which is actually lower than it

10,000

was a decade ago. Women represent untapped potential within the

RIGHT ITEMS + EASY-TO-

category.(3)

5,000

0

346

387

407

Number of items

Consumers buy beer for specific occasions. There’s an optimal time and place for every beer. We have identified four mega occasions.

80% OF VOLUME

SHELVING

Nielsen, December 2016

IS

• Relax: When you’re just relaxing/ kicking back, either by yourself or with your spouse/partner.

S H A R E O F B E E R T Y PE DOLLAR SALES ($MM)

$ % CHG YA

CH A R T H E A D E R

PREMIUM AMERICAN LIGHT LAGER

$4,254.1

(0.3%)

IMPORT

$3,215.8

5.6%

CRAFT

$2,807.7

4.8%

NEAR PREMIUM

$1,224.5

1.0%

PREMIUM AMERICAN REGULAR LAGER

$1.173.8

0.0%

SUPER PREMIUM

$1,034.7

9.4%

FLAVORED MALT BEVERAGES

$986.7

8.3%

ECONOMY

$827.1

(3.3%)

HARD CIDER

$279.5

(9.5%)

MALT LIQUOR

$118.8

(15.9%)

COOLERS

$108.2

0.6%

$7.9

10.5%

ALTERNATIVE Nielsen xAOC 52 weeks ending Dec. 31, 2016

10

456

ALL OTHER SKUS

NAVIGATE

CRITICAL.

442

C R E AT E T R A F F I C • I N C R E A S E CO N V E R S I O N • B U I L D P R O F I T

PREMIUM

ECO N O M Y B E E R D R I N K E R S A R E I M P O R TA N T

is still LARGEST SHARE, Loyalty Avg. % of Household Beer Purchases

Annual Spending

Avg. Drinks/ Week

Purchase Cycle (Days)

Above Premium

57.5

$67

4.9

31

Premium

45.2

$99

6.1

24

Economy

63.4

$142

10.7

15

• Highest annual spending • Most trips per buyer • Fewest days between purchases

• Almost 2/3 of purchases made in grocery with room to grow Nielsen Homescan through August 2016

ABOVE PREMIUM growing.

Unlike many categories, BEER has a HIGH incremental RATE OF

• Connect: When you’re with a small group of close friends and/

RETURN

or family, to mainly catch up and

with

connect, and just be yourself.

additional space.

• Social: When you’re socializing with a group of extended friends and others, where you feel a need to impress them or are conscious of how you come across.

• Celebrate: When you’re celebrating at a large party or

grow the size and value of the beer category.

social event/gathering, with 10 or more people.

This Building with Beer ® publication shares best practices of successful retailers in each class of trade, and it provides solutions to help

Sources: 1. Alcohol and Tobacco Tax and Trade Bureau (TTB), December 2016 2. MillerCoors Internal Sales Estimates, December 2016 3. MillerCoors Behavioral Tracking Study, bi-annual, December 2015 4. Nielsen AOC through Dec. 31, 2016 5. Nielsen Homescan through August 2016 6. Nielsen Space Audit, July 2016 7. CPI Average Price Index, 2017

11

S I N G L E S • 2 - F O R P R I C I N G • S M A L L M U LT I PAC K S

CONVENIENCE STORES

C-STORE is the

#1 CLASS OF TRADE

for beer sales.(1)

C-store is the largest class of trade

The popularity of c-stores for beer

for beer sales, representing almost

purchases is not surprising because

one-third of industry volume and

c-stores are convenient – on the way

continuing to increase in importance.

(1)

• FAST & EASY:

They spend <2 minutes in store,

• RELAX - Shed the day • CONNECT - Chillin’ at home • CELEBRATE - Bringing the beer

PACK AGES THAT MATCH THEIR OCCASIONS

Video Mining, August 2016

Three beer occasions drive people

• FREQUENT SHOPPERS: visit c-stores daily • 92% of beer trips are for 12-pack or smaller • 55% of beer trips are singles purchases • 37% of beer trips are for small packs (4-pack–12-pack)

to c-stores: • Relax: An after-work transition to “me time” that usually involves singles • Connect: Reconnecting with a trusted group of buddies • Celebrate: Using beer to celebrate at a small party or tailgate

• DESTINATION: 55% of c-store beer trips are solely to

Beer shoppers buy packs that

purchase beer

perfectly match these occasions.

• HIGH TRAFFIC:

60% of beer sales occur

from 3 – 8 p.m.; 53% of beer is sold Friday, Saturday or Sunday • ON THEIR WAY TO AN OCCASION: Nearly 80% of beer purchases are for consumption within two hours, 62% within one hour. Therefore, cold beer from the cooler is essential MillerCoors Profitable Beer Marketing Transaction Study through Nov. 30, 2016 and NACS Convenience Tracking Program, August 2016

12

C-STORE BEER SHOPPERS BUY

<20 seconds at cooler

• 52% of beer shoppers

THREE C-STORE OCCASIONS

to beer shoppers’ occasions.

More than half of their beer transactions are singles.

BUILDING WITH BEER ® The foundation of Building with Beer® starts with solid facts and insights. We’ve analyzed 1.8 billion store transactions, conducted more than 6,000 shopper exit intercepts, studied 30,000 singles trips via Video Mining, and talked with c-store shoppers across the country in focus groups. Through our partnership with NACS, we studied

S I N G L E S • 2 - F O R P R I C I N G • S M A L L M U LT I PAC K S B E E R I S WO R T H M O R E I N SA LE S T H A N T H E S PACE I T ’ S G I V E N VS . OT H E R C ATEG O R I E S

8.8

7.0

8.8

9.6

4.7 BEER

WATER

SODA

ENERGY

SPORTS DRINK

Average Days of Supply Nielsen Space Audit, bi-annual study, Q4 2015

8,000 shoppers in the Annual Convenience

TURN SINGLES INTO HOME RUNS

Tracking Program as well as firms

Singles continue to expand in c-stores

representing 25,841 stores in the State of

and now represent a 25 share of

the Industry report to fuel our thinking.

category dollars and 55% of beer transactions. Singles growth has been

Often beer is under-spaced in the cooler.

impressive and responsible for two-

With a lower average days of supply vs.

thirds of the beer category gains over

other categories, beer is worth more

the past five years.(4)

in sales than the space it’s given. On average, optimal c-stores have at least

Optimal c-stores dedicate at least 25% of

40% of cooler doors dedicated to beer.

the beer space to singles. Retail partners

(3)

BEER MAKES MORE MONEY THAN ANY OT H E R C AT EG O RY A S I T E X PA N DS S PACE

$4,754

Weekly sales by # of cooler doors $3,178 $2,081

$249 0

$3,503

$3,750

$4,031

of SPACE to beer.

$2,559

0.5

1

25% 2

3

4

5

6

7

# OF DOORS

Beer

Dedic ate 40%

$954

$311

CSD

Nielsen Space Audit Q4 2015

40%

Tea/Juice

Energy Coffee

Sports Drink

8

Dedic ate 25% of beer space

to SINGLES.

13

S I N G L E S • 2 - F O R P R I C I N G • S M A L L M U LT I PAC K S

Singles shoppers visit c-stores 24x a month and purchase 19 times.(9)

Only 2% of beer transactions have both a SINGLE and SMALL MULTIPACK in the same basket.(8)

have proven that more space for singles

the singles shopper find what he needs.

is beneficial for their bottom lines as

First, merchandising all of the singles

well. A leading retailer tested this across

together rather than dispersing the

20 stores by optimizing the cooler space

singles across all doors results in an

to add an additional door of singles.

average 18% higher sales rate.(5)

The result was increased revenue and profit across the cooler, not just beer.(11)

singles, and are all necessary for Singles shoppers are some of the most

growth. Merchandising singles within

valuable c-store customers; singles

these segments will help shoppers

shoppers visit a c-store 24 times a

quickly find what they’re looking

month and purchase singles 19 times!

(9)

1/3

will leave without a purchase.(9)

While the average shopper spends less than 20 seconds at the cooler, it is

FLAVORS: Flavored Malt Beverages,

important to simplify the shopping trip.

Hard Sodas, Cocktails

Nearly a third of shoppers will leave the store if they cannot find what they are

INDULGENCE: Imports, Crafts and Hard Ciders, Super Premium

looking for. However, if helped to find his/her first item in the first 10 seconds,

REFRESHMENT: Premium and Near

the shopper will buy more items.

Premium American Light Lagers VALUE: Economy

singles and multipacks in the basket.(8)

LARGE BOTTLES: 32-, 40- and

Creating a singles destination will help

42-oz. bottles

D R I V E B E V E R AG E SA LE S BY A LLO C AT I N G 4 0 % O R M O R E O F CO O LE R TO B E E R BEVERAGE $ SALES INDEX Coolers with <40% of space for beer

Coolers with 40%+ of space for beer

Small Stores

100

109.4

Medium Stores

100

107.7

Large Stores

100

107.5

C-stores devoting 40% OR MORE of t heir cooler space to beer have 7-9% HIGHER TOTAL BEVER AGE SALES Nielsen C-Store Cooler Space Audit Q4 2015

14

for, increase their basket size, and encourage trade-up:

Only 2% of beer transactions have both

If shoppers can’t find what they’re looking for, nearly

Next, five distinct segments drive

S I N G L E S • 2 - F O R P R I C I N G • S M A L L M U LT I PAC K S

On average the singles shopper

Premium and Economy small multipacks

purchases 1.5 singles per transaction,

are the ideal products for the relax or

meaning sometimes he buys one and

celebrate occasions. These segments are

sometimes he buys two. To encourage

the perfect beers for reconnecting with

purchase, utilize “2-For” promotions and

friends and account for more than 59% of

clearly communicate it with prominent

small multipack dollar sales in c-stores.(4)

shelf strips. Clear signage results in

In fact, 7 out of 10 small-pack units sold

a 5% sales lift even when the “2-For”

in c-stores are Premium American Lagers

pricing is just the single purchase price

and Economy.(2)

times two.(5) WIN WITH SINGLES

CORE ITEMS C-store shoppers are looking for

1. Allocate at least 25% of beer space

12-packs – the No. 1 multipack package

in dollar sales.(4) So, it’s not surprising

to singles.

2. Merchandise singles together from a

that c-stores that carry both 12-pack

cans and bottles for all three American

shopper perspective.

3. Simplify pricing at shelf by promoting

Light Lager brands sell 5.3% more beer

“2-Fors” across multiple singles

on average than stores that don’t carry

segments and clearly communicate it

all six packages.(6)

with shelf strips.

GROW BIG BY GOING SMALL

THIS STEMS FROM THREE KEY FACTS: 1. Premium American Light Lager brands

Beer multipacks make up three-quarters

have the highest penetration and

of category sales(2) and provide one of the

consumer reach in the beer

largest c-store basket rings (more than

category.(10)

twice the average c-store basket).(7) Small

2. Drinkers are very loyal to their brand

multipacks, which are 12-packs or smaller,

in this segment with the highest

account for 40% of beer transactions.(8)

exclusivity rates in the category.(10) 15

S I N G L E S • 2 - F O R P R I C I N G • S M A L L M U LT I PAC K S

% O F B E E R M U LT I PACK D O LL A R S Premium and Economy multipacks fulfill multiple consumer occasions and deliver dollars.

40% of beer transactions are small multipacks.(8)

10%

Premium

5%

Economy

8%

Imports

43%

Super Premium

19%

Craft/Hard Ciders

16%

7 out

Flavored Malt Beverages

of 10

small packs

Nielsen c-stores 52 weeks through March 25, 2017

sold in

c-stores are PREMIUM

3. Shoppers are particular about

THREE STEPS TO BIGGER BEER

AMERICAN

their beer containers. Half of

SALES WITH SMALL MULTIPACKS

Premium American Light Lager shoppers only buy cans, but

1. Make your multipack mix count –

LAGERS

about one-third only buy

bottles, so you need to carry

both packages.(10)

LIGHT and

ECONOMY.(2)

ensure availability of core 12-packs

and smaller.

2. Lean into Premium American Light

Lagers to drive conversion.

Create a beer beacon with the

3. Ensure availability of Economy brands

items your shoppers seek.

to satisfy shopper expectations.

CO N S U M E R S A R E PA R T I CU L A R A B O U T T H E I R B E E R CO N TA I N E R

12-pack is the

60% 50% 40%

#1

30%

multipack

20%

package in dollar sales.

16

49%

31%

10% 0%

Cans Only

Nielsen Panel Data Q3 2016

Bottles Only

S I N G L E S • 2 - F O R P R I C I N G • S M A L L M U LT I PAC K S

C-STORE DO’S AND DON’TS

Don’ts • Make it harder for the shopper to find his beer by spreading the singles

Do’s • Make it easy for shoppers to find what they want by getting all singles in one door; merchandising singles together results in an 18% sales lift(5) • Organize SKUs by singles segments

across segment doors or distributor doors • Confuse shoppers with several different price points to decipher • Make it questionable for the shopper to purchase the beer by not including price for each item

to motivate trade-up • Communicate front-line, singles price clearly with shelf tags • Utilize simple but impactful shelf strips to communicate “2-For” segment pricing • Ensure beer is always in stock, especially during 3-8 p.m. high-traffic period

Sources: 1. MillerCoors Industry Estimates, December 2016 2. Nielsen, 52 weeks ending December 2016 3. Nielsen Convenience Space Audits, bi-annual audit, Oct. 24, 2015 4. Nielsen c-stores, 52 weeks ending Oct. 15, 2016 5. Nielsen C-Store Audit, Q3 2016 6. Nielsen C-Store Analytics/Space Audit, Q4 2015 7. NACS Convenience Tracking Program, August 2016 8. MillerCoors Profitable Beer Marketing Transaction Study through Nov. 30, 2016 9. 5k C-Store Shopper surveys, January 2017 10. Nielsen Panel Data, Q3 2016 11. Coolermax Test, September 2014

17

CO L D B E E R • A SS O R T M E N T • PAC K AG E VA R I E T Y

LIQUOR STORES

#1

CHANNEL in total alcohol experience(2)

>47K liquor outlets(1)

Focused almost exclusively on total

of consumers includes Sophisticated

alcoholic beverages, liquor stores offer

TAB Enthusiast, Savvy Entertainer and

a unique experience for shoppers. This

Connected Beer Explorer, which include

diverse channel of more than 47,000 out-

Millennials, Gen Xers and over-40

lets is highly fragmented and comprises

shoppers. The liquor channel has a great

independent stores, local chains, state-

opportunity to both exceed shopper

run outlets and large wholesale depots.

expectations and prompt subsequent

Outlet size and product offerings range

beer trips by aligning to shopper

from less than 2,000 square feet, offering

trends, experiential demands, shopping

a few thousand products, to large-scale

convenience and desired value.

footprints of more than 50,000 square feet and more than 60,000 products.

38M

beer shopping trips(2)

22%

of total beer category sales(4)

1.3%

decline in dollar volume(4)

18

Liquor stores can accelerate their impact and relevance through simplified

WHO’S THE SHOPPER?

variety, improved shopability, enhanced

The shopper in the liquor channel is

assortment and delivery of value across

diverse and evolving. The wide range

segments and price tiers.

THE LIQUOR STORE SHOPPER IS DIVERSE AND EVOLVING SOPHISTICATED TAB ENTHUSIASTS

• 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

SAVVY ENTERTAINER

• 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

CONNECTED BEER EXPLORER

• 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

CO L D B E E R • A SS O R T M E N T • PAC K AG E VA R I E T Y

The liquor channel has three distinct

up empty-handed, so smaller

formats, which shoppers describe as:

packs are usually picked up as

Destination, Neighborhood and Corner

others will contribute as well.

Stores. Regardless of the format, the

NOT ALL

STORES ARE CREATED EQUAL .

top-three consumer beer purchase

• CELEBRATE – Special times in

motivations are brands, cold beer and

life and special holidays are worth

pack size.

celebrating and a reason to bring

1. DESTINATION STORES are

everyone together. Shoppers are

designed for and appeal to the

looking for the right TAB to mark a

shopper seeking exploration and

special occasion. Beer is the

experimentation across a wide

beverage for the party without

variety of adult beverages.

breaking the bank.

that have large

described as familiar and comfortable

• SOCIAL – Relationship-building

specialized staff

places to shop for adult beverages.

opportunities in a casual, fun,

3. CORNER STORES are described

comfortable environment involve

as quick and cold with little to no

beer. Not everyone is close, and

exploration.

beer is chosen in an effort to socialize

2. NEIGHBORHOOD STORES are

DESTINATION 7% of outlets 13% of volume Large, warehouse, megastores selection and to help customers with questions

with a crowd-pleasing contribution.

NEIGHBOR-

As consumer behavior trends continue

As the industry has rapidly changed

61% of outlets

to evolve, it is essential that liquor

with the expansion of brewers,

65% of volume

stores address shopper expectations

liquor stores have been determined

in order to remain relevant and recruit

to make beer variety a channel

more beer shoppers and trips into

differentiator. However, it takes more

stores.

than wide selection to meet shopper

OCCASIONS

expectations. On average, liquor stores • CONNECT – The occasion is about

carry 2.2-times more beer product

spending time with one’s inner circle

selection than other large-format

in order to feel connected and be

channels.(4)

Medium-sized stores that vary in selection, size and staff to help with questions

CORNER STORE

oneself. The beer is a symbol of their bond. Shoppers don’t want to show

HOOD

During the rapid expansion of products

32% of outlets 22% of volume Smaller stores

SIGNIFICANT CONVERSION OPPORTUNIT Y (2)

with spaceconstrained

93% OF LIQUOR STORE SHOPPERS BUY BEER

YET ONLY

37% OF BEER SHOPPERS THAT SHOP LIQUOR STORES BUY BEER IN LIQUOR STORES

CONVERT MORE BEER SHOPPERS IN LIQUOR STORES

selection and minimal expectations for staff engagement(3)

19

CO L D B E E R • A SS O R T M E N T • PAC K AG E VA R I E T Y

Premium beer has

24%

more trips

than Above Premium

shoppers.(2)

21%

of FMB

shoppers

are exclusive to the

segment.(2)

78%

of the time

CRAFT BEERS are

consumed after 24 hours.

(2)

in liquor stores, beer trips are down

inspire more routine beer trips. Each

7.3%, and annual spending is down

segment has strengths, and when

7.8%. It’s important to prevent

balanced effectively with the right

barriers like a “lack of organizing

package mix will create incremental

principles making it difficult to

trips, velocity and revenue.

find what they need” and “too many options making selection overwhelming.”(5)

Economy

shoppers

SPEND 2X MORE than Above Premium

shoppers.(2)

20

D O LL A R S H A R E - M A LT B A SE D/ HARD CIDER

With all that choice, it is important to

12.0%

meet shopper expectations through a balance across segments and in-store

12-Pack 28.4%

12.2%

24/30 -Pack

expertise that elevate the experience

Singles

while maintaining an easy-to-shop environment.

6 -Pack

22.4%

25.0%

Remaining Packs

Liquor stores must offer a wide yet disciplined variety of brands and packages to improve conversion and

Nielsen Scantrack Data, 52 weeks ending Dec. 31, 2016; Total Combined Liquor Plus; Liquor Channel is not projected to Total U.S.

CO L D B E E R • A SS O R T M E N T • PAC K AG E VA R I E T Y

Building with Beer ® Liquor combines

FASTGROWING SMALL PACKS

channel, category and shopper insights to support each format in identifying opportunities in their outlet. Neighborhood and Destination stores place a considerable emphasis on exploration and experimentation as a differentiator, but it only works for the shopper when accompanied

these items, especially singles, will help

by associate in-store knowledge and

capture shoppers seeking the variety

expertise.

and convenience the liquor store offers.

The right allocation of segment,

A disciplined balance of segment and

brand and package size is even

package mix provides liquor stores

more critical in the cooler as beer

with a competitive advantage over

shoppers purchase 91% of their

other channels, helping to drive

beer cold. Additionally, trends in

greater frequency as beer is purchased

the channel favor small pack sizes,

more than wine and spirits and plays

and investing in the expansion of

across broader occasions.

10,165,137

Premium Light

Premium Regular

12-PK = +3.6%(4)

38% BUY SINGLES

V E LO C I T Y PE R SK U D O LL A R S

18,456,142

6-PK = +5.4%

AND MULTIPACKS(2)

9,124,886

Budget

8,205,518

Near Premium

6,415,848

Super Premium

5,521,059

Impor t

3,165,030 FMB

3,282,891 2,452,523 Craf t

Hard Cider

Nielsen Scantrack Data, 52 weeks ending Dec. 31, 2016; Total Combined Liquor Plus; Liquor Channel is not projected to Total U.S.

ECONOMY SHOPPERS BUY 1 CASE/

LIQUOR SHOPPERS SPEND MOST OF THEIR TIME AND MONEY IN THE COOLER. PERCENTAGE OF PURCHA SE COLD AMBIENT

Prominent brand/package placement in the cooler will drive conversion.

91% 9% 91% buy beer cold when beer is the primary reason for trip

MillerCoors Relevance Study, September 2016

WEEK VS. CRAFT SHOPPERS BUY 1 CASE/ 10 WEEKS(2)

21

CO L D B E E R • A SS O R T M E N T • PAC K AG E VA R I E T Y

Category

SPACE AND ASSORTMENT MAT TERS FOR SHOPABILIT Y

VARIETY ENCOURAGES routine VISITS.

PACKAGE MIX:

* Variety * Value

ABOVE PREMIUM

PREMIUM

* Occasion

ECONOMY

• Accelerate velocity

• Growth revenue

• Protect volume

• Double-digit growth trend

• Highest-velocity segment

• Most turns and trips

AVERAGE TURNS 26

7

Beer

Liquor

7

Wine

Willard Bishop Super Study, 2016

22

DISPL AYS MAT TER

important to their decision to

Location and relevance of beer

purchase, and 21% of their beer

displays have a significant impact.

purchases were incremental.(4)

1) Out-of-aisle beer displays

3) On non-beer-focused trips, 46%

generate higher lifts

of shoppers stated the display was

(45% vs. 16%).(4)

important to their beer purchase,

2) On beer-focused trips, 38% of

with 30% of the purchases being

shoppers stated the display was

incremental in some way.(4)

CO L D B E E R • A SS O R T M E N T • PAC K AG E VA R I E T Y

SHOPPERS EXPRESS A STRONG PREFERENCE FOR THEIR DESIRED PACK AGE T YPE

79%

}

EXCLUSIVITY

30%

49% CANS ONLY

BOTTLES ONLY

...CANS AND BOTTLES ARE NEEDED TO SATISFY SHOPPER NEEDS IN AMLL Nielsen Homescan Panel, Total US Grocery $2MM+, 52 weeks ending Aug. 13, 2014; Buyer Exclusivity; Total PL Container and 6-Pack PL containers

4) Family of brand or multi-brand

• Showcase beer early in the

displays drive 28% greater sales

shopping trip to drive greater

velocity than single brand

conversion and larger baskets

displays.

(4)

Don’ts LIQUOR STORE DO’S AND DON’TS

• Create out-of-stock issues in the cooler by reducing holding power of high-velocity Economy and Premium segments

Do’s • Implement a disciplined cooler management program • Balance variety and choice with a strong segment and package approach • Improve the in-store experience, matching knowledge and expertise with variety and selection • Create a clear path to cooler to drive more routine beer trips and expand

• Under-represent segments that alienate core, routine shoppers • Block the path and sightlines to the beer cooler creating a situation where the routine beer shopper feels alienated • Silo beer, wine and spirits when displaying. Instead, find basket building opportunities to appeal to shoppers looking for inspiration

occasions • Create cross-segment displays and inspiring points of interruption to improve conversion

Sources: 1. Nielsen TDLinx Total Liquor Channel, Jan. 13, 2017 2. Nielsen Panel Data, 52 weeks ending Nov. 26, 2016 3. MillerCoors STR Case Data, 52 weeks ending Oct. 22, 2016 4. Nielsen, 52 weeks ending Dec. 31, 2016 5. MillerCoors Custom TNS Landis Landscape Study 2011-2016

23

F O O D + B E E R â&#x20AC;˘ M U LT I P L E O CC A S I O N S â&#x20AC;˘ A S S O R T M E N T

GROCERY STORES Grocery stores are the largest class of INCREASE STORE PRESENCE!

trade in the consumer goods industry, accounting for 40% of consumer goods 25% of beer is sold in grocery. This mix of conventional, value-oriented

65% MORE

VALUABLE than trips without beer.

(1)

and high-end operators competing for

ON

MULTIPLE

TRIP TYPES:

25%

stock-up trips

33%

fill-in trips

42%

quick trips(6)

been strong across routine stock-up occasions. However, consumer and shopper behavior is evolving into more

expectations of diverse trip missions.

This is true for beer. Beer is the fourthlargest category in grocery year round and the No. 1 category during the summer months.(4) As beer SKUs have proliferated, grocery stores have expanded their selection.

Grocery stores average about 268 SKUs per store while the amount of space has remained mostly unchanged.(4) This increase in brands has led to

Stock-Up Trip (16+ Total Items) Index: 52

33%

Fill-In Trip (5-15 Total Items) Index: 93

Grocery stores have traditionally

higher levels of out-of-stocks and a 24

Quick Trip (1-4 Total Items) Index: 259

the channel.

stores to change execution to meet PURCHASED

42%

declining physical shopping trips within

purposeful trips that will require grocery BEER IS

25%

volume and more than 33,000 stores. class of trade is very diverse with a

Beer trips are

G R O CE RY CH A N N E L T R I P T Y PE S

Video Mining, September 2016

F O O D + B E E R • M U LT I P L E O CC A S I O N S • A S S O R T M E N T BEER PLAYS A CRITICAL ROLE IN GROCERY: • HIGH CONVERSION RATE • BUILDS LARGER BASKETS

more challenging consumer shopping

opportunities to ensure beer is

experience. Unfortunately, grocery

purchased with food for specific

stores are losing shoppers, trips and

occasions.

share of total beer dollars.

Beer plays a critical role in grocery

• COMPLEMENTS A MEAL

Crossdepartment

There are ways to turn this around, but

with high conversion rates, but

first it’s important to understand the

trip conversion can be improved.

reasons why people shop for beer at

This is a significant opportunity for

INCREASE

grocery stores.

customers to build larger baskets and

basket size.

DISPLAYS will

improve frequency of purchase while

THE SHOPPER

complementing occasions with food.

The beer trip is important considering it is 65% more valuable than trips that

• RELAX OCCASION: Shoppers enjoy

do not include beer. Additionally, beer

drinking beer to kick back, either at

is purchased on multiple trip types –

home alone or over a meal with a

25% on stock-up trips, 33% on fill-in

partner. Shopping trips for these

trips, and 42% on quick trips, where

routine, everyday occasions are

beer is the primary trigger category.

(6)

planned with hopes of getting everything bought in one place.

The basket value is 57%

GREATER

on beer trips vs. non-beer trips.(1)

There is an opportunity for retailers to leverage a large beer category and evolving shopper behaviors with a greater presence around the store to satisfy the shopper needs.

THE OCCASIONS Meals are the cornerstone of the grocery trip. While shoppers have a variety of options to fulfill their beverage needs, there are various occasions where food and beer are

50% of Americans consider themselves foodies.

Food is the #1 category on Pinterest.(7)

the focus. It is essential to identify 25

F O O D + B E E R • M U LT I P L E O CC A S I O N S • A S S O R T M E N T selves and live in the moment. Sharing

Beer

a meal with those who mean the most

displays

to us is a break in our routine and often

to support

means a fill-in trip to the shopper’s

feature

everyday store, which enables a fast trip

ads drive

with protein as the focus.

33% lift.(4)

Beer is a preferred beverage option as the occasion requires a quality, smooth,

16%

refreshing drink to go with food while

state that

in the store perimeter or in the meat

allowing guests to relax and connect in a down-to-earth way. Providing beer

of shoppers

DISPLAYS

INFLUENCE them to make unplanned category purchases.(2)

$ SPENT PER SHOPPING TRIP

$75.77 with Beer $48.26 without Beer This basket drives

significant sales and

gross profit dollars per week for

the average store.(1)

26

department ensures conversion and Shoppers are realistic about what they

inspires incremental sales.

can accomplish at meal time, so crossdepartmental displays featuring simple

• SOCIAL OCCASION: Entertaining

meals and small packs will increase

at home or going to someone’s home

basket size and improve beer trip

for a get-together is an opportunity

conversion.

to build stronger relationships and feel accepted and confident. Food is always

• CONNECT OCCASION: Small get-

present, but often as a lighter, snacking

togethers with close friends and family

option. Alcohol adds a little

are used to reconnect, be our authentic

excitement. Creating simple cross-

F O O D + B E E R • M U LT I P L E O CC A S I O N S • A S S O R T M E N T merchandising interruptions with

is a key time to inspire cross-segment

basket-building snacking items is

displays, leverage larger packs and

an opportunity for customers to

interesting food pairings.

Grocery stores are

build baskets.

BUILDING WITH BEER

®

• CELEBRATE OCCASION: An event to

Fortunately, there are steps retailers can

honor something special has a bigger,

take to capitalize on the opportunity.

more energized crowd. These events

First, balancing SKUs across segments

require a thoughtful plan in order to

and pack size is one way to simplify the

make it memorable. Shoppers will

shop, maximize revenue and profit, and

make special trips and shop across

reduce out-of-stocks while exceeding

departments to find everything they

changing shopper expectations. The

need while seeking inspiration and

increase in complexity and the focus on

variety to find just the right item. This

simplifying the shop by leveraging display

$

Share of

off-premise class of trade for beer.(4)

Velocity

LAGERS

Percent

Cider

YA

Distribution

24.4

(0.9%)

10.2

$91,665,265

7.1

(0.4%)

5.9

$49,025,264

with 11% of

Economy

12.7

(3.3%)

10.2

$48,134,133

the space.

Super Premium

6.0

6.9%

5.2

$43,292,444

Import

19.8

4.0%

18.1

$42,566,542

Craft

21.5

5.4%

33.4

$24,177,253

Hard Cider

2.0

(9.4%)

4.0

$16,969,447

Premium American Light Lagers Premium American Lagers

Change

Cider Item

per SKU

LIGHT

Malt/ Hard

Malt/Hard

largest

AMERICAN

Y E A R - E N D PE R FO R M A N CE BY T Y PE $ Share

the 2nd

Dollars

represent

25% OF THE GROCERY VOLUME

CRAFT

represents

21% OF THE VOLUME

Nielsen Scantrack Data, 52 weeks ending Dec. 31, 2016

with 33% of TO P 2 % O F SK US (~4 0 0 I TE M S ) D R I V E C ATEG O RY 75% OF BEER CATEGORY $ VOLUME

the space.

IMPORTS represent

19% OF THE

80% OF BEER CATEGORY CASE VOLUME

92%

VOLUME

with 19% of the space.(4)

OF BEER CATEGORY $ GROWTH Nielsen Point of Sale Data, 52 weeks ending 2016

27

F O O D + B E E R • M U LT I P L E O CC A S I O N S • A S S O R T M E N T

2010:

M O R E I TE M S , LE SS ACCO M PA N I E D BY D I S PL AY

192 SKUs

2015:

Number of Beer (Malt/Hard Cider) Items Featured

269 SKUs

Number of Beer (Malt/Hard Cider) Items Featured with Display

+40% Avg

items per store(5)

18.8

INNOVATION

22.7

21.1

27.5

25.9

7.3

7.8

7.8

8.0

CAL YR 2012 W/E 01/05/13

CAL YR 2013 W/E 01/04/14

CAL YR 2014 W/E 01/03/15

CAL YR 2015 W/E 01/02/16

8.1

has

accounted for MORE

THAN 50% of beer

category

CAL YR 2016 W/E 12/31/16

Nielsen through Dec 31, 2016

VOLUME over the

past three years.(4)

execution serves multiple purposes to

When displaying beer it is important to

improve basket size, increase trips and

understand that not all segments,

maximize conversion.

brands and pack sizes yield the same efficiency and effectiveness for the

Effective display execution is a great PREMIUM

AMERICAN LIGHT

LAGER

generates 2X

VELOCITY per SKU than

other

28

way to cut through complexity and simplify the shop. Done right, displays

Grocery has historically been strong

will increase revenue with supporting

in stock-up trips and large-pack beer

feature ad activity, improve category

features, but as the shopper continues

engagement and inspire people to pair

to evolve, pack size matters to impact

beer with their meals.

meal and social occasions.

• Beer displays to support feature

MORE

segments.

category.

(4)

activity drives +33% lift

Finally, carry the right packs. Grocery

• Beer displays with discounted pricing

stores sell around 56% of the volume

are noticed three-times more than

in small packs (6- and 12-packs). Six-

other displays

packs are the fastest-growing pack

• Beer displays re-engage existing

size in grocery followed by singles

shoppers with 16% of shoppers

and then 12-packs. Driving points of

saying display impacts their buying

interruption throughout the store will

decisions (2)

meet the needs of the shopper.(4)

F O O D + B E E R • M U LT I P L E O CC A S I O N S • A S S O R T M E N T G R O CE RY Y E A R - E N D PE R FO R M A N CE Total U.S.

Total U.S. Food

Package

$ Share

$%

Units %

Units Share

Chg YA

Malt/Hard Cider

Size

Malt/Hard Cider

Chg YA

Singles

7.2

1.9%

(0.3%)

27.7

6-PK

25.6

5.4%

2.6%

27.8

12-PK

30.5

3.6%

3.3%

22.1

24-PK

12.1

(2.2%)

(4.1%)

6.0

30-PK

7.9

(2.0%)

(2.8%)

3.8

All Other

16.8

(1.9%)

(4.4%)

12.7

Nielsen Scantrack Data, 52 weeks ending Dec. 31, 2016

DO SHOPPERS RECALL IN -STORE DISPL AYS? YES! RECALL THE T YPE OF PRODUCT ON DISPL AY

62% RECALL THE BRAND OF PRODUCT ON DISPLAY

53% RECALL THE LOCATION OF THE DISPL AY

68% Great Northern Instore, February 2017

• Increase basket rings by creating points of interruption aligned with meal solutions • Maximize velocity and turns with the right execution of display support across segments and brands • Focus space on core items Don’ts • Replace highly effective and wide reaching ad boxes with less effective segments and brands • Create out-of-stock issues in the cooler by reducing holding power of high-

GROCERY DO’S AND DON’TS

velocity Economy and Premium segments • Restrict the basket-building beer category from being displayed and

Do’s • Improve feature strategy to generate traffic, drive points of differentiation and balanced trip missions • Balance space and assortment to align with variety and velocity needs across all segments to satisfy shopper demand, minimize out-of-stocks and generate greater efficiency

cross-merchandised with food offerings • Display non-featured beer segments/ brands in place of featured brands that act as an in-store reminder and drive conversion Sources: 1. Nielsen Homescan Panel Data, 52 weeks ending July 2, 2016 2. Display relevance study, September 2016 3. MillerCoors STR Case Data, 52 weeks ending Oct. 22, 2016 4. Nielsen ScanTrack Data 52 weeks ending Dec 31, 2016 5. InfoScout Panel & Survey, 2016 6. Video Mining, September 2016 7. Food Marketing Institute, US Grocery Shopping Trends, 2016

29

GROWTH • CONVENIENCE • STRONG CONTENT

eCOMMERCE

U.S. HOUSEHOLDS BUYING GROCERIES ONLINE 2016: 36% 2015: 31%

B E E R VO LU M E S H A R E BY

CHANNEL DYNAMICS Purchasing groceries online is no longer

e CO M M E R CE CL A SS O F T R A D E

a niche behavior. The percentage of U.S. households that bought groceries online has nearly doubled in just three years: 20% in 2014 vs. 36% in 2016.(1) Online

77.2%

grocery shopping will continue to grow at an accelerated rate as more than 50% of

3.3%

2014: 20%

consumers indicate that they are willing

ACCELERATED

available.(6) Projections indicate that by

3rd PART Y

2020 eCommerce will command a 10%

DIRECT CR AFT BREWERY

share of total grocery spend.

BRICK AND MORTAR

PACE OF

ADOPTION!

9.7%

to use online grocery ordering if it were

(2)

10%

PURE PL AY MillerCoors Projection, December 2016

ONLINE BEER SHOPPER IS: • male • higher-income

e CO M M E R CE

Beer household online beer purchase

EXPONENTIAL

penetration is only 4% but is poised

G R OW T H

for accelerated growth as the changing 10.0%

( S h a r e o f To t a l

more widely available to shoppers.(3)

Grocer y Spend)

7.1%

In 2016, online beer sales totaled 11.3 million equivalent cases representing

5.1%

2.4%

3.0%

retail landscape makes online beer much

only 0.4% of total industry volume, with

3.8%

third-party delivery apps commanding a dominant share. Moving forward, online beer is expected to grow at an

2015

2016

Willard Bishop

30

2017

2018

2019

2020

accelerated rate, reaching more than 5% of total industry volume by 2020 with Large Format Brick and Mortar

GROWTH • CONVENIENCE • STRONG CONTENT and Pure Play retailers achieving a dominant share as they roll eCommerce, including beer, out to a majority of their stores and distribution centers.(5) WHO’S THE SHOPPER? Compared with online grocery shoppers in general, the online beer shopper is younger (41 vs. 49 years old), 58% male and higher income ($123k vs. $96k).(3) While Millennials do index higher for online shopping, it is clear that all age groups appreciate the convenience and are increasing their use of online grocery shopping.

BUILDING WITH BEER® There are three key retailer strategies for a successful online grocery and alcohol program.

1. Provide strong website content.

2. Deliver a convenient customer experience.

3. Optimize operational efficiencies

and profitability.

in-store AND online purchase intent.

More than 50% of online beer shoppers do research online before going in

Mobile-first strategy is

imperative!

store to buy beer. The information they are looking for includes basics, such as beer item availability, price per ounce, container type and key product characteristics, including alcohol by

CORE

SHOPPERS WHO

BUY BEER

volume. But they are also looking for

Annual Beer Spend

more inspirational content, such as

(PER HOUSEHOL D)

information on what beer styles and PROVIDE STRONG WEBSITE CONTENT

brands to buy, food and beer pairings,

Strong online content can influence

and recipes.

TOP FIVE BEER PURCHASE OCCASIONS FOR ONLINE SHOPPERS BUY AS A GIFT

44%

BUY DURING MAJOR HOLIDAYS

42%

BUY FOR SPECIAL OCCASIONS BUY FOR PLANNED SOCIAL ENTERTAINMENT BUY FOR OUTDOOR BBQS & PARTIES

Brand Hook Study, December 2015

39% 34% 33%

$121.40 Households Shopping In-store Only

+12% $135.97 Households

Shopping Both In-store and Online Willard Bishop 2016 eCommerce SuperStudy™

31

GROWTH • CONVENIENCE • STRONG CONTENT TR ADITIONAL PL AYERS ENTERING ONLINE CPG BRICK &

53%

MOR TAR Traditional brick-and-mortar retailers adding online purchase options for their shoppers NON TR ADITIONAL PL AYERS ENTERING ONLINE CPG

3RD PART Y Delivery apps that partner with brick-and-mortar retailers to provide online delivery

45%

of online beer

shoppers research online prior to

purchasing in-store

43%

of those using online

are searching for

are checking the

inspiration

prior to a beer shop

availability of the beer

some type of

Brand Hook Study, December 2015

Content and images need to work

an order. The key for the online retailer

across different platforms, including

is to employ a search algorithm that

desktop, tablet and mobile. In the

delivers what the consumer wants on

U.S., smartphones accounted for

the search results page, while also

the highest share of online traffic

supporting the brands it knows will

at 47%.

result in conversion.

(7)

Retailers need to take a

mobile-first strategy to content.

Many shoppers also use website

PROVIDE

department filters instead of the

STRONG WEBSITE

search bar. It is important to organize

CONTENT BY:

category filters in a way that is intuitive

1. Providing complete

to shoppers so they can easily navigate

and accurate basic

to the beer styles and brands.

product content PURE PL AY

2. Offering inspirational advanced

Leverage on-demand analytics to

content solutions

make the shopping experience more

Online retailers that operate out of non-shoppable distribution centers

3. Focusing on mobile content first

personal. An important element

— if you get that right, the rest

of personalization is list-building

is easy

functionality that customers can

DIREC T CR AF T BREWER Craft breweries that are able to legally ship beer direct to consumers

32

easily upload to their shopping cart.

DELIVER A CONVENIENT

Another is to provide suggestions for

CUSTOMER EXPERIENCE

complementary purchases based on

Almost two-thirds of those

items selected as well as forgotten

placing an online grocery order that included beer did not repeat.

items generated by shopping history.

(4)

Consumers are becoming accustomed Many grocery websites are not

to being offered what they want, how

optimized at this point, and the

they want it, when they want it. In the

experience isn’t great for online

context of online grocery this also

grocery shoppers. The sites are

includes the right fulfillment options in

clunky and take too long to build

the time windows that work for them

GROWTH • CONVENIENCE • STRONG CONTENT and at the right cost. Whether it is

Online beer is profitable. Only a

home delivery, “click and collect” or

handful of the top-selling online

refrigerated lockers, convenience is

categories outpace beer in per-unit

the key for consumers. The process

profits. In fact, an average beer SKU

becomes easier for customers after

generates more than twice the per-

the third order. Customers who

unit profits of an average store SKU.

order three times are significantly

Adding beer to the retailer’s online

more likely to become loyal online

offering provides a bigger opportunity

shoppers.

to generate higher per-unit profits

(4)

3

is the

MAGIC

NUMBER!

After three orders,

LOYALTY

SPIKES.(4)

than most other items in basket.(4) OPTIMIZE OPERATIONAL

EFFICIENCIES AND PROFITABILITY

eCOMMERCE DO’S AND DON’TS

Online economics are challenging and can be margin dilutive. Best-

TRAFFIC BY PLATFORM

in-class grocery retailers are taking a long-term view of eCommerce

eCOMMERCE

FORMAT

by providing a convenient online

Do’s

experience while simultaneously

• Deliver strong web content

testing various operational and

• Build convenient and powerful

fulfillment solutions to improve the

website navigation and search

economics of their online program.

functionality

9% 44%

47%

• Personalize the shopping experience Store Pick models experience high

• Offer convenient customer

Tablet

out-of-stock rates, which drive up

service

labor costs and contribute to a poor

• Optimize operational efficiencies

Smartphone

shopping experience.(4) In the beer

and profitability

category 40% of the SKUs represent

• Provide convenient fulfillment

95% of sales. Focusing on a core group

options for pick-up/delivery

of UPCs that are ordered frequently among most online grocery shoppers

Don’ts

will make it easier to manage inventory

• Complicate navigation with too many

and significantly reduce online out-of-

filters

stocks.(4)

• Go live unless user experience works

Desktop Demandware Shopping Index report, September 2016

well for mobile Beer can strengthen online programs

• Offer better pricing and deals in-store

in a number of ways. Core grocery

vs. online

shoppers who buy beer are threetimes more likely to buy beer online with their groceries than non-core shoppers and spend 12% more per week on beer when they shop both in-store AND online.(4)

Sources: 1. Lightspeed/Mintel August 2016 2. Willard Bishop Projection, 2016 3. Brand Hook Study, December 2015 4. Willard Bishop 2016 eCommerce SuperStudy™ 5. MillerCoors Projection, December 2016 6. A.T. Kearney 2015 Study of On-Line Grocery Shopping 7. Demandware Shopping Index report, September 2016

33

CO N V E N I E N C E • I M M E D I AC Y • VA LU E + A SS O R T M E N T

DRUG STORES

The drug store channel is a relatively

Beer is

WHO’S THE SHOPPER?

small class of trade, representing only

Drug is the preferred channel for

2% of beer industry volume. However,

convenience among female

MORE

the drug channel’s top three retailers

shoppers. They represent 66% of

all fall within the top 15 chain accounts

total store trips and 60% of total

for their total beer category volume.

beer sales.(5)

THAN $1.3 BILLION

in drug store sales.

(1)

Beer is a large business for drug retailers, ranking No. 3 among front-

The drug channel serves two

end categories and No. 2 based on

primary roles for most shoppers:

velocity per store.

• Provides convenience and

B E E R I S T H E T H I R D - L A R G E S T C ATEG O RY I N D R U G Ve l o c i t y o f b e e r t r u m p s c a n d y, b u t s t i l l l a g s b e h i n d t o b a c c o.

Beer ranks 2nd in

category velocity.

60

%

OF DRUG S TORE BEER IS BOUGHT

BY FEMALE S.

BEER IS THE

3rd

L ARGEST DRUG

DOLLAR VOLUME

VELOCITY ($/TDP)

RANK

TR ADITIONAL TOBACCO

$2,874,977,689

$437,058

1

CANDY

$2,850,458,112

$77,819

2

BEER

$1,305,895,263

$359,733

3

SOFT DRINKS

$1,043,591,711

$158,050

4

LIQUOR

$919,908,808

$341,634

5

SALT Y SNACKS

$906,086,180

$75,714

6

WINE

$735,623,708

$177,705

7

NEW AGE BEVER AGES

$672,930,003

$100,376

8

WATER

$588,024,237

$152,606

9

NUTS

$445,931,963

$99,207

10

CATEGORY. Nielsen Scan Data, latest 52 weeks ending Oct. 15, 2016, Total Drug

34

CO N V E N I E N C E • I M M E D I AC Y • VA LU E + A SS O R T M E N T

87%

healthy lifestyle solutions.

and social occasions that support

• Serves as a convenient place

many drug shoppers’ expectations

for female shoppers to make

for a healthy lifestyle. Relaxing

quick, in-and-out trips.

and connecting with friends/family are key and these occasions account

WHAT ARE THE OCCASIONS?

for the majority of drug beer

Beer plays a key role in the personal

consumption occasions.

OF DRUG SHOPPERS BUY SOMETHING ELSE WITH BEER: Food

and snacks:

PR E M I U M A M E R I C A N LI G H T L AG E R & I M P O R T

55%

ACCO U N T FO R M O R E T H A N H A LF O F TOTA L C ATEG O RY

Pharmacy

$ SHARE

SHARE OF SKUs

$ / SKU

PREMIUM AMERICAN LIGHT L AGER

30.9

23.2

$302,324

IMPORT

27.2

22.5

$274,587

CR AFT

9.3

15.7

$134,010

PREMIUM REGUL AR

8.8

8.8

$227,804

PREMIUM AMERICAN L AGER

7.7

7.7

$229,532

ECONOMY

6.8

5.7

$272,135

SUPER PREMIUM

4.3

5.6

$177,729

FL AVORED MALT BEVER AGE

3.2

7.0

$103,220

HARD CIDER

0.9

1.9

$112,451

MALT LIQUOR

0.6

1.1

$121,803

COOLERS

0.3

0.9

$65,896

ALTERNATIVE

0.0

0.0

$74,506

items: 30%

Other

alcoholic

beverage: 27%(5)

Premium

American

Light Lager is the

#1 beer

segment

based on

share and $/SKU.

Nielsen Scan Data, latest 52 weeks ending Oct. 15, 2016, Total Drug

35

CO N V E N I E N C E • I M M E D I AC Y • VA LU E + A SS O R T M E N T

AWARENESS Physical

Most don’t know drug retailers sell beer.

HEALTHY 46%

54%

C+R Drug Shopper Research Study, May 2016

PERCEIVED VALUE

With price as driver, many perceive better value in other channels.

About 25% cite price as top reason for not purchasing beer at drug store.

C+R Drug Shopper Research Study, May 2016

of drug chain beer buyers agree strongly/somewhat that: “Sharing a beer is an important part of how I connect with friends and family.”

Mental/Emotional

LIFEST YLE

Unsure/ Unaware Chain Drug Retailers Sell Beer Aware Chain Drug Retailers Sell Beer

70%

Spiritual

67%

of drug chain beer buyers agree strongly/somewhat that: “Beer is an important part of me-time.”

C+R Drug Shopper Research Study, May 2016

The majority of drug shoppers

AWARENESS

consider beer appropriate in the drug

• Capture leakage by building

store channel. They see a drug store

awareness through in- and

as a place for convenient, in-and-out,

out-of-store messaging that

immediate-need trips.

connects with occasions. Thematic

(3)

beer displays are a great way to BUILDING WITH BEER

®

connect. Beer displays drive

The biggest beer opportunities for

incremental sales and deliver more

drug retailers are low beer shopper

sales per square foot of floor space

conversion and trip leakage to

than wine or spirits in drug stores.(6)

competing channels. Of all the beer-

• Target in-store messaging to shoppers

buying households that shop drug

who are not necessarily visiting the

stores, only 10% of them buy beer in a

beer aisle (endcaps, special displays,

drug store, leaving the remaining beer

circular ads, etc.) while focusing the

purchases to competing channels.

messaging on small packs (6- and

(2)

12-packs) as these packs make up ASSORTMENT

The grocery channel captures the greatest

more than 50% of drug revenue and

share of non-drug chain beer trips and

are more likely to drive trial with

Do drug stores offer my favorite brands refrigerated?

is perceived as offering a wide beer

female guests.(1)

selection at a good value as part of a

• Also, try to leverage key equities in

Drug Beer Buyers

one-stop-shop destination. That said,

messaging (e.g., drug is considered

many drug chain beer buyers consider

less crowded/busy than grocery,

the drug channel to be better for quick

more pleasant to shop than c-stores

convenience trips (less crowded/busy)

and more convenient than liquor

and are making brief, focused trips that

stores) to take advantage of strengths

the drug channel could fulfill. The top

vs. other retail channels.(3)

67% AGREE

Drug Non-Beer Buyers, Aware Drug Sells Beer 22% AGREE

About 20% of drug non-beer buyers cite limited selection as big barrier to purchase.

C+R Drug Shopper Research Study, May 2016

36

(3)

barriers preventing these shoppers from purchasing beer at drug stores center

PERCEIVED VALUE

on awareness and perceptions of value

• Let shoppers know how much they

and assortment.

will save by ensuring clear execution

(3)

CO N V E N I E N C E • I M M E D I AC Y • VA LU E + A SS O R T M E N T DRUG CHANNEL

IMPACT OF DISPLAY

BEER SHOPPER

AVERAGE DISPLAY SIZE

DISPLAY $ PER FT 2

LIFT $ PER FT 2

SPIRITS

8 Ft 2

$16

$3

WINE

8 Ft 2

$11

$1

BEER

10 Ft

$52

$12

2

Nielsen Drug Store Audit of TAB Displays, 2014

CONVERSION 10% 90%

CONVERTED UNCONVERTED

of promotional pricing at retail

• Cold beer assortment is critical –

– accurate shelf price tags and

82% of drug store shoppers buy

eye-catching value offer displays.

refrigerated beer, while 22% buy

• Leverage displays that cross-

room-temperature beer.(3)

Nielsen Homescan latest 52 weeks ending Aug. 27, 2016

merchandise beer with categories that have high affinity to beer

DRUG STORE DO’S AND DON’TS

baskets.

• 87% of drug shoppers buy something else with beer: food and snacks – 55%; other alcohol

Do’s

beverage – 27%.

• Use displays to increase the

(3)

• Economy beer over-indexes in

awareness of beer availability in

drug (110 index vs. grocery ),

store

skewing toward Gen X and Baby

• Cross-promote beer with other

Boomer shoppers. Promoting

categories to communicate value

Economy beer on a regular basis

and increase the size of the

can be an effective way to

shopper’s basket

communicate value and reduce

• Focus assortment on core items

leakage to competition.

that fulfill the most consumer

(1)

(4)

occasions ASSORTMENT

• Clearly promote the price at retail

• Even though grocery and liquor stores are recognized as offering

Don’ts

greater beer variety, the most

• Allow beer items on shelf and

common beer purchases across the

display to have missing price

relax and connect consumption

tags

occasions are 6- and 12-packs of

• Include items that are not

regular domestic beer brands and

planogramed in the cooler

leading Imports, suggesting drug stores can meet the assortment needs of most shoppers by focusing on these segments and packs.(3)

Sources: 1. Nielsen AOD, 52 weeks ending Oct. 15, 2016 2. Nielsen Homescan latest 52 weeks ending Aug. 27, 2016 3. C+R Drug Shopper Research Study, May 2016 4. MillerCoors BTS Survey, 52 weeks ending Oct. 15, 2016 5. National Drug Retailer Shopper Card Data, 2015 6. Nielsen Drug Store Audit of TAB Displays, 2014

37

AWARENESS • CONNEC T & REL A X • IN -S TORE E XECUTION

DOLLAR STORES

Household

Penetration

Dollar stores are the fastest-growing channel, driven by consumer needs

$34.72 when beer in basket

for value and convenience. Since 2001 dollar channel household penetration

66%

has increased from 59% to 66%, and the

GROW TH

59% 2001

BEER RANKS 3RD in dollars per point of distribution.

PROJECTION:

10,000+

tripled in the same timeframe, totaling more than 27,000 outlets. (6)

were up 37%, while the number of dollar

10,000 dollar stores could be selling

stores selling beer has dramatically

beer within the next three years.(3)

increased since 2012, approaching 8,000 stores.(1) Beer sales per store are

Beer is the third-most productive

increasing, too, up 25% in 2016 vs. a year

consumable category tracked by

ago.(1) As volume and sales continue to

Nielsen in terms of velocity ($/point of

grow, projections indicate that more than

distribution), surpassed only by milk and bread.(1) Premium American Light

DOLL AR STORES SELLING BEER Number of Stores Selling Beer

beer

within

3 years

$28,208

on both revenue and productivity ($/ item). Beer also helps increase basket $34.72 when beer is in the basket.(4)

$22,632 $20,448

WHO’S THE SHOPPER?

$15,279

Dollar is the preferred convenience

$10,315

3,852

Lagers and Economy lead the way based

rings from $15.84 without beer to

Beer Dollars per Store

outlets selling

Nielsen Homescan latest 52 weeks ending Aug. 27, 2016

Total 2016 beer sales in dollar outlets

Dollar

5,023

6,260

7,203

7,927

channel for female shoppers, who represent 72% of total store trips. Dollar store shoppers also tend to skew lower income with 45% of shoppers earning

4YAG

3YAG

Nielsen through Oct. 15, 2016

38

$15.84 when beer NOT in basket

number of dollar stores has more than

2016

2YAG

YAG

L52

less than $30,000 per year.(2)

AWARENESS • CONNEC T & REL A X • IN -S TORE E XECUTION WHAT ARE THE OCCASIONS?

small-format shoppers buy cold beer,

• Connect: A time to spend with

it is critical to have a cooler door

friends/family • Relax: An after-work transition to me-time that usually involves singles

assortment strategy that focuses on the core items that consumers purchase most.(5) • Start with the right mix of singles and

Beer shoppers buy packs that perfectly

multipacks. Based on Nielsen space

match these occasions. Three-quarters

audits, the optimal beer cooler

of their beer purchase dollars are small

allocation is 25% singles and 75%

packs (multipacks of 12 or less) with less

multipacks.(7)

than 20% coming from larger than

• Ensure that each brand/pack choice

18-packs.(1) Singles are also a large

drives incremental revenue and profit

opportunity. They fit with the relax

based on the store’s consumer profile.

occasion and drive only 6% of dollar sales, but make up 22% of the unit sales.(1)

FEMALE SHOPPERS

3. IN-STORE EXECUTION Display execution and reducing out-

BUILDING WITH BEER®

of-stocks are the biggest execution

The biggest beer opportunities for

opportunities. Displays help to create

dollar retailers are low beer shopper

awareness for beer and serve as backstock

conversion and trip leakage to competing

for fast-moving items, especially if they are

channels. Of all the beer-buying house-

on promotion. Reducing out-of-stocks is

holds that shop dollar stores, only 3% of

critical to maintaining strong growth trends

them buy beer in the dollar channel.(4)

and requires a coordinated effort between

72%

82%

of shoppers

BUY BEER COLD.

the retailer, brewer and distributor network Dollar retailers must overcome three

supported by solid store-level execution.

barriers in order to drive continued growth and increase conversion.

DOLL AR STORE DO’S AND DON’TS

1. AWARENESS • Capture leakage by building awareness for COLD beer through

Do’s

in- and out-of-store messaging.

• Build awareness for COLD beer

• Target messaging to shoppers who

• Implement an effective assortment

are not visiting the beer aisle (end-

strategy that includes singles

caps, special displays, circular ads,

• Reduce out-of-stocks

etc.) while focusing the messaging on small packs, as these are more

Don’ts

likely to drive trial with female guests.

• Under-order items that will be featured in upcoming ads

2. EFFECTIVE ASSORTMENT

• Deter distributors from building

• Dollar stores tend to have limited

mandated displays

cooler space. Given that 82% of

• Sell warm beer only

Sources: 1. Nielsen through Oct. 15, 2016 2. Nielsen Homescan, latest 52 weeks ending Dec. 30, 2016 3. MillerCoors Internal Estimate, December 2016 4. Nielsen Homescan, latest 52 weeks ending Aug. 27, 2016 5. C+R Research, May 2016 6. Nielsen TDLinx through January 2016 7. Nielsen Space Audit, July 2015

39

MILLENNIALS

• REBUILD TR AFFIC

• FOOD + BEER + EXPERIENCE

ON-PREMISE OVERVIEW

$49.6 BILLION YEAREND BEER SALES 2 0 16

Beer is

47% of TAB

sales in the

on-premise.

Alcohol contributes 16% to

Putting the ON back in the ON-premise!

The on-premise is THE place to seed

Beer continues to play the dominant

and build categories and brands. The

role in the on-premise environment.

channel is unique in that it offers the

The category contributes more than

opportunity to target demographics

40% to the total alcohol beverage

and occasions to create experiences

sales in three primary classes of trade:

that will surprise and delight guests.

• Neighborhood bar: These local And on-premise accounts cater to

hangouts meet the needs for social

a desirable audience. Regardless

and connect occasions.

of demographics, the on-premise

• Sports bar: These venues provide an

consumer is one of the most valuable

opportunity to connect while

and engaged consumers out there.

watching the big game with friends.

They see the on-premise as the

• Casual dining: These restaurants

perfect escape – escape from work

give large and small groups the

and everyday demands and escape

opportunity to connect over a

to friends and family.

good meal.

2 016 TOTA L O N - PR E M I SE A LCO H O L B E V E R AG E SA LE S

total Food and Beverage sales.

Tec hnomic, Ju ne 2016

Beer ($M)

Wine ($M)

Spirits ($M)

Total ($M)

$49,592

$19,898

$36,784

$106,274

Change vs. 2015

2.0%

2.0%

2.8%

2.3%

Contribution

47%

19%

35%

100%

Beer ($M)

Wine ($M)

Spirits ($M)

(3.1%)

(1.3%)

1.8%

Type Sales

Technomic, June 2016

Type Volume vs. 2015 Nielsen CGA, December 2016

40

MILLENNIALS

• REBUILD TR AFFIC

• FOOD + BEER + EXPERIENCE

Combined, these three classes of

own or with friends) rather than

trade represent more than 75% of

going out. The occasion is not

total on-premise sales revenue.

changing – it’s shifting away from the on-premise. This trend is

But it’s no secret that the

made easier by digital technology,

on-premise is seeing ongoing

which enables people to “source”

challenges with decreased traffic

entertainment from the comfort

and increased competition.

of their homes. People can get

Consumers increasingly expect

virtually anything via an app

on-premise operators to make

(music, food and beer delivery,

leaving the house worthwhile.

etc.) and they can use their

21- to 27year-olds

SEEK new

and unique

experiences and

alternatives to

traditional venues.

devices to connect with others This is particularly true for the

all over the world. Why leave?

21- to 27-year-old set, which is constantly seeking out new and

The second challenge is a more

unique experiences and is finding

recent phenomenon: the rise of

alternatives to traditional

the beer tasting room. There are

on-premise venues. As as result

more than 5,400 tasting rooms

of this adventure-seeking trend,

doing business in the United

Millennial consumers are driving

States.

rapid changes in the on-premise landscape.

The impact they are having,

5,400+

beer tasting rooms in

the U.S., a big

on-premise competitor

Foursquare, August 2016

particularly on neighborhood bars, Solutions exist, but let’s first dig

is significant. That’s because they

into two big challenges confronting

are stealing the most valuable visits

the on-premise.

– weekends and late nights. These new, intriguing beer tasting rooms

The first challenge is a longstanding

provide unique experiences that

one – declining traffic. It’s the

21- to 27-year-old consumers seek.

primary reason for the decline in beer unit sales in recent years.

Consumers are able to engage

Restaurants and bars account for

the brewers, connect and have

approximately 95% of the estimated

quality conversations with their

300,000+ on-premise outlets in the

friends. Further, they get to enjoy

United States.(1) The traffic trend in

the product where it is brewed.

the key casual dining and bar classes

There is often entertainment and

of trade remains negative, and there’s

increasingly there is a kitchen (or

no sign of an imminent turnaround.

food truck) that provides food.

There’s a sense of being part of a

This trend is driven in part by people

local community and it’s authentic

choosing to stay at home (on their

– a feature important to Millennials.

IN BEER TASTING ROOMS, THE FOCUS IS ON BEER!

Cash-

strapped

Millennials

are moving off-premise for

budgetary reasons.

41

MILLENNIALS

• REBUILD TR AFFIC

Y E A R - OV E R -Y E A R T R A FF I C G R OW T H ( %)

“Home-

tainment”

FY 2015

95%

of the

C A SUAL

=

(2.5%)

(0.6%)

O nP

Restaurants and bars

BAR S

is a rising trend.

(1.1%)

on-premise(1)

U.S. outlets’ challenge: Negative traffic

trends!

Technology is making it easier

to source

entertainment at home.

CY L52W

(3.5%)

(2.7%)

(2.7%)

estimated 300,000+

• FOOD + BEER + EXPERIENCE

CY L24W

CY L12W

CY L4W

(4.1%)

(4.3%)

(3.9%)

(3.5%)

(3.2%)

(2.9%)

(3.4%)

(3.3%)

(2.8%)

Guest Metrics, October 2016

Compounding the impact is that

right for the category. Making

when consumers leave the tasting

radical changes to assortment

room, they are not visiting another

and offerings, and forgetting

on-premise outlet.

fundamentals, is unlikely to pay off in the long run.

SO WHAT TO DO? Is it all doom and gloom? No. But

BUILDING WITH BEER®

clearly the landscape in recent years

Strong category management is

has changed and on-premise operators

critical to ensuring growth of

need to change if they’re going to get

volume and value of the beer

consumers to visit and stay longer once

category.

they arrive. Successful operators have been leveraging social media to

Not all brands are created equal.

increase awareness of opportunities unique to the on-premise setting, as

• Core brands have the highest

well as premium specials and limited-

consumer preference, revenue

time offers.

and profit – 60 core brands drive 70% of category unit volume.(1)

42

But one thing that is critical is

• Tail brands offer wide variety

staying focused on doing what’s

but low velocity – 350 or 5% of

MILLENNIALS

• REBUILD TR AFFIC

• FOOD + BEER + EXPERIENCE

the 7,000 new on-premise entrants

19 minutes longer than the

delivered 50% of the dollars

average guest.(2)

.(2)

Core brands

THE POWER OF THE

HEDGE YOUR BETS WITH

Satisfying the loyal and profitable

CRAFTS

Light Lager drinkers is essential to

The market is constantly flooded

to brands

growing beer category volume

with “shiny new things,” each needing

and revenue. In a 2016 study, when

space and attention, and not always

that don’t

a bar added one Light Lager on

delivering incremental sales or revenue.

draught, weekly unit sales increased

National/regional Crafts should be

by 9.2% and weekly dollar sales

prioritized over local in the tail.

AMERICAN LIGHT LAGER

are losing

NATIONAL AND REGIONAL

distribution

drive sales.

increased by 4.2%.

(3)

Big Craft brands serve as signposts

Tail brands average

• Light Lagers represent 1 out of 3

and offer a ‘safe’ entry point while

beers sold.

delivering higher velocity than local

• Light Lager drinkers are two-times

brands. Local Crafts can be a

more loyal than the average Craft

gamble; they create variety but

400 servings

drinker and also drive higher

national Crafts create velocity.

per account

(2)

annually.(2)

velocity, consuming on average 3.6 drinks per occasion,

• National and regional Crafts

approximately 50% more than

account for 87% of Craft dollars.(1)

the average Craft drinker.(4)

• 85% of new brands are local,

• Light Lager drinkers spend more

but national Crafts drive 17%

time in the on-premise, staying

higher velocity vs. local.(1)

Drive

VOLUME AND VARIETY

FOCUS ON WI NN I NG S T Y LES

$ S H A R E O F T O TA L B E E R B Y S T Y L E

AMERICAN LIGHT

Top 5 Styles Represent 70% of $ Share

INT’L PALE L AGERS IPA WITBIER

AM REGUL AR L AGER

with

optimal

assortment.

PALE ALE

PALE L AGER STOUT HARD CIDER

Bottom 16 Account for 30%

GOLDEN ALE FRUIT BEER

DARK L AGER AMBER ALE

AMBER L AGER

Careful! Too Much Focus on Niche Styles Doesn’t Translate to $$$

SE ASONAL BROWN ALE STRONG ALE PORTER

BELGIAN DARK STRONG SAISON SOUR

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

LIGHT LAGER DRINKERS demonstrate high brand

LOYALTY.

Technomic, June 2016

43

MILLENNIALS

CONSUMER TRADEOFFS: PAY LESS but drink 1.2 more

PAY MORE but drink less

• REBUILD TR AFFIC

OPTIMIZING REVENUE

Craft, consumers pay more for

Category management also

the higher quality perception

focuses on driving the right

but they, too, drink less.

pricing strategy to optimize

Light Lagers are more price

revenue. Pricing plays a big role

sensitive than Crafts and Imports

in achieving revenue goals. Sub-

– a change in price will have

optimal pricing gaps can leave revenue on the table.

more influence on demand.

While American Light Lager

consumers are less price

Conversely, Craft and Import sensitive. To maximize draught

drinkers might be the most loyal,

sales revenue, national Craft and

they are also sensitive to price.

Imports should be priced 30%

If their favorite beers are priced

PREMIUM LIGHT

DRINKERS

• FOOD + BEER + EXPERIENCE

too high, they may cut back.

higher than Light Lagers, and

When it’s a local Craft, consumers

be priced 45% higher. This

pay more for the local connection

typically translates to a

but they drink less. For national

$1 - $2 price gap.(9)

regional and local Crafts should

are price

sensitive.

NOT ALL MARGINS ARE CREATED EQUAL WHEN VELOCIT Y IS CONSIDERED LOCAL CRAFT

LOCAL

are willing to

3- 6 Drinks per Occasion

PAY MORE, but they

DRINK LESS.

1- 4 Drinks per Occasion

$ %

MAXIMIZE REVENUE with price tiers.

44

2-3 Drinks per Occasion

$ %

$ %

Pay more for local connec tion

Pay more for higher quality perception

Pay less but with high brand loyalty

Less price sensitive

Less price sensitive

More price sensitive

Guest Metrics, TUS On-Premise 2016

Margin Contribution %

CONSUMERS

LIGHT LAGERS

Margin $

CRAFT

NATIONAL CRAFT & IMPORTS

MILLENNIALS

• REBUILD TR AFFIC

• FOOD + BEER + EXPERIENCE

Elevate the Beer Category

76%

of consumers

CREATE WAIT STAFF ADVOCACY

TELL THE QUALIT Y STORY

Wait staff are the primary point of

It is critical to ensure a quality

contact for a consumer. They must

experience for the consumer! To

be knowledgeable about the beer

ensure this: 1) Wait staff should have

category and should be inspired

the correct training to ensure the

to make suggestions.

perfect pour and 2) Use the right

don’t know

glassware for the quality product.

Consumers often feel lost and don’t know what they want prior to ordering.

An imperfect pour results in beer

When wait staff make a suggestion,

loss and lost dollars. The right

54% of those suggestions result in

glassware showcases the beer

conversion.(5) Further, 65% of consumers

credentials. Leave the generic pint

would pay more for a product

glass on the shelf:

recommended by a wait staff.(5)

• 62% of consumers prefer bars and

what they

want prior

to ordering.

NOT ALL

GLASSES ARE

CREATED EQUAL.

restaurants that serve beer in the When wait staff use their persuasive

proper glass(6)

power and get one extra beer on the

• 39% of consumers pay more for beer

check it boosts bar revenue and staff tips.

style-appropriate glassware, providing the opportunity to drive profit

(6)

Never underestimate the power of suggestion and the role wait staff play

A quality experience means a happy

in an on-premise outlet!

consumer and a happy retailer.

USE PERSUASIVE POWER TO BOOST BAR REVENUE AND STAFF TIPS

$750/ WEEK

PEOPLE PER WEEK

AND THEY CONVERT...

1 OUT OF 4 PEOPLE

TO SPEND $4...

FOR ONE EXTRA BEER

= Barrels wasted = Dollars down the drain

ALLOWS THE DRINKER TO...

LET’S SAY STAFF SERVES...

750

THE POWER OF THE PROPER GLASS

Imperfect pour

REVENUE FOR THE BAR

SEE THE BEER 3Cs OF BEER PRESENTATION COLOR, CLARITY, CARBONATION

SMELL THE BEER

=

80% OF BEER FLAVOR COMES FROM AROMA

$112/ WEEK

EXTRA FOR SERVER

MSS, Bartender Influencer Beer Report - January 2015

ENJOY THE BEER GLASS SHAPES CAN AMPLIFY TASTE & MAINTAIN BEER HEAD, MAKING IT FEEL LESS FILLING National Craft + Cider ASU 2014 Survey, Craft Journey Flow Segmentation, Technomic Co-Pilot

On-Premise Sources: 1. Guest Metrics, TUS On-Premise 2016 2. Guest Metrics, 2016 3. Guest Metrics, YTD August 2016 4. Nielsen Homescan, 2016 5. MSS, Bartender Influencer Beer Report, January 2015 6. National Craft + Cider ASU 2014 Survey, Craft Journey Flow Segmentation, Technomic Co-Pilot 7. TNS Brand Tracking Study, August 2016 8. Technomic, June 2016 9. MillerCoors Internal Data, 2016

45

CONNEC T

• OPTIMIZE ASSORTMENT

• RECAPTURE EVENING

NEIGHBORHOOD BARS

Millennial traffic has declined by

5%

(7)

WHO’S THE CONSUMER? There are two primary motivations for two different consumer groups:

total Food and Beverage sales

• “I want to connect with my

in bars. Tec hnomic,

Gen X, primarily male • “I want to get out and be social,” consumer, Millennial, 50% male,

3%

(7)

Ju ne 2016

friends,” for the older consumer,

for the legal drinking aged

Gen X traffic has increased by

Alcohol contributes 88.3% to

50% female The motivation to go out for

• Gen X – Going to the bar to relax and connect with friends over a beer • Millennial – Beer is convenient and great to share with friends in a social setting

Millennials hasn’t changed, but bars

WHAT ARE THE OCCASIONS?

are losing their appeal. Millennials

CONNECT OCCASION

are choosing to “get out and be

This occasion is all about spending

social” elsewhere. Beer tasting

quality time and catching up with a

rooms are attracting the Millennials.

small group of close friends. It’s about reconnecting and enjoying

The second trend causing the

UP: Digital Connections

DOWN: Face-to -face Socializing 46

conversations.

Millennial traffic declines in this class of trade is digital technology.

SOCIAL OCCASION

So much happens over texting or

Getting out, being social and living

social media today. And while we all

it up is the focus of this occasion. It’s

need some face time to truly connect

about meeting new people and

or to catch up with friends, face-to-

mingling while enjoying a drink.

face experiences are happening less and less frequently. Bars are visited

BUILDING WITH BEER ®

by most beer consumers and whether

To develop beer solutions for the

it’s a Gen X or a Millennial consumer,

neighborhood bar, the following

beer has a role to play in the

should be considered to attract new

neighborhood bar:

customers for the primary occasions:

CONNEC T

• OPTIMIZE ASSORTMENT

• RECAPTURE EVENING

LOSSES FOCUSED IN EVENING OCCASIONS Lunch

Happy Hour

0%

+1%

Dinner

-2%

Late Night

-17%

Draught is preferred(8)

T O TA L O N - P R E M I S E T R A F F I C V S . Y E A R AG O Guestmetrics, July 2016

To maximize revenue • CONNECT

NEIGHBORHOOD BAR DO’S AND DON’TS

1. He prefers draught but he is open to bottles. Both Premium American Light Lagers and national and regional Crafts play a strong role. Assortment

Do’s

optimization is key.

• Become a destination bar providing

2. He makes a beeline for his first

interactive social games, for example

beer and it’s non-risk, it’s his go-to.

• Focus on the core, Premium American

3. For his second beer he is open

Light Lagers

to trying something new, whatever

• Focus on draught

he sees on a chalkboard, on the

• Implement optimal price gaps between

tap handles or recommendations.

Light Lagers, national Crafts/Imports

4. Consumers expect to pay more

and local Craft

for Craft beers. Price gap

• Educate wait staff so they can make

management is the priority to

informed suggestions

maximize revenue.

• Train bar staff in the art of the perfect

price gap management!

Connect and Social occasions

pour • SOCIAL 1. Something light, no matter the

Don’ts

style. Most are looking for a brand

• Feature just alcohol

that is sessionable, one they can

• Prioritize local Crafts over national/

drink throughout the night.

regional in the tail

2. Draught beer is preferred, but

• Ignore package when package is easier

bottles are easier.

• Leave money on the table with reduced

3. Rounds are bought as a show

price gaps

of initiative and camaraderie.

• Underestimate the power of suggestion • Over-pour and serve a beer with too

In summary, bars need to ensure an

little head

optimal assortment and pricing, and tailor their offer to ensure more frequent and longer visits.

47

CONNECT • TELEVISIONS • SPORTS + BEER

SPORTS BARS

$19.3 BILLION

BEER SOLD IN SPORTS AND NEIGHBORHOOD B A R S (8)

Both

bottle and draught options

WHO’S THE CONSUMER?

are not immune to traffic declines. The

Primarily male, the sports bar is like

connect occasion remains unchanged,

man’s best friend – someone who

but it is now possible to reconnect with

is consistently fun and relaxed. This

a small group of friends over a game

consumer’s motivation is “to catch

somewhere other than a sports bar.

up over beers and a game.”

Ultra-high definition televisions, surroundWHAT IS THE OCCASION?

sound systems and live-streaming have

The sports bar is all about the connect

all, over time, become more and more

occasion. The focus is on the people

common in the household. And with a

first and the game second. Beers in the

click of the remote, it’s easy to keep up

foreground and TVs in the background

with games across numerous sports in

set the stage for enjoying some easy

one afternoon – all in the comfort of your

conversation while watching a game.

own home. Sports bars are also impacted by the digital technology trend. While

“I’m catching up with buddies over

clicking through the television channels,

beers and sports, what’s better?”

taking in every game, it only takes a

The occasion is a natural fit for beer. Beer is a social drink; it fits within numerous places and activities. Sports and beer just go together!

The sports bar consumer is not looking to experiment with his drinks at a sports bar because his mind is distracted with so many other things.

Sports bars, like their neighborhood counterparts, 48

CONNECT • TELEVISIONS • SPORTS + BEER Connect occasion!

American Light Lager biggest player

moment to access one’s favorite food-

In summary, sports bars are a place where

delivery app and order in some food to

the right assortment is important, but too

get you through the day.

much assortment can be overwhelming and impacts service levels.

And if you haven’t had time to go to a liquor outlet, there are markets with online

SPORTS BAR DO’S AND DON’TS

liquor stores that deliver, too. It’s worth repeating, regardless of the location, sports and beer just go together.

BUILDING WITH BEER

®

Do’s • Become a destination bar providing

To develop beer solutions for the sports

interactive social games, for example

bar, the following should be considered to

• Ensure sufficient facings, both draught

ensure the right brand, in the right pack, at

and bottle, for Premium American Light

the right price for the occasion:

Lagers

• Premium American Light Lagers play

• Clearly communicate and implement

the biggest role, as they fit the occasion

pitchers and bucket deals to increase

perfectly.

speed of service

• On arrival, the sports bar consumer

• Provide value offers that appeal to the

makes a beeline for his regular beer and

sports fan

defaults to his favorite Premium American Light Lager.

Don’ts

• He is open to both bottle and draught.

• Feature just alcohol

• Later on he is likely to try brands that are

• Under-face the core

on the specials list.

• Have too many specials for staff to have

• Rounds and buckets are the order of the

to repeat to customers

day, especially when the bar is busy, to

• Extend value offers across all brands

drive velocity.

and segments 49

SOCIALIZE • ASSORTMENT • FOOD + BEER

CASUAL DINING

ALMOST

$19

BILLION IN

C A S UA L DINING

S A L E S (8)

WHO’S THE CONSUMER? The casual dining restaurant is like a mini retreat where the consumer takes a break and enjoys good food and beer.

Males and females go to a casual dining restaurant for a quick food break or to catch up with a group. The motivation typically is one of two things: not lost its relevance, and yet traffic • Food break: “I want to get food when

Alcohol contributes

21.1%

to total Food and Beverage sales. (8)

2016 CASUAL DINING ALCOHOL BEVERAGE SALES: Beer - 48% Wine - 20% Spirits - 32% Tec hnomic, Ju ne 2016

50

losses are not far behind those of bars.

I am hungry.”

• Grub gathering: “I want to catch up with people over a shared meal.”

For one, the age-old reasons that prevent consumers from going out exist: “The service is poor,” “I don’t feel like I am

THE OCCASIONS

getting value for money,” and “Nothing

Casual dining can fulfill each of the

changes, it’s the same old, same old.”

mega occasions. It’s about taking

Second, occasions are no longer

time to enjoy some food along with

happening only in casual dining

beers, without worrying about cooking

restaurants:

or cleaning up. These are either

• Digital technology: There has been an

impromptu occasions taken alone or

explosion of apps that offer to deliver

with one other person, or planned

food from a restaurant to your door.

ahead to celebrate with friends

• “To Go” orders: Consumers would

and family.

rather collect the food and enjoy it in their own home. This is a lost

Beer is perfect in this environment – it’s

opportunity for restaurants to up-sell

a relaxing complement to a delicious

to diners or to offer them a beverage.

meal. It is proof that he/she is taking

• Channel blurring:

a breather for him/herself, and it

complements the flavor of dishes and

lowered prices, making it more

completes the meal. The occasion has

affordable to eat at home, while

º Many grocery chains have

SOCIALIZE • ASSORTMENT • FOOD + BEER

restaurants are increasing prices.

first order is a quick order of a favorite.

Something that complements the meal is

º Grocery chains have established

“grab-and-go” where shoppers

chosen once the food arrives.

can buy fully prepared meals and enjoy them at home.

In summary, the beer category provides a range of styles to complement all casual

It is time to move the occasions back

dining occasions.

to the casual dining restaurant! Visits to these outlets are primarily food-driven.

CASUAL DINING DO’S AND DON’TS

They are not just places to eat, they are places to meet family and friends to

Use digital technology to complement experience.

connect and sometimes to celebrate.

Digital technology can be used to remove

Do’s

barriers and get consumers in outlets.

• Offer menu differentiation and value

Many need reminders that these types

offers, such as bundling food and drink

of outlets still exist. Once consumers

• Offer the right glassware

are in casual dining locations, enhance

• Provide a mix of all beer styles in both

the occasion by facilitating the ordering

draught and package

process and making checkout fast.

• Implement optimal price gaps between Light Lagers, national Crafts/Imports

BUILDING WITH BEER®

and local Craft

To develop beer solutions for casual

• Provide value offers that appeal to the

dining, consider the following to ensure

price-sensitive consumer

the right brand is in the right pack, at

• Suggest simple beer/food pairings to

the price for the occasion:

complement the meal • Educate wait staff so they can make

Both Premium American Light Lagers

informed suggestions

and national and local Crafts have roles to play, all depending on the time of

Don’ts

day, the day of the week and whether

• Ignore social media as a means to

it’s before or during the meal.

communicate with consumers • Prioritize local Crafts over national/

The food break typically occurs at lunch

regional in the tail

time or a weekday dinner and the beer

• Leave money on the table with reduced

order is usually a favorite from the

price gaps

specials, specifically draught because

• Extend value offers across all brands

he/she can’t get it at home.

and segments • Complicate offers, slowing down wait

Grub gathering typically takes place for

staff

Friday and Saturday dinners, and the

• Underestimate the power of suggestion

Welldeserved break: away from home, no cooking, cleaning or chores Places to meet friends and celebrate special occasions

On-Premise Sources: 1. Guest Metrics, TUS On-Premise 2016 2. Guest Metrics, 2016 3. Guest Metrics, YTD August 2016 4. Nielsen Homescan, 2016 5. MSS, Bartender Influencer Beer Report, January 2015 6. National Craft + Cider ASU 2014 Survey, Craft Journey Flow Segmentation, Technomic Co-Pilot 7. TNS Brand Tracking Study, August 2016 8. Technomic, June 2016 9. MillerCoors Internal Data, 2016

51

At MillerCoors, we are committed to growing the size and value of the beer category. 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.

Building with Beer® On-Premise

Building with Beer® Grocery

• Demonstrate category leadership by leveraging the power of Premium American Light and appreciate the differentiation of national, regional and local Crafts • Drive operational excellence and efficiency with the optimal mix of brand, pack and price • Elevate the beer category and ensure a quality drinking experience for consumers

• Improve feature, space and assortment mix to drive revenue and trips • Increase basket ring by pairing meal solutions with beer • Optimize display velocity and turns to deliver profitable revenue

Building with Beer® Liquor Store Building with Beer® C-Store • Optimize cold space across all items to grow overall cooler revenue and profit • Merchandise singles by shopper segments to improve revenue and profit • Simplify singles pricing to drive incremental purchases, revenue and profit

• Recruit routine beer shopper visits by elevating the in-store experience • Grow profitable revenue through a disciplined variety in the cooler • Maximize total alcohol occasions with basketbuilding solutions • Simplify the shopping experience to help consumers quickly locate their favorite brands and discover new choices

PLEASE CONTACT YOUR MILLERCOORS SALES TEAM FOR MORE INFORMATION.

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