9 minute read
A Mixed Bag
from CSN-0822
by ensembleiq
2022 MIDYEAR REPORT CARD
A Mixed Bag
The current challenges facing the c-store industry — from inflation to supply chain issues to high gas prices — are impacting key product categories in varied ways
By Linda Lisanti
AFTER WEATHERING a difficult 2020 as consumers stayed home during the worst of the COVID-19 pandemic, convenience store sales began to rebound in the first half of 2021 and by the time the calendar was ready to turn the page to a new year, almost all of the industry’s key product categories were on the upswing — many registering doubledigit sales gains for the year.
The story for 2022 so far is a bit different, with some product categories still seeing positive momentum, but others feeling the negative effects of inflation, supply chain issues, continued staffing challenges, and record-high gas prices (as of press time).
“Inflation is impacting every level of our business, from the cost of goods [to] rents we are asked to pay, cost of repairs and maintenance, and the wages we need to offer to remain competitive,” the CEO of one roughly 100-store chain recently told Convenience Store News. Inflation hit a 40-year high in June 2022, driven by record gas prices, according to the Consumer Price Index, an important economic metric. U.S. consumer prices overall jumped by 9.1 percent year over year, the largest increase seen since 1981.
The good news is that even as inflation climbed higher and drove up prices across the board, retail sales rose in June, according to the National Retail Federation (NRF), indicating that consumers may be modifying their shopping behavior, but they’re still spending.
“Inflation has consumers modifying their spending behavior and prioritizing essentials like food, energy, and back-to-school items,” NRF President and CEO Matthew Shay observed.
The exclusive Convenience Store News 2022 Midyear Report Card, compiled in partnership with NielsenIQ, looks at dollar sales and unit volume metrics for January through June 2022 to evaluate which product categories are gaining vs. losing amidst today’s challenges.
The State of Cigarettes
In 2021, total convenience store industry sales of cigarettes were flat, rising just 0.3 percent, while unit volume in the category declined by 6 percent, the largest drop in five years.
During the first six months of 2022, both cigarette dollar sales and unit volume were down vs. a year ago. Sales were down 3.9 percent, while units were down more than double that (8.6 percent).
Fourth tier and imported cigarettes were the only segments to post both sales and unit increases during the first half of 2022. The remaining segments all posted declines, with premium cigarettes leading the decreases at 4.2 percent for sales and 9.5 percent for units.
The State of OTP
In 2021, other tobacco products (OTP) had a better year overall than cigarettes, despite seeing the smallest percentage change in total industry sales of the past five years (up 6.4 percent), and marking the first instance of negative unit volume in five years (down 1.4 percent).
The first half of 2022 presented a similar scene for this category, with total industry OTP sales up 4.4 percent vs. a year ago, while units were down 1.8 percent for the same period.
The smokeless tobacco and pipes segments were the first-half standouts in the OTP category, posting both sales and unit volume increases. The e-cigarettes and papers segments also posted sales increases, but saw unit volume declines.
The State of Packaged Beverages
CIGARETTES
2022 FIRST HALF
DOLLAR SALES UNIT VOLUME % CHANGE VS. YA % CHANGE VS. YA
Total Cigarettes -3.9% -8.6% Branded discount -2.8% -5.8% Fourth tier 13.4% 21.8% Imported 15.6% 5.5% Premium -4.2% -9.5% Subgeneric/private label -2.9% -7.4%
OTHER TOBACCO PRODUCTS
2022 FIRST HALF
DOLLAR SALES UNIT VOLUME % CHANGE VS. YA % CHANGE VS. YA
Total OTP Cigars E-cigarettes Other tobacco
4.4% -1.8% -1.6% -3.0% 10.7% -3.9% 0.0% -12.0% Papers 0.9% -2.2% Pipe/cigarette tobacco -3.4% -0.8% Pipes 61.5% 13.3% Smokeless 3.6% 1.1%
PACKAGED BEVERAGES
2022 FIRST HALF
DOLLAR SALES UNIT VOLUME % CHANGE VS. YA % CHANGE VS. YA
Total Packaged Beverages 6.5% -1.3% Bottled water 6.6% -3.7% Carbonated soft drinks 6.5% -2.4% Energy drinks 6.2% 2.9% Enhanced water 11.1% 2.2% Iced tea (ready to drink) 0.3% -8.5% Juice/juice drinks 2.5% -4.5% Other packaged beverages 2.5% -5.1% Sports drinks 12.7% -0.1%
BEER & MALT BEVERAGES
2022 FIRST HALF
DOLLAR SALES UNIT VOLUME % CHANGE VS. YA % CHANGE VS. YA
Total Beer Budget Flavored malt Imported Malt liquor Microbrews/craft Non-alcoholic Popular Premium Super premium -0.2% -3.4% -9.1% -13.4% 2.1% 0.9% 10.7% 6.6% -2.7% -9.2% -6.0% -1.7% 4.8% -1.7% -1.1% -4.6% -6.8% -9.8% 6.6% 6.2%
previous year. The category’s total c-store industry sales rose 10.9 percent, while unit volume also grew 5.2 percent — the first notable increase in five years.
The first six months of 2022, however, brought a unit volume decline of 1.3 percent vs. a year ago. Dollar sales were still on the rise, albeit at a slower pace of 6.5 percent growth.
Energy drinks and enhanced water were the category standouts for the first half of this year, being the only segments to post both sales and unit volume increases. Sports drinks had the biggest percentage increase in sales, but saw a slight 0.1 percent decline in units.
The State of Beer
Sales of beer and malt beverages contracted in 2021 following strong pandemic-related growth the previous year. Unit volume dropped 5 percent, while sales dropped 2.8 percent.
The contraction seems to be continuing, but leveling off somewhat, based on the numbers for the first half of this year. Unit volume was down 3.4 percent from January through June 2022 vs. a year ago, while dollar sales were essentially flat, declining just 0.2 percent.
Segment-wise, imported beer, super premium beer and flavored malt beverages are faring well in the beer category, posting first-half growth in both dollar sales and unit volume.
The State of Candy
2021 marked a high point for the candy category’s total c-store industry sales growth over the last five years, hitting 11.9 percent growth. Last year also marked the first time in five years that unit volume in the category grew, rising 5.5 percent year over year.
The first six months of 2022 brought sustained sales growth of 10.8 percent vs. a year ago. However, unit volume returned to negative territory, dropping 0.1 percent.
All segments of the candy category posted increases in dollar sales for the January-June 2022 period. Three segments also posted unit volume increases: candy rolls/mints/drops, gum, and bagged or repackaged peg candy. The rest of the segments saw a drop in units.
CANDY
2022 FIRST HALF
DOLLAR SALES UNIT VOLUME % CHANGE VS. YA % CHANGE VS. YA
Total Candy 10.8% -0.1% Bagged or repackaged peg candy 13.9% 1.1% Candy rolls/mints/drops 17.0% 9.2% Chocolate bars/packs 7.8% -2.8% Gum 18.8% 5.9% Non-chocolate bars/packs 8.4% -0.2% Novelties/seasonal 6.4% -6.4%
SALTY SNACKS
2022 FIRST HALF
DOLLAR SALES UNIT VOLUME % CHANGE VS. YA % CHANGE VS. YA
Total Salty Snacks Crackers 14.1% 3.4% 10.9% 1.8%
Mixed 3.7% -5.6%
Nuts/seeds
3.5% -3.2% Other salty snacks 11.0% 1.3% Packaged ready-to-eat popcorn 20.9% 11.6% Potato chips 14.6% 4.5% Pretzels 17.0% 4.8% Puffed cheese 20.0% 7.4% Tortilla/corn chips 18.7% 5.7%
EDIBLE GROCERY
2022 FIRST HALF
DOLLAR SALES UNIT VOLUME % CHANGE VS. YA % CHANGE VS. YA
Total Edible Grocery 14.7% 8.0% Breakfast cereal 8.2% -2.0% Condiments 11.9% 8.2% Other edible grocery 18.2% 9.7% Packaged coffee/tea 6.8% -0.5% Water beverage enhancers 3.4% -1.8%
The State of Salty Snacks
Similar to candy, the salty snacks category also posted its highest c-store industry sales growth in five years in 2021, and last year marked the first time in five years that unit volume in the category grew. Sales were up 10.2 percent, and unit volume was up 4.1 percent.
According to this year’s Midyear Report Card, the category is performing even better so far in 2022. First-half sales jumped 14.1 percent vs. a year ago, with unit volume rising 3.4 percent.
With the exception of two subcategories, all other segments of the salty snacks category posted firsthalf growth in both dollar sales and unit volume. The nuts/seeds and mixed salty snacks segments grew in dollar sales, but posted unit declines.
The State of Grocery
Edible grocery dollars and units in the convenience channel grew in 2021, but that growth slowed compared to the previous year when many consumers were looking to make quicker stock-up trips and seeking alternatives to grocery stores during the height of the pandemic. The category’s sales last year were up 3.7 percent, while units were up 1.1 percent.
The first six months of 2022, however, brought a resurgence to this category, perhaps fueled by consumers seeking to make fewer shopping trips to offset record-breaking gas prices. First-half edible grocery sales were up 14.7 percent vs. a year ago, and unit volume was up 8 percent.
C-store industry sales of nonedible grocery items were also strong during the first six months of this year, with sales increasing 7.8 percent vs. a year ago, and unit volume increasing 5.2 percent. This is a reversal from 2021 when sales dropped 4.1 percent and units dropped 6.6 percent.
The State of General Merchandise
In 2021, the general merchandise category continued its five-year streak of volume decreases in the convenience channel, dropping 2.7 percent. Dollar sales, however, were up 3.6 percent.
Looking at the first six months of 2022, general merchandise is off to a shaky start in the c-store industry this year, with both dollar sales and unit volume declining. First-half unit volume was down 6.7 percent vs. a year ago, and sales were down 4.3 percent.
Only one segment of the category saw growth across both sales and units during the first half of this year: hardware/tools/housewares. Most other segments were down in both metrics.
The State of Health & Beauty Care
Last year, the health and beauty care (HBC) category experienced its largest c-store industry sales growth in five years. Unit volume also increased, reversing four years of declines. Sales rose 4.1 percent year over year, while units increased 2.8 percent.
The first half of 2022 brought continued HBC sales growth, to the tune of 3.1 percent growth vs. a year ago. Unit volume, however, retreated back into negative territory, dropping 3.3 percent.
Segment-wise, the first-half standouts in the HBC category were vitamins/supplements, cosmetics, and other internal over-the-counter medications. These segments produced growth in both dollar sales and unit volume during the first six months of this year. CSN
NON-EDIBLE GROCERY
2022 FIRST HALF
DOLLAR SALES UNIT VOLUME % CHANGE VS. YA % CHANGE VS. YA
Total Non-Edible Grocery 7.8% 5.2% Dish care 8.0% 5.1% Household care 4.0% 2.2% Laundry care 25.6% 17.7% Other non-edible grocery 4.4% -3.5% Paper/plastic/foil products 4.4% 3.4% Pet care 6.9% 5.7%
GENERAL MERCHANDISE
2022 FIRST HALF
DOLLAR SALES UNIT VOLUME % CHANGE VS. YA % CHANGE VS. YA
Total General Merchandise -4.3% -6.7% Batteries -3.9% -9.3% Film/photo -86.5% -74.7% Hardware/tools/housewares 7.2% 5.0% Other general merchandise -1.0% -10.6% School/office supplies 4.7% -3.2% Seasonal -2.6% -6.4% Smoking accessories -7.0% -11.3% Telecommunications hardware -14.2% -23.6% Trading cards -19.9% -23.0% Video/audio tapes -3.8% 48.4% Wearables/apparel -13.7% -17.8%
HEALTH & BEAUTY CARE
2022 FIRST HALF
DOLLAR SALES UNIT VOLUME % CHANGE VS. YA % CHANGE VS. YA
