NACS Magazine July 2022 by NACS Magazine

Advancing Convenience & Fuel Retailing

JULY 2022 TOP BRANDS NielsenIQ data reveal the hot sellers consumers crave ALCOHOL MIX PACKS Variety encourages trial and boosts sales

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ONTENTS NACS / JULY 2022 FEATURES

28 What’s Your

Inflation Strategy? Fine-tuning internal processes, improving pricing strategies, removing silos and nurturing supplier partnerships are ways operators can minimize inflationary effects.

44 Today’s Back Bar Is Not Just for Tobacco

Digital signage and furniture-quality fixtures help modernize this space for new merchandise.

50 Variety Is the Spice of Life

On the cover: AlexandrBognat/Getty Images. This Page: Vrender/Getty Images

Mixed packs allow c-stores to boost assortment and sales opportunity among adult beverages.

Brands Consumers Love These brands led the way in c-store sales in 2021.

STAY CONNECTED WITH NACS @nacsonline facebook.com/nacsonline instragram.com/nacs_online

Subscribe to NACS Daily—an indispensable “quick read” of industry headlines and legislative and regulatory news, along with knowledge and resources from NACS, delivered to your inbox every weekday. Subscribe at www.convenience.org/NACSdaily.

linkedin.com/company/nacs NACS JULY 2022 1

ONTENTS NACS / JULY 2022 DEPARTMENTS 06 From the Editor 08 T he Big Question 10 NACS News 18 Convenience Cares 20 I nside Washington

FDA should stop its plan to ban menthol cigarettes and flavored cigars; Congress looks at excessive swipe fees.

26 I deas 2 Go

Taylor Quik Pik builds on the past as it looks to the future.

54 C ool New Products

IT’S A FACT

65.37% is the gross margin percentage contributed by frozen dispensed beverages in 2021.

58 G as Station Gourmet

Yabbos’ unique twist on a drive-thru has made it a food and beverage destination.

62 C ategory Close-Up

CATEGORY CLOSE-UP PAGE 62

Frozen dispensed beverages delight consumers of all ages; packaged beverages soar, thanks to higher trips and product innovation.

PLEASE RECYCLE THIS MAGAZINE 2 JULY 2022 convenience.org

The presence of an article in our magazine should not be permitted to constitute an expression of the association’s view.

viennetta/Getty Images

72 B y the Numbers

Zip up beverage profits

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Fill it

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/ JULY 2022

Where is your next big idea coming from? With a NACS membership, you’ll network with the best and the brightest of the convenience industry. With leading retailers, and the suppliers and manufacturers of products known and loved the world over. convenience.org/membership

See Why NACS Matters.

EDITORIAL

NACS BOARD OF DIRECTORS

Kim Stewart Editor-in-Chief (703) 518-4279 kstewart@convenience.org

CHAIR: Jared Scheeler, The Hub Convenience Stores Inc.

Lisa King Managing Editor (703) 518-4281 lking@convenience.org Lauren Brooks Digital Content Manager (703) 518-4283 lbrooks@convenience.org CONTRIBUTING WRITERS Terri Allan, Sarah Hamaker, Al Hebert, Pat Pape, Renee Pas DESIGN Imagination www.imaginepub.com

ADVERTISING Stacey Dodge Advertising Director/ Southeast (703) 518-4211 sdodge@convenience.org Jennifer Nichols Leidich National Advertising Manager/Northeast (703) 518-4276 jleidich@convenience.org Ted Asprooth National Sales Manager/ Midwest, West (703) 518-4277 tasprooth@convenience.org

PUBLISHING Erin Pressley Publisher and Vice President, Education & Media (703) 518-4208 epressley@convenience.org Rose Johnson Audience Development and Production Manager (703) 518-4218 rjohnson@convenience.org

OFFICERS: Lisa Dell’Alba, Square One Markets Inc.; Varish Goyal, Loop Neighborhood Markets; Brian Hannasch, Alimentation Couche-Tard Inc.; Chuck Maggelet, Maverik Inc.; Ken Parent, Pilot Flying J LLC; Victor Paterno, Philippine Seven Corp. dba 7-Eleven Convenience Store; Don Rhoads, The Convenience Group LLC PAST CHAIRMEN: Julie Jackowski, formerly Casey’s General Stores Inc.; Kevin Smartt, TXB MEMBERS: Chris Bambury, Bambury Inc.; Frederick Chaveyriat, MAPCO Express Inc.; Andrew Clyde, Murphy USA; Chris Coborn, Coborn’s Inc. Little Dukes; George Fournier, EG America LLC

Terry Gallagher, Gasamat Oil/Smoker Friendly; Anne Gauthier, St. Romain Oil Company LLC; Douglas S. Haugh, Parkland Fuel Corp.; Raymond M. Huff, HJB Convenience Corp. dba Russell’s Convenience; Ina (Missy) Matthews, Childers Oil Co.; Charles McIlvaine, Coen Markets Inc.; Lonnie McQuirter, 36 Lyn Refuel Station; Jigar Patel, Hari 1 LLC, dba Fish River Food Mart; Elizabeth Pierce, Applegreen PLC; Glenn M. Plumby, 7-Eleven Inc.; Robert Razowsky, Rmarts LLC; Richard Wood III, Wawa Inc. SUPPLIER BOARD REPRESENTATIVES: Brent Cotten, The Hershey Company; Kevin Farley, GSP STAFF LIAISON: Henry Armour, NACS GENERAL COUNSEL: Doug Kantor, NACS

NACS SUPPLIER BOARD CHAIRMAN: Brent Cotten, The Hershey Company CHAIRMAN-ELECT: Kevin Farley, GSP VICE CHAIRMEN: David Charles, Cash Depot; George Ubing, E&J Gallo Winery PAST CHAIRMEN: Rick Brindle, Mondele-z International; Drew Mize, PDI MEMBERS: Tony Battaglia, Juul Labs; Alicia Cleary, AnheuserBusch InBev; Matt Domingo, Reynolds; Mike Gilroy, Mars Wrigley; Josh Halpern, FIFCO USA; Danielle Holloway, Altria Group Distribution Company; Jim Hughes, Molson Coors

Beverage Company; David Jeffco, Dirty Dough Cookies; Kevin M. LeMoyne, Coca-Cola Company; TJ Lynch, Hospeco Brands Group; Bryan Morrow, PepsiCo Inc.; Lesley D. Saitta, Impact 21; John Thomas, iSEE Store Innovations LLC; Sarah Vilim, Keurig Dr Pepper; Dean Zurliene, Monster Energy Company RETAIL BOARD REPRESENTATIVES: Steve Loehr, Kwik Trip Inc.; Chuck Maggelet, Maverik Inc. STAFF LIAISON: Bob Hughes, NACS SUPPLIER BOARD NOMINATING CHAIRMAN: Brad McGuinness, PDI

NACS Magazine (ISSN 1939-4780) is published monthly by the National Association of Convenience Stores (NACS), Alexandria, Virginia, USA. Subscriptions are included in the dues paid by NACS member companies. Subscriptions are also available to qualified recipients. The publisher reserves the right to limit the number of free subscriptions and to set related qualifications criteria. Subscription requests: nacsmagazine@convenience.org POSTMASTER: Send address changes to NACS Magazine, 1600 Duke Street, Alexandria, VA, 22314-2792 USA. Contents © 2022 by the National Association of Convenience Stores. Periodicals postage paid at Alexandria VA and additional mailing offices.

1600 Duke Street, Alexandria, VA, 22314-2792

Premier Manufacturing: Brands Built on Integrity Owned by a cooperative of proud American farmers using the best U.S.-grown tobacco blends among their competitors, Premier provides high-quality, value-priced cigarette brands for the adult consumer. C-stores across the country are buying in.

Commitment to Quality Premier Manufacturing, Inc. is the consumer products division of U.S. Tobacco Cooperative Inc. (USTC), an American grower-owned marketing cooperative based in Raleigh, NC.

500+ member farmers throughout the Southeast

Members maintain GAP Connections Trackable process includes all aspects of manufacturing under one roof Certification Standards Ensures sustainable, ethical agricultural practices Tobacco processing & stemmery Primary blending / Cigarette finishing

All products made in USA & 100% guaranteed

Robust Partnerships

A Cut Above the Rest

Premier’s support staff prides itself on meeting customer goals with seamless execution in achieving the highest regulatory standards.

Premier products use only top-end tobacco blends.

• Provides sales/service support across the U.S. • Develops POS materials for high visibility • Creates custom sales & merchandising programs • Maintains strong relationships with top distributors

• Partners with top national and regional retail chains

The finest flue-cured tobacco in the world • All U.S. grown • Environmentally sustainable • Compliant with every regulation The best blend among competitors • Highest concentration of flue-cured tobacco • Vibrant color • Blends provide exceptional aroma and flavor experience Manufactured on industry-leading equipment • Laser perforation • Inked code dating • Latest high-tech advancements

Your Trusted Premier Brands Choose the brand that suits your loyal consumers. Each brand features a variety of styles to satisfy every taste. Contact PremierManufacturing today! www.gopremier.com/contact

UP FRONT FROM THE EDITOR

Shrink It

he first time I noticed shrinkflation was in May when I bought my go-to super fruit greens bottled juice and realized that the usual 15.2-fluid-ounce bottle was noticeably skinner at 11 ounces—but the price was only marginally smaller. I started paying attention. One-pound boxes of pasta now have 14 ounces. Ketchup bottles are smaller. There are fewer napkins in a pack, and so it goes. Size does matter to Americans, as I was reminded anew during my June trip to Berlin, Germany, for NACS Convenience Summit Europe. I’d forgotten how small consumer-packaged goods are in Europe compared with the U.S. With inflation at 8.6% in the U.S. and supply chains still kinked, suppliers and retailers are grappling with what to do about it. For many of you, this may be the first time you’ve operated in an economy with significant inflation, so there is no muscle memory to fall back on. In this month’s cover story, “What’s Your Inflation Strategy?”, we tap into the wider convenience industry to see what moves retailers like Coen Markets, FavTrip and Parkland USA are making right now to get ahead of the challenge, along with advice from category management pros Impact 21 for our annual category management issue. Making sure you have in stock what your customers want is certainly one part of the category management playbook. In “Brands Consumers Love,” we share the category-leading brands in the convenience channel for 2021 and the first quarter of 2022, based on total U.S. convenience data from NielsenIQ. Most of the brands are well-known, but there are some newer entrants that are helping to build excitement in some standby categories. In the alcohol space, mixed packs are encouraging consumers to try different beers and hard seltzers, as we share

6 JULY 2022 convenience.org

in “Variety Is the Spice of Life.” Kum & Go, for instance, is leaning into Just because: 12-packs of three or four different Flowers for sale at flavors or styles of hard seltzers. a Shell Select petrol station in Berlin. There’s plenty advice here for European sizes category managers when it comes coming to a cold to what to stock and how to mervault near you? chandise it. Looking for ideas to spruce up the tobacco back bar? “Today’s Back Bar Is Not Just for Tobacco” has you covered. Think furniture-quality displays, digital signage and LED lighting. A good decluttering goes a long way, too, to elevate the look of this key POS area. Finally, don’t miss our Big Question interview with Markus Laenzlinger, CEO of Swiss company migrolino AG, and recipient of the 2022 NACS European Convenience Industry Leader of the Year Award. His first profession? Chef. Happy summer, my friends!

Kim Stewart, Editor-In-Chief

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UP FRONT THE BIG QUESTION

What lessons have you learned in your 20+ years of leadership?

My first profession was a chef. I learned to live in an environment that is always busy. We are working with different cultures. Of course, you have to be precise; you have to understand stress. You have to be in the detail, because the customer otherwise changes his opinion and goes to the competitors. I came out of the Swiss Federal Railways. I was responsible for commercial real estate in all of the Swiss railway stations, so I was the liaison to all of the formats in Switzerland and also to all of the international brands. And then we did a new strategy, and we said, ‘What will we do in the future with the small stations?’ I had no clue. Then I went to the Netherlands during vacation, and I saw it. It was a small convenience store with an integrated ticket-selling situation. I came home. I had written maybe 5-6 pages of a business plan. My boss was on vacation, and on Friday evening before I left for the weekend, I put this concept on his desk. And then on Monday, I was there at 7 o’clock. He always arrived at half past seven. And then five minutes later, he came out and said, ‘Markus, that’s the way. Please organize everything you can. We will do it.’ That’s the start of migrolino. First under the brand Avec, and then fuel stations. migro (Switzerland’s largest grocer) was involved in this joint venture company, and then we said, listen, we have a fuel company, and they have the same needs for a 8 JULY 2022 convenience.org

 Markus Laenzlinger, CEO of Swiss company migrolino AG, and the recipient of the 2022 NACS European Convenience Industry Leader of the Year Award convenience store. Could we demerge this joint venture? I did it as well, and then migro said, we are doing brickand-mortar business, what do you want with these small formats? And I said, you have to believe, maybe one day— the day’s already here now—we will be more profitable than you. And that’s the case. You have to view the vision as big so that everybody can see it. I think you have to admire people. Then understand the assignment that somebody gives you. Otherwise, you’re not able to transmit it to your people. And then, of course, you have to check, do I have the right staff? Are

they really able to do this mission? And then, do I need support from somewhere, for example, consulting companies? Should I hire somebody who has the knowledge? Do I have the resources? Then let’s go. Let’s do the venture. When I started, we had just left the joint venture, and I had a boss who said, ‘Markus, I want to be No. 1.’ So that was my assignment. No. 1 in Switzerland. My main competitor had at the time 212 stores. Coming out of this joint venture I had 14 stores. I said, OK, we will become No. 1. Then I had to reflect with the team, ‘What the heck can we do to be No. 1?’ My goal was expansion, expansion, expansion. I think that is the best way you can become No. 1. But it was not really organized expansion. And then as soon as I had the stores, I said, now we have to bring structure into this entire business. We did it. We have a lot of talent in migrolino, but you have to awake ambition to be No. 1. We are always hungry to do more. This is not easy to convince people to do extra. I hire only people who are better than me. Not every manager does this because often they are afraid that somebody is cutting the leg of the chair, but me, never. I have to give them trust, as a culture. I give them feedback; we are very close. I have meetings every week with each of the members of my directors, executive board. I became more of a coach to see if the final dish is finished at the right time. A journalist once asked, ‘Markus, your first education was not as an economist or a businessman. You were in a kitchen. How is it possible to be in a position such as this [CEO]?’ I said, listen, I’m still cooking. I have another kind of result, but at the time [the dish] has to be finished. Note: Henry Armour, NACS president and CEO, interviewed Laenzlinger at NACS Convenience Summit Europe in Berlin in June. This is condensed and edited from the full interview.

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UP FRONT NACS NEWS

ACS Convenience Summit Europe hosted the NACS European Convenience Retail Awards in Berlin, Germany, on June 2. This prestigious competition recognizes outstanding achievements in the European retail communities. The awards provide one of the greatest benchmarks of global convenience retailing excellence. Maxol Ballycoolin in Dublin, Ireland, took home the coveted NACS European Convenience Retailer of the Year Award. The award was sponsored by Dover Fueling Solutions. The judges agreed that Maxol is future-proofing its business by focusing on customer needs and delivering a food-focused experience for its customers. In 2021, Maxol announced a ¤7 million (US$7.5 million) investment program that included ¤1 million to refurbish its Ballycoolin location. The company upgraded the first-floor area bringing the overall seating capacity to

99. The outside was transformed with the addition of 20 parking spaces, as well as an outside seating area and a rebrand of the car wash facility. On the forecourt, two additional premium fuel pumps now offer Maxol Premium Fuel, which supports the company’s Carbon Neutral Program by offsetting 100% of the customer’s emissions through investments in certified carbon offset projects. “After a century of being a retail leader, Maxol continues to prove that our global industry is constantly looking to see how it can stay ahead of the curve and deliver retail excitement to customers. This award is well deserved,” said NACS President and CEO Henry O. Armour. Reitan Convenience Sweden won the NACS European Convenience Retail Sustainability Award for its PBX brand and setting the standard for what sustainability means in the global convenience retail channel. The award was

sponsored by The Coca-Cola Company. “We are so happy and proud that PBX won such a prestigious award. PBX would not have been possible without the dedicated people behind the initiative. We are determined to redefine our industry to make convenience sustainable and sustainability convenient, and it is with great humbleness that we take on this journey,” said Malin Eklund, sustainability director at Reitan Convenience. Reitan Convenience launched its sustainable convenience store brand PBX in 2021. The store functions as a “living lab,” where Reitan can test its sustainability strategy in a fast and efficient way. Reitan is using the store to directly investigate and evaluate what is most sustainable in terms of both operations and supply to speed up sustainability work in its other operations. PBX is part of Reitan Convenience’s sustainability strategy, which was developed in consultation with Prosperous Planet in 2019. Twelve goals were adopted,

Thank you to our NACS European Convenience Retail Award sponsors:

10 JULY 2022 convenience.org

Antonio/Getty Images

NACS Honors European Convenience Retailing Leaders

Maxol Ballycoolin of Dublin, Ireland, celebrates winning the coveted NACS European Convenience Retailer of the Year Award. L to R: Thomas McMullan, director; Ciaran McNally, chief retail officer; Peter Robinson, licensee; Brian Donaldson, CEO; Siobhan Grimes, head of retail; Declan Costello, chief information officer; Kevin Patterson, retail manager NI; and Jim Burke.

including a pledge that by 2030 the company will be a climate-neutral business, that the goods and services sold will be produced in a way that protects the ecosystems, as well as constant development on the range of food and beverages that focus on health and wellness. Żabka won the NACS European Convenience Retail Technology Award, recognizing the company’s fully autonomous Żabka Nano store concept. The award was sponsored by Gilbarco Veeder-Root. Żabka has 8,300-plus convenience stores in the Polish market. Żabka Nano is the company’s autonomous store concept, which uses an innovative method of authorization and payment for purchases, implemented in cooperation with Adyen. To enter the store, the customer places their payment card against a terminal. While inside shopping, all the customer needs to do is select products and leave. A camera system will

recognize the products removed from the shelves, calculate the appropriate amount and automatically finalize the payment using the payment card used when entering Żabka Nano. The system does not identify customers and does not remember the image. “We have a common goal, which is to simplify life for customers and offer them convenient solutions using the latest technologies. Thank you for the NACS European Convenience Retail Technology Award, and we promise that we will surprise yet again by the projects we carry out,” said Paweł Grabowski, director of unmanned solutions at Żabka Future. Markus Laenzlinger, CEO of Swiss company migrolino AG, is this year’s recipient of the 2022 NACS European Convenience Industry Leader of the Year Award. “I am honored and delighted to receive this accolade from NACS and join

the likes of Magnus Reitan and István Kapitány as a renowned convenience retail leader in our global industry,” said Laenzlinger. migrolino, owned by the migros group, Switzerland’s largest retailer, operates 347 convenience stores. Under Laenzlinger’s 22-year tenure, a joint venture was created between the Federation of Migros Cooperatives, the Swiss Federal Railways (until 2005) and Valora AG, which resulted in the convenience store Avec. In 2009, this joint venture was taken over by migros, and since then migrolino has become a leading convenience retail brand in Switzerland that continues to lead the evolution of fresh to-go food and customer-focused service. NACS Convenience Summit Europe took place May 31–June 2 in Berlin, Germany. Visit convenience.org/CSE for more information about the 2023 event in Dublin, Ireland. NACS JULY 2022 11

/ FULL SPEED AHEAD example applications

UP FRONT NACS NEWS

KE LET’S MA SOME MOVES! WELCOME BACK TO THE NACS SHOW!

NACS Show Registration Is Open It’s full speed ahead for convenience retail leaders! Discover new products, ideas, technology and connections with your friends and industry peers at the world’s largest event for all things convenience—it’s time to get to business and register for the 2022 NACS Show. Join us October 1-4 at the Las Vegas Convention Center in Las Vegas, Nevada. The NACS Show provides the most comprehensive representation of products and services for the convenience and fuel retailing industry. Retailers come to the NACS Show to discover proven ideas and strategies that enable them to increase sales, attract new customers, build their brand and improve their bottom line. Suppliers exhibit at the Show to establish a presence in the convenience channel, obtain sales leads, increase product exposure and introduce new products. Historically, 23,000+ people attend the NACS Show from over 70 countries, and more than 1,200 companies exhibit. Attendees will discover exciting innovations and products in over 420,000 square feet of expo space, meet more than 1,200+ exhibitors across five key categories and find emerging categories in our New Exhibitor Area and Cool New Products Preview Room. Get even more from your NACS Show experience by adding one of our pre-conference workshops to your registration: NACS Advanced Category Management Certification and NACS Food Safety Conference. Pre-conference workshops take place on October 1, Day One of the NACS Show. For more information and to register visit www.nacsshow.com.

Patterson Joins the Fuels Institute

Amanda Patterson

Amanda Patterson has joined the Fuels Institute as communications and projects coordinator. She will be part of the team building out communications and marketing campaigns, with a focus on social media engagement and high-impact graphics development. Prior to joining the Fuels Institute, Patterson served as a communications specialist at the Clearwater (Florida) Marine Aquarium, engaging with media and managing video projects, both behind the scenes and on-camera. She also has experience with communications and project management in state and local government roles.

Sims and Serfass Join NACS Keonna Sims has joined NACS as an education program coordinator. In this role, Sims will provide overall speaker management and planning for several NACS events, including Leadership for Success, Convenience Summit Asia, the NACS Show and webinars. Prior to joining NACS, Sims was lead event coordinator for Keonna Sims the Virginia Tech Applied Research Corporation, coordinating both live and virtual meetings for the organization. 12 JULY 2022 convenience.org

Anna Serfass has joined NACS as an expo and meetings coordinator. In this role, she will be part of the team executing large events such as the NACS Show, as well as committee meetings and other regional events. Serfass earned a B.S. in hospitality management from Indiana University of Pennsylvania. She has experience working Anna Serfass on multiple types of events, including serving as an information technology assistant to support the Consumer Electronics Show (now known as CES).

NACS LEADERSHIP FOR SUCCESS CLASS OF 2022 The NACS Leadership for Success program offers rising industry leaders an invaluable experience for growing their skills and becoming stronger performers in their companies, their careers and in their lives. NACS and The Hershey Company congratulate the individuals selected for the 2022 program.

Funding for this program is provided in part by The Hershey Company.

Chris Bayless Wallis Companies Kelly Beavers Love’s Travel Stops

Terry Hoffman Whatley Convenience Store, LLC dba Zelmo’s Zip In

Wade Robinson Pump-n-Pantry, Inc. Marco Robledo Robinson Oil Corporation

Eric Carrillo Love’s Travel Stops

Kayla Hurst Tri Star Energy, LLC dba Twice Daily

Tony Cordova Thorntons LLC

Josh Hylton GetGo Cafe+Market

Brandon Slack Maverik, Inc.

Angela Crabtree Maverik, Inc.

Daniel Martinez Robinson Oil Corporation

Karlie Truckenmiller Wallis Companies

Monika Czubak Aramark Northern Europe

Peter Mauro Love’s Travel Stops

Lori Goff Maverik, Inc.

Trisha Merrill Maverik, Inc.

Kari Watson Whatley Convenience Store, LLC dba Zelmo’s Zip In

Evan Greco Love’s Travel Stops

Adam Miller GetGo Cafe+Market

Julia Heitner Coen Markets, Inc.

Scott Morgan Thorntons LLC

convenience.org/leadershipforsuccess

Chris Romba GetGo Cafe+Market

Melanie White Kum & Go, L.C. Alex Wolfe GetGo Cafe+Market

UP FRONT NACS NEWS

New Members NACS welcomes the following companies that joined the association in April 2022. NACS membership is company-wide, so we encourage employees of member companies to create a username by visiting www.convenience.org/Create-Login. All members receive access to the NACS Online Membership directory, latest industry news, information and resources. For more information about NACS membership, call (703) 684-3600. NEW RETAIL MEMBERS

DensityUSA Saint Louis, MO www.densityusa.com

Interstate All Battery Urbandale, IA interstatebatteries.com

Shady Vent Construction Cedartown, GA www.shadyvent.com

Deville Beverage Co Inc. Cypress, CA www.drinkdeville.com

Intuitivo Wilmington, DE www.intuitivo.com

Solari Brands Longmont, CO www.hipshots.com

Tenura LLC Tampa, FL

Diebolt & Company Old Lyme, CT www.Dieboltco.com

Jesse’s WakeUP! LLC New York, NY www.JessesWakeUP.com

Sprecher Brewing Co LLC Orlando, FL sprecherbrewery.com

NEW GLOBAL SUPPLIER COUNCIL - ADVANTAGE MEMBER

Duncan Toys Company Middlefield, OH www.yo-yo.com

K3DES LLC Houston, TX www.k3des.com

SQEEDS Aurora, CO www.sqeeds.com

NCR Corporation Atlanta, GA www.ncr.com

Elevation Delta Medina, OH www.elevationdelta.com

Kadenwood Newport Beach, CA kadenwoodbrands.com

Tacony Corporation Matthews, NC www.tornadovac.com

NEW SUPPLIER MEMBERS

Enhanced Immune San Diego, CA enhancedimmune.com

KE Design LLC Tempe, AZ www.kedesignllc.com

Alliance Sales & Marketing Charlotte, NC www.alliancesalesinc.com

Everest Ice and Water Systems Apopka, FL everesticeandwater.com

Kii Corporation San Mateo, CA www.en.kii.com

TBE Beverages LLC dba BrightFox New York, NY www.drinkbrightfox.com

Anastasia Confections Inc. Orlando, FL anastasiawholesale.com

Fresh Blends North America Inc. Delray Beach, FL www.freshblends.com

Aqua Leash Phoenix, AZ www.aqualeash.net

Fuel Ox LLC Asbury, NJ www.fuelox.com

ATX Float LLC Austin, TX www.atxfloat.com

Glow Your Pup Up Queen Creek, AZ glowyourpupup.com

Brownie Brittle LLC West Palm Beach, FL www.browniebrittle.com

GMAN USA LLC Tampa, FL www.gmanusa.com

Cadco Ltd. Winsted, CT www.cadco-ltd.com

Grabango Berkeley, CA www.grabango.com

CBD Living Corona, CA www.cbdliving.com

HST US LLC Naples, FL www.hst-rc.com

Chicken Guy Orlando, FL www.chickenguy.com

Intazza Coffee Hacienda Heights, CA www.intazza.com

Flash Market Inc. West Memphis, AR www.flashmarkets.com Pride Management LLC Springfield, MA

14 JULY 2022 convenience.org

NUDE MINTS Las Vegas, NV www.nudemints.com OpsAnalitica Highlands Ranch, CO opsanalitica.com Paragon Praxis LLC Ponchatoula, LA www.paragonitsec.com

The Cure Brand Knoxville, TN www.thecurebrand.com The Lemon Perfect Company Atlanta, GA www.lemonperfect.com Trilliant Food and Nutrition dba Horseshoe Beverages Little Chute, WI www.trilliantfood.com

Philip Morris International Vital Proteins New York, NY Chicago, IL www.pmi.com www.vitalprotiens.com Quick & Pure Ice Systems Wyld CBD Phoenix, AZ Clackamas, OR ww.quickandpure.com www.wyldcbd.com Rooted Food Sales Newbury, MA www.rootedfoodsales.com Rovertown Richmond Heights, MO www.rovertown.com

UP FRONT NACS NEWS

Member News RETAILERS

John Georgiou has joined Parker’s as human resources business partner, operations. In his new position, John Georgiou Georgiou helps execute strategies for acquiring, developing, motivating and retaining talent to support the company’s strategic growth across coastal Georgia and South Carolina. ExxonMobil announced Matt Furman as vice president of public and government affairs. Furman Matt Furman joins ExxonMobil from Best Buy Co. Inc., where he was chief communications and public affairs officer since 2012. SUPPLIERS

Jeff Barstow joined Golbon as the director for category management. For over 30 years, Barstow has held Jeff Barstow multiple key senior roles within the industry, including being an owner/founder of an independent broadline distributor in the Northeast.

16 JULY 2022 convenience.org

Geoff Abell is Golbon’s new director of member development. Abell brings an extensive background Geoff Abell in sales, spending the past 10 years as the vice president of sales for a foodservice distributor in North Carolina. Betty Wettstein joined Golbon as member manager of convenience and retail. Wettstein has experience in Betty Wettstein wholesale food distribution and retail stores, including sales, purchasing, operations and marketing. Previously, Wettstein was a foodservice director for a distributor supporting a six-state region of convenience store business, foodservice programs and product procurement. OPW Vehicle Wash Solutions welcomed Kevin Ahnert as the new business unit manager for Payment SoluKevin Ahnert tions and Controls. Ahnert started his career in the car wash industry in the late 1990s and was previously the vice president of operations at ICS.

VP Racing Fuels Inc. announced that Bruce Hendel has been promoted to senior vice president, global Bruce Hendel sales. In his career of nearly 30 years as vice president, Hendel has held several leadership roles. In addition to his most current position, he was director of sales, consumer products and western regional manager. Karen Madden has been promoted to chief operating officer, VP Racing Fuels. Most recently serving as vice Karen Madden president of branded retail, Madden will assume responsibility for the operations of VP’s three manufacturing, warehousing and shipping facilities in Texas and Tennessee. She joined VP in 2019. Ben Dolan has assumed the role of vice president, branded retail, VP Racing Fuels. Dolan was most recently VP’s vice Ben Dolan president of marketing. Dolan joined VP in 2020, following more than 20 years of sales and marketing experience across a broad range of industries.

George Predick, regional vice president for Wisconsin and Illinois, retired from S. Abraham & Sons Inc., a subGeorge Predick sidiary of Imperial Trading Company. Predick began his career with SAS in 1989 as new business development manager for Wisconsin and Illinois. Predick has worked in the industry since 1974, beginning at Bambas Tobacco Company, which later was purchased by Core-Mark International where Predick was a district manager.

KUDOS

MAPCO, a convenience store chain with more than 330 stores throughout the Southeast, was named a 2022 Top Workplace USA by employee survey and research organization Energage. The annual list of recognized

employers is developed based on the results of an Energage Workplace Survey distributed to employees and is compared to 15 years of research, data from 70,000 organizations and 23 million employee surveys.

ADD Systems shared the news of the passing of Mark Collins, ADD Systems vice president of ADD South. After more than 35 years, Collins’ contributions were countless, and his mark on ADD’s products, team members and clients was indelible.

Calendar of Events

NACS Executive Leadership Program at Cornell July 31-August 04 | Dyson School, Cornell University | Ithaca, NY

NACS Women’s Leadership Program at Yale November 13-18 | Yale School of Management | New Haven, CT

JULY NACS Financial Leadership Program at Wharton July 17-22 | The Wharton School, University of Pennsylvania | Philadelphia, PA

NACS Convenience Summit Asia July 19-21 | Singapore

FEBRUARY NACS Leadership Forum February 08-10 | Eden Roc | Miami Beach, FL

NACS Marketing Leadership Program at Kellogg July 24-29 | Kellogg School of Management, Northwestern University | Evanston, IL

OCTOBER NACS Show October 01-04 | Las Vegas Convention Center | Las Vegas, NV NOVEMBER NACS Innovation Leadership Program at MIT November 06-11 | MIT Sloan School of Management | Cambridge, MA

NACS Convenience Summit Asia February 28-March 02 | Waldorf Astoria Bangkok | Bangkok, Thailand MARCH NACS Day on the Hill March 07-08 | Washington, D.C.

For a full listing of events and information visit www.convenience.org/events.

NACS JULY 2022 17

CONVENIENCE CARES

SOCIAL SHARES NACS encourages retailers to share their giving-back news on social media using #ConvenienceCares.

Convenience Retailers Unite for 24/7 Day T he NACS Foundation kicks off 24/7 Day on July 24 and encourages convenience retailers and their supplier partners to join the celebration. Now in its fourth year, 24/7 Day is the only day that celebrates the partnership between the convenience store industry and those on the front lines in our communities. The NACS Foundation Response Relief program’s signature event celebrates and recognizes the first responders, medical and emergency professionals and Red Cross volunteers who are there for their communities during times of need. The event unifies the collective efforts of tens of thousands of convenience stores that honor and thank those who work 24/7 with items like a hot cup of coffee, cold beverage or a breakfast sandwich. The first 24/7 Day event in 2018 had three retail partners: Sheetz, Wawa and RaceTrac. Last year, participation increased by more than 1,000% with

18 JULY 2022 convenience.org

30,000-plus convenience retail locations across the U.S. celebrating 24/7 Day, showcasing how the convenience retailing industry is stronger together. “Most convenience stores are open 24/7, which is especially important during times of need, like wildfires, tornados, hurricanes or snowstorms. These are the times when communities not only rely on their local c-store for essentials but also the first responders and American Red Cross volunteers who are dedicated to keeping our communities safe,” said Stephanie Sikorski, NACS vice president of marketing and director of the NACS Foundation. There is no cost for retailers and suppliers to join the 24/7 Day celebration at the entry level, and participation is flexible and structured around the needs and goals of each company. To learn more about participating in this year’s 24/7 Day, contact Sikorski at ssikorski@convenience.org or (703) 5184231, or visit www.247day.org.

In The Community Every year, the convenience and fuel retailing industry dedicates billions of dollars to advancing the futures of individuals and families in our communities. The NACS Foundation unifies and builds on NACS members’ charitable efforts to amplify their work in communities across America and to share these powerful stories. Learn more at www.conveniencecares.org.

EG AMERICA, UNITED WAY SUPPORT EDUCATIONAL NONPROFITS 1 EG America in May kicked off an in-store fundraising campaign with United Way to support youth programs and educational resources in partnership with local nonprofits, such as Boys and Girls Clubs and Attendance Works to provide safe after-school programming, literacy programs, career preparation and more. This marks the third fundraiser between EG America, based in Westborough, Massachusetts, and United Way. Since the first fundraiser in 2020, EG America

c-stores and their customers have raised over $170,000 to support education and health programs as part of United Way’s mission to advance the common good in communities around the world. Participating EG America brands include Certified Oil, Cumberland Farms, Fastrac, Kwik Shop, Loaf ‘N Jug, Minit Mart, Quik Stop, Sprint, Tom Thumb and Turkey Hill.

PARKER’S DONATES $56,000 TO BEAUFORT SCHOOLS 2 Savannah, Georgia-based Parker’s donated $56,000 to the Beaufort County School District in South Carolina as part of the company’s Fueling the Community program, which is a longstanding charitable initiative that donates a portion of every gallon of gas sold on the first Wednesday of each month to area schools in coastal South Carolina and Georgia. A portion of the Parker’s donation goes to support the school district’s annual Support Person of the Year recognition program. Other funds go to specific schools designated by Parker’s Pump Pal members when they purchase fuel on the first Wednesday of each month. Parker’s has given more than $1.8 million to area schools since the inception of the Fueling the Community program in 2011.

The facility’s name honors the meaningful relationship between Evan Smith, a 2013 graduate of Belton High School and 2017 graduate of Texas A&M University, and Logan Marek, a 2017 Belton High School graduate with autism. Before Evan’s death in 2018, he had a passion for young people with disabilities, including serving as a personal care provider for Logan.

MAVERIK AIMS TO REDUCE WILDFIRES 4 Salt Lake City-based Maverik and the U.S. Bureau of Land Management in May launched a regional partnership to raise awareness about fire prevention to reduce human-caused wildfires. Coinciding with Wildfire Awareness Month, nearly 400 Maverik stores across 12 Western states played educational fire safety awareness videos on Maverik’s fuel pumps and in-store TV screens plus social media channels. Customers who purchased a firewood bundle also received a set of campfire safety tips. The goal of the “Spark Safety, Not Wildfires” campaign was to provide simple, effective tools for public-land users, which they’ll see as they stop to fuel up.

FIKES/CEFCO GIFTS $1 MILLION TO UMHB TEACHER CENTER

PILOT DONATES $100,000 TO MILITARY FAMILIES

3 The University of Mary Hardin-Baylor (UMHB) in Belton, Texas, is building a state-of-the-art special education training and instructional facility thanks in large part to a $1 million gift from Fikes/ CEFCO. UMHB’s Marek-Smith Center for Teacher Preparation will serve as the premier center for special education training and instruction in the U.S.

5 Veteran-founded Pilot Company donated $100,000 to Hire Heroes USA, an organization dedicated to providing job search assistance to current members of the military, veterans and their spouses. With this $100,000 donation, Hire Heroes USA will be able to take 100 military members through the transition process and into great careers.

1 4

NACS JULY 2022 19

INSIDE WASHINGTON

Prohibition Has a Bad Track Record FDA should stop its plan to ban menthol cigarettes and flavored cigars. BY ANNA READY BLOM

Key Figures

34%

of all cigarettes sold are menthol

51%

of all cigars sold are flavored

20 JULY 2022 convenience.org

ucts such as e-cigarettes. What FDA’s proposals fail to fully consider is the opportunity it will create for an illicit market. Today, menthol cigarettes account for 34% of all cigarette sales, and flavored cigars account for 51% of all cigar sales, according to NACS data. These numbers demonstrate a significant user base for these products in the tobacco category. As the FDA acknowledges in its proposals, these products are addictive in nature. To remove them from shelves means that many current users who cannot quit or will not switch to other tobacco products will search for the products from illicit sources. And illicit sellers will seize the opportunity to profiteer from the bans, much like bootleggers in the 1920s. CONSEQUENCES OF THE ILLICIT MARKET Prohibition of menthol cigarettes and flavored cigars will push legal sales to the illicit market, undermining the efforts of responsible retailers. Today, licensed tobacco retailers are responsible for ensuring that tobacco products do not get into the hands of minors. They are also responsible for only selling products that are regulated with respect to their contents, fire safety and other attributes. Legitimate retailers also

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n January 17, 1920, the production, sale and distribution of alcohol was prohibited in the U.S. Supporters of prohibition expected people would stop drinking if alcohol was completely banned. What they didn’t anticipate was that many people would instead turn to the black market for booze. Out of prohibition emerged a booming illicit market that included illegal production (better known as bootlegging) and a proliferation of speakeasies. It also included an uptick in gang-related violence and organized crime. By 1933, prohibition was over because it created a far greater risk for communities than the legal sale of alcohol. Fast forward 102 years and the Food and Drug Administration (FDA) is proposing prohibition of menthol cigarettes and flavored cigars. Prohibition as policy assumes current users of the products will quit or switch to regular cigarettes or other tobacco prod-

New Africa/Getty Images

Illicit sellers will seize the opportunity to profiteer from the bans, much like bootleggers in the 1920s. collect and remit the appropriate taxes on those products. Illicit sellers do not abide by any of these regulations. Convenience store retailers invest millions of dollars to ensure that they comply with the law when it comes to selling age-restricted products. These investments include training employees on how to check IDs and how to safely stock and store the products. In

fact, many retailers in the industry use advanced ID scanning technology and have a third party conduct stings of employees to ensure they’re checking IDs. If the FDA removes menthol cigarettes and flavored cigars from convenience stores, where customers must be 21 years or older to purchase them, it will only increase the likelihood of minors accessing them. Illicit sellers do not check IDs; they will sell products to anyone with money to buy them. Along with the risk of increasing minor access, the illicit market poses a greater risk to health because counterfeit products have not undergone FDA scrutiny. Congress passed the Family Smoking Prevention and Tobacco Control Act in 2009, putting the regulation of tobacco under the FDA’s purview, including the manufacturing, distribution and sale of these products. The tobacco products sold in convenience stores are authorized by the agency. Counterfeit cigarettes, on the other

hand, avoid this scrutiny and are often smuggled into the United States. The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) states, “While all cigarettes are dangerous and are known to cause disease, counterfeit cigarettes often contain higher levels of tar, nicotine and carbon monoxide than genuine cigarettes, and may contain contaminants such as sand and packaging materials. Counterfeit cigarettes pose a greater health risk to consumers and cost taxpayers millions in lost revenue.” While the FDA argues that prohibition will lead to greater health benefits, the agency did not fully weigh the impact to individuals who buy more dangerous products from the illicit market. The FDA’s proposals fail to consider the full effects prohibition will have on the illicit market and the economic impact to legal sellers today. A regulation that causes legal retailers to lose sales to illegal sellers causes undue economic burdens for these businesses. These regulations do not seem to account for those losses, in particular the losses of sales of non-tobacco items that are purchased when people buy menthol cigarettes or flavored cigars. When looking to finalize its proposals, the FDA needs to consider the impact prohibition will have on legal tobacco retailers (especially small businesses), their customers and their communities. The agency cannot claim to have done this without fully addressing the consequences of the illicit market. NACS is filing comments on behalf of the industry and encourages retailers to send their own comment letter. Download a template letter at www. convenience.org/FDAbans.

Anna Ready Blom is NACS director of government relations. She can be reached at ablom@convenience.org. NACS JULY 2022 21

Congress Looks at Excessive Swipe Fees BY ANNA READY BLOM

$794 billion. That’s how much Visa and Mastercard’s swipe fees have increased since the last time the Senate Judiciary Committee held a hearing on the topic in 2006. And it’s one of the reasons the chairman of the committee, Senator Dick Durbin (D-IL), felt dialogue on the matter was long overdue. NACS has long advocated for Congress to address Visa and Mastercard’s dominance of the payment card market and the skyrocketing fees that result from the lack of competition in the space. This spring, Sen. Durbin, along with Sen. Roger Marshall, (R-KS), Rep. 22 JULY 2022 convenience.org

Peter Welch, (D-VT) and Rep. Beth Van Duyne, (R-TX), wrote to Visa and Mastercard asking the card companies to withdraw their planned swipe-fee increases. The lawmakers said the increase would add to inflationary pressure and is the “last thing American families deserve right now.” However, Visa and Mastercard blatantly ignored their request, and their rate hike took effect April 22. The increases predominantly focused on “card not present” transactions and amounted to $1.2 billion. In response to the card firms’ dismissal, Durbin called for a hearing.

NACS TESTIFIES Entitled “Excessive Swipe Fees and Barriers to Competition in the Credit and Debit Card Systems,” the May 4 hearing featured witnesses from the credit card industry, the retail industry and a consumer group. NACS General Counsel Doug Kantor and Laura Shapira Karet, CEO of Giant Eagle, testified on behalf of the retail industry. They sat on the panel with executives from Visa, Mastercard and Commerce Bank. Also testifying was Ed Mierzwinski, from U.S. Public Interest Research Group (US PIRG), a consumer group. “Today we’re going to talk about a hidden fee that fuels the fires of inflation across America every day,” stated Durbin as he opened the hearing. “When swipe fees on credit and debit cards go up as they just recently did, it increases inflation, and consumers ultimately pay the price.” His opening statements and questions were followed by lawmakers from both sides of the aisle who voiced concern about the broken market in which swipe fees are set. Kantor testified that since swipe fees are a percentage of the cost of every transaction, when gas prices rise or the cost of goods rises due to inflation, these fees multiply for retailers. In 2021, overall card fees paid by the convenience store industry were $13.5 billion, up 25.6% in 2021 versus 2020 ($10.7 billion), NACS State of the Industry data indicate. The first two quarters of 2022 have seen even steeper increases. “This is an incredibly concentrated market, and none of [the banks] are setting their own prices. That doesn’t make any sense,” stated Kantor. “On top of that, Visa and Mastercard set the terms by which cards are accepted, which make sure to insulate those fees from any other competitive market pressure to make sure they can stay high.” Bill Sheedy, senior adviser to Visa’s CEO, testified that there is plenty of competition in the payments space, citing tech-based entrants, such as Pay-

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INSIDE WASHINGTON

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INSIDE WASHINGTON monopoly in order to inflate demand and squeeze merchants?” NACS is working with Giant Eagle CEO Karet shared that the Merchants Payments her profit margins are between 1% and Coalition to pursue legislation 2%, compared with 50% at Visa. She that will bring long-needed noted the April increases will cost her competition to credit cards. company $1.3 million a year, and given To contact your member of Congress and ask them to her razor-thin profit margins, she has #StopSwipeflation visit no choice but to pass the increase along www.convenience.org/grassroots, to customers in higher prices. or if you’d like to be more Committee ranking member Sen. involved in this effort, contact Charles Grassley (R-IA) cited “staggerMargaret Hardin, NACS ing increases” in prices grassroots manager. during the current “time of high inflation” and acknowledged that “fees are eating into Pal/Venmo, Square/ already-tight margins, Block, Affirm, Afterespecially for small pay, Klarna and Zelle. business owners.” Kantor was quick to While most of the respond that these country is hurting from Doug Kantor, NACS general forms of payments inflation at a 40-year counsel, testifies before the Senate Judiciary Committee during cannot be compared high, Kantor pointed a hearing on swipe fees. because this hearout that the credit card ing was on credit cards, and Visa and industry is profiting from it. He cited Mastercard dominate more than 80% of recent earnings calls where the chief the market. financial officer of Visa acknowledged, “we are a beneficiary of inflation.” FEES FUND CARD REWARDS During the hearing, however, witnesses The Visa and Mastercard executives from Visa and Mastercard shied away defended the “value” credit cards bring from the issue of inflation. to both merchants and consumers in the Durbin offered several policy form of rewards. When asked what the solutions to bring relief to Americans, interchange fees pay for, Charles Kim, including having two unaffiliated CFO of Commerce Bancshares Inc., said networks on a credit card. This way the that “roughly 60% goes out in the form dominant card networks would have to of rewards.” compete for a retailer’s business, like The Hispanic Leadership Fund what happens on debit cards today. released a study the day before the hear“We need to deal with the competiing that found that the current swipetion problem in credit cards to have a fee structure drives up shelf prices for fair deal for merchants and consumers, all Americans, regardless of how you and frankly for the U.S. economy,” pay. This hurts low income Americans stated Kantor. “When we have compethe most. It found that American famitition, prices are lower, we have more lies earning less than $75,000 per year innovation, and people have more send a total of $3.5 billion to families money in their pockets. They can spend earning more than $75,000 per year. more, and that consumer spending Sen. Mike Lee (R-UT) questioned the helps drive the economy.” system’s brokenness: “Couldn’t one arAnna Ready Blom gue that this is a manifestation of a lack is NACS director of of competition and that the price is begovernment relations. ing inflated by the lack of competition, She can be reached at ablom@convenience.org. and that consumer rewards share in the 24 JULY 2022 convenience.org

ONE VOICE This month, NACS talks to

Dan Alsaker,

principal, Alsaker Corp. What role in the community do you think convenience stores should play? Convenience stores bring stability to the local population. They incentivize the community to train the first-time work force. They give hope and confidence during tough times by being consistently open and available. The role of the convenience store is to be a beacon of normalcy. What does NACS political engagement mean to you? Political advocacy rounds out our understanding of proposed legislation. It brings a wealth of information to the table for us to use in understanding the intended outcome of legislation. It channels many voices into one synchronized effort. Being engaged allows you access to the conversation. What federal legislative or regulatory issues keep you up at night (with respect to the convenience store industry)? What we don’t know or hear about that goes on behind closed doors in caucuses. We have no voice in such wild procedures. What c-store product could you not live without? A smile to every customer.

NACSPAC DONORS NACSPAC was created in 1979 by NACS as the entity through which the association can legally contribute funds to political candidates supportive of our industry’s issues. For more information about NACSPAC and how political action committees (PACs) work, go to www.convenience.org/nacspac. NACSPAC donors who made contributions May 1-31, 2022, are: Karla Ahlert RaceTrac Inc.

Dell Cromie Glassmere Fuel Service

Stewart Spinks The Spinx Company Inc.

J. Scott Apter Apter Industries Inc.

Jim Garrett Volta Oil Company Inc.

Tom Wake Core-Mark & Eby-Brown

Tony Battaglia JUUL Labs

Steve Kimmes Kimmes Enterprises LLC

Todd Walker Altria Client Services LLC

Shanali S. Bhagat American Energy Distribution

Henry Latifzadeh Callaway Oil Inc.

Brent Cotton The Hershey Company

Jordan Nicgorski JUUL Labs

IDEAS 2 GO

Taylor Quik Pik is a third-generation family owned convenience store chain established in the 1950s in Blair, Nebraska. L to R: Brad Taylor, president and owner, with daughter, Brooke Shallberg, COO, and son, Eric Taylor, CEO.

Honoring History Name of company: Taylor Quik Pik Date founded: 1954 # of stores: 10 Website: www.facebook.com/ taylorquikpik

26 JULY 2022 convenience.org

Taylor Quik Pik builds on the past as it looks to the future. BY SARAH HAMAKER

Since 1954, the Taylors have been serving the community in and around Blair, Nebraska, with food and fuel, a tradition the third generation of the family-owned convenience chain Taylor Quik Pik is eager to continue. “Our grandfather founded Taylor Oil Company, the parent company of Taylor Quik Pik, and we’re proud to be part of this company as it’s grown into the 21st century,” said Eric Taylor, CEO of Taylor Quik Pik. Taylor, along with his sister, COO Brooke Shallberg, has taken over the day-to-day operations of the chain, while their father, Brad Taylor, is the president and owner. The siblings have a vision to carry the 10-store chain into the future while continuing to provide the products and service customers have come to expect from Taylor Quik Pik.

THE START The evolution of Taylor Quik Pik has been six decades in the making. “Our grandfather owned or leased 31 stores, some under the Quik Pik banner and others under the Champlain Oil name,” Taylor said. “When our father took over ownership in the early 2000s, he eventually sold underperforming stores, bringing the number down to seven.” The siblings grew the chain while continuing to provide the Quik Pik service. “We’re constantly looking for ways to improve the stores we have and also eyeing existing sites we could bring into the Quik Pik family,” Taylor said. “Since 2020, we’ve acquired five sites—two of which we simply moved operations from existing locations to the new sites, and three were new to our chain.” Part of their mission has been to remodel older stores both to expand foodservice offerings and to cater to the growing needs of their local communities. For example, they brought in electric vehicle chargers at one location, and three more are slated to get chargers soon. “While we’re in a growth mindset, we’ve worked to keep the small, family-business feel to our stores and company,” Shallberg said. “We have some of the best employees, and we know that keeping them happy is going to help them make our customers’ days better.” To that end, they treat all employees well, with those in the corporate office stopping by stores daily. “Because we’re visible in the stores, we keep in touch with the employees and managers. We want them to see us on the ground and know we care about them,” she said.

a hit with customers. While one unit has a Godfather’s Pizza Express, eight serve Hometown Pizza. “We also offer burgers and other fried foods, but pizza is the cornerstone of our foodservice program,” Shallberg said. When launching the Hometown Pizza brand, the stores gave away a ton of pies to schools and local businesses to generate interest through word of mouth, which worked. “That strategy paid off big time for us in getting our pizza brand out there in our communities,” Taylor said. “We also allow schools to purchase our pizza at cost, then sell them at a profit, which also gets the brand out there while helping schools raise money.” Of course, with a fresh pizza program, having a beer cave with ice cold beverages is a natural fit. Taylor Quik Pik beer caves chill down to 28 degrees, which customers love. Overall, they try to give the product mix a good variety and often bring in items customers request. For example, when a customer mentions a new energy drink, Shallberg immediately sources it to get it on the shelf. “We like being the first store in town to have the next big energy drink or beer to come out,” she said. “Being a smaller chain allows us to switch things up and adapt more quickly,” Taylor added. At the end of the day, Taylor Quik Pik wants to change its customers’ world for the better. “I tell my managers and store employees that the people who are crazy enough to think they can change the world are the people who actually do,” Taylor said. “We encourage our employees to start with the customer right in front of them.”

THE PRODUCTS As with many convenience retailers these days, Taylor Quik Pik recognized the need to differentiate with its foodservice. Three years ago, the company developed its own pizza brand called Hometown Pizza, which has become

Sarah Hamaker is a freelance writer and NACS Magazine contributor based in Fairfax, Virginia. Visit her online at sarahhamakerfiction.com.

“Charity” pumps donate a portion of income to local schools.

BRIGHT IDEAS At Taylor Quik Pik, giving back to the community is engrained in every aspect of the company. “Our locations are in small towns, so we’re part of the community, so we want to help out however we can,” said CEO Eric Taylor. For example, two locations have dedicated a fuel pump that donates a portion of the income to a local school. The company plans to expand the “charity” pump to additional stores soon. The stores also hand out gift certificates for charity and fundraiser events, while the company sponsors children’s sports teams and banners at sporting events. “We try not to turn anyone down who comes to us with a charitable request,” Taylor said. “We feel it’s important to give back to the community because we wouldn’t be here without their support of us.”

Ideas 2 Go showcases how retailers today are operating the convenience store of tomorrow. To see videos of the c-stores we profiled in 2021 and earlier, go to www.convenience.org/Ideas2Go. NACS JULY 2022 27

Infla What’s Your

Fine-tuning internal processes, improving pricing strategies, removing silos and nurturing supplier partnerships are ways operators can minimize inflationary effects. BY RENEE PAS

28 JULY 2022 convenience.org

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one are the days when the pandemic was the hottest point of conversation. Today, convenience store leadership teams, much like their counterparts in other business sectors across the U.S., are focused on inflation. A buzzword no one wanted, inflation has pushed its way to the forefront as it reverberates through every aspect of running a business. It’s a top issue in nearly every discussion among the leadership team at Parkland USA, said company President Doug Haugh. Detailed internal discussions around how to approach rising prices happen much more frequently now. “We have had to work hard to accelerate our reporting and expense tracking cycles so everyone from store managers to the price book team to our category team can track and adjust to rising prices more rapidly,” he said. What used to be a monthly routine at Parkland USA has become a weekly one. And what the team used to do weekly, now is daily. “It’s intense, but otherwise the margin compression could be ruinous,” he said.

a tion Strategy?

NACS JULY 2022 29

If you missed our Hot Topic webinar, DataDriven Strategies to Minimize the Impact of Inflation on C-stores, co-presented with NielsenIQ, you can watch it on-demand at www.convenience.org/ webinars. Learn how short-term shifts and item price sensitivities have impacted the way consumers shop, the enduring effects on shopping patterns if inflationary pressures persist and the datadriven strategies that c-stores can apply today to maintain sales volumes in the face of price pressure and sustain shopper loyalty.

In one case, a new vendor relationship brought about a sponsor for FavTrip’s social media, which has a strong following. “Out of those discussions, some good things can happen,” Sultan said. WINNERS AND LOSERS The reality of today’s business climate means that c-store operators large and small must take a closer look at every detail. Indeed, John Benson, director at advisory firm AlixPartners, believes those companies that lack discipline on how they manage their business will suffer as a separation of players tends to emerge in the kind of economic situation the U.S. is seeing today. Even larger, more sophisticated retailers have parts of their businesses where there is room for improvement, he noted. “Companies are going to have to respond; there will be winners and losers,” Benson said. It is a message he shared at the NACS State of the Industry Summit in April, a message he continues to preach, and one that he expects to reiterate throughout 2022, given no economist foresees a quick turnaround to the current inflationary environment. What is important to understand, Benson said, is the impact of price increases on financials. “Oftentimes we see companies being price-takers or getting cost increases from suppliers and being reactive to those.” Instead, he advises trying to move away from the mindset of “there’s nothing we can do but pass it along or impact margins.” One approach is to consider how often a price can be renegotiated. “It depends how important you are as a customer, how much leverage and relevance you have to that supplier,” Benson said. “While it’s easier if you are a larger company, there are always opportunities. It’s probably rarely the case that you are able to completely reverse it, but you can work with your supplier to mitigate part of that.”

It’s an excellent opportunity right now to really look at internal processes around vendor cost changes.” 30 JULY 2022 convenience.org

Hanna Plonsak/Getty Images

On-Demand Webinar

Inflation likewise garners much attention at Coen Markets. “We have weekly meetings on input cost changes and have to judge what/ where/how to respond,” said Charlie McIlvaine, chairman and CEO of Coen Markets Inc. The 60-store chain operates in Pennsylvania, Ohio and West Virginia. “It’s a nonlinear process that takes vigilance,” he said. Labor cost inflation garners a similar level of attention, as does recruiting itself, McIlvaine said. “This is our reality today and one where we cannot afford to avoid action.” The sting of inflation extends to every operator, large and small. “We’re really feeling the pain right now,” said Babir Sultan, president of 12-store chain FavTrip in Independence, Missouri. He continues to get letters from seemingly every vendor regarding cost increases being passed along to him. From the CO2 company to the company that cleans and delivers carpets, the message is the same: Inflation is impacting his business. Sultan understands that companies have no choice but to pass costs along, much like, eventually, he in turn will pass those costs to customers. “Eventually it will make its way to the customer, and that means less margin going forward for us,” he said. “It’s really tough.” In an effort to diminish the impact of inflation and the cost of products in the store, Sultan is actively looking at shifting gears where it makes sense. For example, to combat supply-demand issues he’s substituting local items wherever he can, and he’s considering private-label items where he can source them or if a supplier offers a related rebate to offset some of the pricing. Supplier relationships are also being reevaluated, Sultan said. “It’s definitely time to revisit relationships with vendors,” he said. “We went through a list of vendors who we need to work with in the cold vault and some that we may exit our relationship if not meeting our needs and will reallocate elsewhere.”

youngvet/Getty Images

Look at and identify points of leverage, Benson advised, for instance changing something operationally, such as a change in the order pattern to drive efficiency for the supplier, or if it’s possible, negotiate a better price with a longer contract. “Any consumer-facing business has to become much more intelligent in how they operate right now. It’s rare to see this many price increases this fast.” It’s difficult to compare notes on how convenience stores handled inflation in the past and look for lessons learned, Benson said, since the last time the U.S. experienced inflation at this level was 40 years ago. “The convenience store industry is so different today than it was 40 years ago, which makes it difficult to look at historical precedent,” he said. “It’s a highly competitive environment for c-stores today. Companies don’t have the luxury of being passive.” INCREASED COSTS: A PROCESS When dealing with vendor pricing changes, establishing a good foundational process is always essential but becomes exponentially more critical to a business during inflationary periods, Liza Salaria, senior principal consultant at Impact 21, noted. “Make sure you have good processes internally around how you receive cost changes from the vendor community, and how those are reviewed and implemented into price book and the stores,” she said. “It’s an excellent opportunity right now to really look at internal processes around vendor cost changes.” Now is the time to also look at overall buy practices, Salaria said, particularly in the foodservice area. “Determine if there is an opportunity to lock down pricing by taking a position on high-volume commodities. Additionally, research opportunities to buy direct (vs. redistributors) and

consider launching RFPs on high-volume items to ensure you are receiving the most competitive prices.” The challenge, even in the best of times, becomes keeping up with the number of cost changes coming from multiple sources, primarily direct-store-delivery suppliers and grocery wholesalers. Amid the current inflationary period, which includes hiccups in supply, operators may be finding they are underwater when it comes to receiving vendor price changes with ample time to review them and adjust retail pricing, Salaria said. Now is the time to verify that internal processes are working smoothly, and vender communication regarding price increases is well defined. “Many retailers do not have vendor policies set up effectively,” she said. A good process starts with including vendor price changes in the contract, said Salaria, who advises operators to aim for a minimum seven-day notice. From there, category managers play a key role. “It’s very important with all price changes that a category manger sees that and makes the change effective at retail. As you set margin targets in price book, that allows the category manager to see when a cost has changed: It’s a trigger that they can make a move if they want to maintain margin rate.” If there is not a policy in place where category managers are notified in enough time to execute retail changes, this could result

Companies that lack discipline to manage their business will suffer as a separation of players tends to emerge in the kind of economic situation the U.S. is seeing today.

NACS JULY 2022 31

CPG inflation primarily driven by food departments Inflation Varies by Department

Feb ‘22 CPG Inflation

Pet Care

Household Meat Seafood

+10%

13 12 12

Produce Dry Grocery Frozen

Regular Price

Promoted Price

+8%

+12%

11 11 10

Baby Care Dairy Deli

10 8 8

Health & Beauty Bakery Alcohol

8 5 4

Tobacco

Source: NielsenIQ, Total US xAOC, 4 weeks ended February 26, 2022

Readjust and figure out where it makes sense to price items lower and drive traffic, and then increase pricing on other items to keep everything in balance [marginwise].”

32 JULY 2022 convenience.org

Stagflation? As prices rise, most CPG departments are reporting softness in volume sales

Annual CPG Food Inflation

+7%

Inflation and Sales Growth

Vol % Chg

-3

Vol

+1 -1

-7 -9

Meat

Seafood

Household

-8

Baby Care

+12

Produce

-4

Health & Beauty

+10

Pet Care Dry Grocery

$ % Chg

Frozen

-3

-4

Dairy

-3

Deli

+13

-5

-9

Tobacco Alcohol

-5

-7

Bakery

+16

+14

Source: NielsenIQ, Total US xAOC, 52 weeks ended March 19, 2022 – Volume = Units

in significant margin loss, Salaria explained. “This is a really good time to ensure that the linkage between vendor policy, price book, accounting and category management is solid.” On a more macro level, Salaria advises managing the whole portfolio and avoiding the trap of getting into silos and managing by category. “It’s really about optimizing the whole portfolio of products in a way that drives value and incremental trips,” she said. “That isn’t done by category.” Salaria shared that some categories might not be as price sensitive for customers and the retailer can look more closely at margins. “Understand how margins can shift throughout the store,” she said. “We find most category managers are rewarded or held

accountable by the individual category vs. the total store performance. Now is the time to work as a team and shift that thinking.” A PORTFOLIO-STYLE MINDSET Anis Hadj-Taieb, CEO of retailer pricing firm DemandTec, agrees that c-store operators benefit from viewing their business with a portfolio-style mindset. He likens the approach to transferring stocks around to keep an investment portfolio balanced. “The idea is to readjust and figure out where it makes sense to price items lower and drive traffic, and then increase pricing on other items to keep everything in balance [margin-wise].” Even prior to the inflation the U.S. is experiencing now, having the right pricing

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Commodity vs. Retail Price 90% 80% 70% 60% 50% 40% 30% 20% 10%

BLS Commodity Price 2021 vs 2020

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Source: NielsenIQ AOD CORE 2022 forecast updated through 03/12/2022

Blanket price increases are less effective Sales Dollars

Increased Risk With Price Increase

Pricing systems used to be a club for the bigger players, but you no longer have to have scale to be effective.”

Item 1

Profit

$3.9M

$3.7M

$3.5M

Item 2

Item 3

Item 4

Item 5

$2.5M

You need to understand your portfolio’s price sensitivity

$1.2M $0.5M

Blanket Increase

Strategic Increase Source: NielsenIQ

and being able to balance pricing against a business objective was a sustainable, healthy way to run a business, Hadj-Taieb said. “Sadly, the most commonly used pricing tool today is often Excel, and it’s impossible to run a business on that. People are realizing they need to do something. We are seeing a big pickup in discussions and demand. “Pricing systems used to be a club for the bigger players, but you no longer have to have scale to be effective,” Hadj-Taieb said. DemandTec recently launched an ondemand model of its pricing and analytics system that takes the workload off retailers to build the internal team to handle the system, and, he said, makes pricing systems more financially approachable for regional players. “It makes it easier for them to embark on their pricing journey,” he said. 34 JULY 2022 convenience.org

Gross Revenue

The pricing discussion goes beyond items in the store and extends to the multiple channels today’s consumers tap for purchases, such as ordering through a c-store’s website, app or through a third-party delivery model. Understanding how to price correctly through each of those different channels is important, Hadj-Taieb said. “There are so many things outside of a retailer’s control these days; you cannot do much about some of those things,” Hadj-Taieb said. “But if you do not fix your pricing, you are at some point going to drive over a cliff.” Renee Pas’ writing draws from both her c-store background and her more than 20 years writing about various retail channels. She can be reached at reneepas4@gmail.com.

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V O L

Brands Consumers

36 JULY 2022 convenience.org

E V O These brands led the way in c-store sales in 2021.

BY KIM STEWART

Vrender/Getty Images

onvenience retailers and consumers alike are operating with the mindset that the worst of the pandemic is behind us. That confidence showed up in NACS State of the Industry (SOI) data for 2021, which revealed that inside-store sales grew 8.7% year over year to $277.9 billion. When it comes to the products powering inside c-store sales, the tried-and-true brands are holding their own, while some newer entrants are on the rise. With the help of total U.S. convenience data from NielsenIQ, this month we look at the brands driving category growth plus new entrants that have popped up in the rankings in the first quarter of 2022. The majority of the names comprising the top 11 of the leading categories in the convenience channel are well-known, and category managers would not be surprised that brands like Anheuser-Busch InBev’s Budweiser, for example, dominated the beer category or that Hershey’s continued to lead the candy category on a product share basis in 2021. That said, some

notable movement in the rankings within some of the categories provides some excitement and novelty. In 2021, merchandise sales in convenience stores posted solid growth of 6.4%, driven by packaged beverages, up 14.4% year over year, NACS SOI data for 2021 indicate. The center-store categories of candy, salty snacks, packaged sweet snacks and alternative snacks all saw sales increase by double-digits compared with 2020. NACS Research ranks center-store convenience top categories by gross margin contribution. Top margin center-store contributors for 2021 include: 1. Packaged beverages—23.3% 2. Cigarettes—10.4% 3. Other tobacco products—6.5% 4. Beer—5.7% 5. Salty snacks—5.2% 6. Candy—5.2% 7. General merchandise—2.7% 8. Alternative snacks—2.1% 9. Packaged sweet snacks—1.5% NACS JULY 2022 37

(Based on 2021 total dollar sales) Brand

Sales

Units

%ACV

Red Bull

99.6%

Monster

99.2%

Coca-Cola

99.5%

Gatorade

98.3%

Mountain Dew

98.3%

Pepsi

98.8%

Starbucks

97.8%

Dr Pepper

98.4%

Bang

95.5%

Bodyarmor

90.7%

Private Label

39.1%

Source: NielsenIQ for Total U.S. Convenience, Calendar Year 2021

Top 11 Cigarette Brands (Based on 2021 total dollar sales) Brand

Sales

Units

%ACV

Marlboro

99.3%

Newport

98.4%

Camel

98.8%

Pall Mall

95.5%

Natural American Spirit

95.5%

L&M

89.6%

Winston

89.6%

Kool

84.9%

Maverick

64.2%

Parliament

57.4%

Virginia Slims

63.2%

Source: NielsenIQ for Total U.S. Convenience, Calendar Year 2021

Top 11 OTP Brands (Based on 2021 total dollar sales) Brand

Sales

Units

%ACV

Copenhagen

92.9%

Juul

80.0%

Grizzly

94.2%

Vuse

79.4%

Middleton’s

95.9%

Skoal

89.8%

Swisher

92.8%

Zyn

75.2%

Backwoods

82.3%

Garcia Y Vega

76.8%

Dutch Masters

64.7%

Source: NielsenIQ for Total U.S. Convenience, Calendar Year 2021 38 JULY 2022 convenience.org

PACKAGED BEVERAGES In 2021, packaged beverage sales grew 14.4% year over year on a perstore, per-month basis, NACS SOI data indicate. Gross margin contribution rose to 23.26%, up from 22.06% in 2020. The category ranked No. 1 for inside gross profit contribution ahead of prepared food in 2021 and was No. 2 in inside sales. Energy drinks have powered growth within the packaged beverages category during the past two years and dethroned carbonated soft drinks in 2020 as the top contributor to category sales. That trend held in 2021 as energy drinks contributed 26.8% to the packaged beverages category and saw sales increase 14.4%. Three of the 11 best-selling packaged beverage brands in the convenience channel last year were energy drinks: Red Bull, Monster and Bang. Red Bull continues to lead packaged beverage category sales, with a 16% year-overyear sales increase and a 15.9% rise in units compared with 2020. Monster Energy slipped into the No. 2 spot for 2021, bumping Coca-Cola. The Monster brand saw a 10.2% rise in sales and a 9.4% rise in units in 2021, while Coca-Cola sales grew 2.5% and units edged lower. Bang, made by Vital Pharmaceuticals, is still growing, increasing its ACV (all commodity volume) distribution to 95.5% for 2021, compared with 89.8% for 2020. Gatorade, owned by PepsiCo, was the leading sports drink in the channel for 2021, with sales up 14.8%. BodyArmor, owned by The Coca-Cola Company, enjoyed impressive growth as sales climbed 37.3% and units increased 31.7% in 2021. Starbucks’ bottled coffee was the sole coffee drink among the NielsenIQ top 11. It’s no secret that supply chains are stressed, particularly for packaged beverages, which are important drivers of trips to convenience stores. In the first quarter, those stresses showed up in the NielsenIQ product rankings as all but Red Bull, Monster and BodyArmor lost units.

CIGARETTES AND OTP Tobacco remains a key category for the convenience store channel, and it’s one that benefited mightily during 2020 as people worked from home. In 2021, cigarette sales edged up 1.2% year over year, NACS SOI data indicate. Premium cigarettes made up 80.6% of the category, followed by branded discount cigarettes at 11.4%, subgeneric/ private label at 6.2% and fourth tier at 1.1%. Within the top 11 leading brands in the category, there was some trading of positions, but Altria’s Marlboro is by far the category leader, dominating sales and ACV, followed by British American Tobacco’s Newport. BAT’s Camel brand climbed to the No. 3 position, bumping Pall Mall, also from BAT, to No. 4. However, all the brands in the top 11 lost units in 2021, and seven out of 11 saw sales decline. Those trends continued in the first quarter of 2022 with a notable exception: BAT’s Lucky Strike appeared in the top 11 with a 200% surge in sales and units. After a pullback in 2020, the OTP category in 2021 marked a turnaround, with sales up 7.2% year over year amid an 8.1% rise in profits. The category ranked fourth in inside gross profit contribution and fifth in inside sales contribution. Smokeless contributes 38.7% to the category, followed by e-cigarettes at 31.6%, cigars at 22.2%, other tobacco at 4.2%, pipes at 1.8% and papers at 0.9%. Altria’s Copenhagen remains the category leader, followed by JUUL and BAT’s Grizzly. BAT’s Vuse moved up to the No. 4 slot, with a 57.1% jump in sales and a 37.9% increase in units sold in 2021. Another big gainer was ZYN from Swedish Match, which boosted dollar sales by 43% and units by 42.6% last year.

Dmitrii Smirnov/Getty Images

Top 11 Packaged Beverage Brands

Top 11 Beer Brands

Jirik V/Getty Images

BEER In the beer category, the largest three subcategories all delivered sales growth, according to NACS SOI data for 2021. Premium beer, which accounted for 27.6% of the category’s sales, grew sales 3.4% to a total of $5,609 per store, per month. Gross profits for premium beer also showed strong growth of 9.1% year over year. AB’s Budweiser is ensconced at the top of the leading brands in the category, with nearly 99% market penetration. Sales and units, however, slipped in 2021 as people ventured back into bars and restaurants. The second- and third-largest subcategories, imports and flavored malt, both had significant gains in revenue and profit, increasing both metrics by double-digits year over year, NACS SOI data indicate. Import sales overall increased 10.0% year over year on a per-store, per-month basis and grew gross profits by 17.1%. Modelo from Constellation Brands continues to gain market share, with an ACV in 2021 of 87.1% vs. 85.1% in 2020. Corona Extra, also from Constellation Brands, is riding the import wave, too, as sales rose 6.8% and units grew 6.4%. Flavored malt sales increased 10.7% from 2020, and gross profits were up 16.8%. White Claw hard seltzer from Mark Anthony International is still the go-to beverage in the flavored malt space, with a 4.2% increase in sales and a 12.1% jump in units in 2021. A new brand in the beer category top 11 for 2021 was Boston Beer’s Twisted Tea. The hard tea notched a 25.4% increase in sales year over year and a 19.5% increase in units.

SALTY SNACKS In 2021, salty snacks made up 4.36% of inside sales, up 0.24 point from 2020, according to NACS SOI data. Sales per store, per month increased 11.3%, and the category ranked No. 5 in inside sales when cigarettes are excluded. The category also ranked No. 6 in inside gross profit contribution in 2021. Potato chips led the category, accounting for nearly 40% of salty snacks’ sales. The second-largest subcategory, other salty snacks—which includes items like puffed onion rings, pork rinds, vegetable puffs and potato sticks—saw sales growth of 23.0% year over year. PepsiCo’s Frito-Lay unit holds all but three of the top 11 leading brands in NielsenIQ’s 2021 ranking. Up-andcomer Barcel Takis, owned by Grupo Bimbo, surged to the No. 5 spot, with a 20.6% increase in sales and an 11.1% rise in units. That’s up from No. 9 on the 2020 list. Momentum continued into the first quarter as nearly all brands in the top 11 saw growth in sales dollars and units. The Kellogg Company’s CheezIt made its way into the top 11, along with PepsiCo’s Sabritas brand.

(Based on 2021 total dollar sales) Brand

Sales

Units

%ACV

Budweiser

98.6%

Modelo

87.1%

Michelob

94.5%

Coors

96.8%

Miller

94.4%

Corona Extra

94.0%

Busch

81.8%

White Claw Hard Seltzer

88.4%

Natural

88.6%

Twisted Tea

79.8%

Heineken

80.8%

Source: NielsenIQ for Total U.S. Convenience, Calendar Year 2021

Top 11 Salty Snack Brands (Based on 2021 total dollar sales) Brand

Sales

Units

%ACV

Doritos

96.7%

Cheetos

96.6%

Lay’s

96.7%

Ruffles

94.5%

Barcel Takis

61.3%

Fritos

94.8%

Sabritas

76.9%

Pringles

95.4%

Funyuns

91.5%

Chester’s

87.6%

Frito-Lay

91.8%

Source: NielsenIQ for Total U.S. Convenience, Calendar Year 2021

Three of the 11 bestselling packaged beverage brands in the convenience channel last year were energy drinks. NACS JULY 2022 39

Top 11 Candy Brands (Based on 2021 total dollar sales) Sales

Units

%ACV

Hershey’s

99.2%

M&M Mars

99.3%

Wrigley’s

99.2%

Skittles

97.3%

Life Savers

94.7%

Starburst

95.2%

Haribo

85.4%

Air Heads

93.7%

Trolli

88.0%

Ice Breakers

89.8%

Sour Patch

90.3%

Source: NielsenIQ for Total U.S. Convenience, Calendar Year 2021

Top 11 Alternative Snacks Brands (Based on 2021 total dollar sales) Brand

Sales

Units

%ACV

Jack Link’s

94.2%

Slim Jim

90.5%

Old Trapper

49.6%

Kellogg’s

94.3%

Clif

80.7%

Private Label

28.6%

Welch’s

73.9%

Quest

63.3%

Kind

70.6%

No Man’s Land Beef Jerky

20.3%

Cattleman’s Cut

35.9%

Source: NielsenIQ for Total U.S. Convenience, Calendar Year 2021

CANDY The candy category accounted for 3.5% of inside sales contribution (up slightly from 2020), ranking seventh out of all in-store categories, and accounted for 5.2% of gross profit contribution in 2021, according to NACS SOI data. Chocolate bars and packs traditionally account for the largest share of candy sales in c-stores, and 2021 was no exception. Hershey’s is the leading brand, followed closely by Mars Inc.’s M&M brand. What’s notable for 2021 was the growth of non-chocolate candy like gummy varieties and sourand fruity-flavored treats. Breaking into the 2021 top brands rankings was Haribo by Haribo GMBH, Trolli by Ferrara Candy Co., Sour Patch from Mondelēz International and Starburst from Mars Inc. And denoting Americans’ return to work and social occasions without masks, gum and mints brands—Hershey’s Ice Breakers, Mars Inc.’s Life Savers and Mars Inc.’s Wrigley’s—all landed in the top 11. The fourth-largest sales subcategory in candy struggled in 2020, primarily because of work-from-home and stay-at-home orders. Sales of the gum and mints subcategory rose 15.4%, and gross profits increased 14.3% in 2021.

ALTERNATIVE SNACKS Meat snacks like Conagra’s Slim Jims and Link Snacks’ Jack Link’s power the alternative snacks category, which also includes health/energy/ protein bars, granola/fruit snacks and other alternative snacks. Leading the rankings, Jack Link’s increased its dollar sales percentage 21.4% year over year, and unit sales grew 13.4%. Slim Jim, meanwhile, carved out a 4.1% increase in sales, but units dipped 5.1%. New to the top brands list for 2021 were two meat snacks: No Man’s Land Beef Jerky and Premium Brands’ Cattleman’s Cut. No Man’s Land grew sales 73.4% in 2021, while Cattleman’s Cut sales rose 57.8%. Both have ACVs below 40%, so there’s plenty of market share to grab. Another new entrant was the Quest brand from the Simply Good Foods Company. Quest’s lineup includes keto-diet friendly protein bars and snacks. Sales rose 23.2% and units increased 19.4% in 2021, and the brand’s solid growth continued in the first quarter of 2022.

Kim Stewart is editorial director of NACS and editorin-chief of NACS Magazine. She can be reached at kstewart@ convenience.org.

Dive Into the Data The NACS State of the Industry Report of 2021 Data is the essential guide for convenience and fuel retailers to benchmark their performance in 2021. NACS is now in its 52nd year of publishing the report, which is available for purchase in a digital-only format. The report highlights the business-critical categories of finance, store operations, merchandising and fuel sales. Purchase your digital copy today at www.convenience.org/SOIreport. 40 JULY 2022 convenience.org

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How Cash at the sco can ease labor issues It’s 2022--Retailers have recognized the value of selfcheckout technology and the benefits it will bring to their stores including easing labor shortage problems, improving the customer experience, and, of course, increasing the bottom line. Now you need to consider how to deploy your self-checkout to best suit the needs of your stores and your customers; the big question is— do you automate cash, or go completely cashless?

lead customers to perceive unfairness—why should they wait in line while the card paying customer can breeze right through? It’s not worth the risk alienating such a large portion of your customers. Card-only self-checkouts will still require a cashier to handle all cash payments, increasing the likelihood that lines will continue to be long at rush hour, and risk customers walking out without purchasing. 41% of customers will abandon their purchase if they see a long line, and one bad experience can sour customers on your entire business. Almost half of consumers avoid a specific store if they have to wait longer than 5 minutes. No one wants to lose business due to customer dissatisfaction, and these lines can be effectively eliminated by deploying cash automation with self-checkout. 41% of customers will abandon their purchase if they see a long line

You may be leaning toward cashless—it’s less costly upfront, and card payments seem more like “the future.” Let’s examine that assumption—can you get the full ROI you expect from your self-checkout without adding cash? First consider from the perspective of the speed of service; self-checkout will move your customers through the line faster and eliminate long lines at peak times of day. If you’ve only automated cashless payments you haven’t solved the complete problem, and will not be able to repurpose cashiers to take on additional store related tasks, like cleaning, stocking shelves, etc. Stores that struggle with staff shortages will find relief by allowing their customers to checkout without their assistance, ensuring only one cashier is required to ring up ageverified products. 47% of all purchase values under $25 are paid in cash Next, think about your customer’s experience. For the average purchase in convenience stores, consumers overwhelmingly choose cash; 47% of all purchase values under $25 are paid in cash. The percentage of cash usage in your stores may be even higher given that the average c-store transaction is between $3.75-9.00; recent studies report around 40-50% of purchases are made in cash. In addition to preferences, the Federal Reserve estimates 20-28% of the population is currently “un-banked,” or “under-banked,” and do not have access to card payments. Cashless only self-checkouts could

Lastly, cashless processing isn’t always as cheap as it seems to be. There’s a good chance cash payments cost less as a percentage of your revenue than cashless. Driving customers to cashless may actually increase costs and negatively impact profit margins. In order to fully reap the benefits of your self-checkout deployment you need to include both cash and cashless payments. Cash automation makes it a well-rounded solution and delivers a superior ROI for your business.

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Struggling with staff shortage? Automate cash at the Self-Checkout Your customers don’t expect to wait in a long checkout line; it defeats the purpose of “convenience.” Up to 50% of convenience store transactions are paid in cash. Don’t leave it out of the fast lane. CPI is a provider of payment solutions with 30 million devices in operation, processing 40 million cash payments and powering 4 billion transactions each week to keep your stores productive and give you piece of mind.

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44 JULY 2022 convenience.org

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Digital signage and furniture-quality fixtures help modernize this space for new merchandise. BY PAT PAPE For years, the ubiquitous back bar has displayed tobacco products. Most convenience stores have them, as well as contractual obligations to provide 50% of the available space for Philip Morris products and 35% for Reynolds. “That leaves 15% of the rest of the fixture for eight to 10 smaller companies,” said Mark Schueller, director of marketing, Premier Manufacturing, the consumer products division of U.S. Tobacco

Cooperative Inc. “Distributors are willing to restock, help reorder and update POS. We all want our POS out there.” Now, new products—vapor, hemp, pouches, e-cigs and more—are joining cigarettes in that space. “Those emerging categories will challenge cigarettes as the number of products increases,” he said. Often peppered with tobacco marketing materials and federally mandated health warnings, the back bar is feeling extra heat from regulators. In April, the U.S. Food and Drug Administration NACS JULY 2022 45

“Today, if a store is being built with a lot of space and foresight, retailers put their higher-dollar items in the back bars,” said Sharan Kalva, chief operating officer at C-StoreMaster, a national c-store distributor specializing in tobacco and beverage products. “They’re not tobacco back bars anymore. They’re controlled retail areas where you sell a variety of products,” said Mike Lawshe, president of Paragon Solutions, a retail design firm in Fort Worth, Texas, “Today, the contracts and offerings are changing. Expensive health and beauty products are coming into that area, and the fixtures are becoming multipurpose. Now, we’ve got everything from Nyquil to Advil to electronics and tobacco on the same fixture. These items aren’t necessarily intertwined, but they’re going into the same space.”

“MESSAGING CAN HELP [CUSTOMERS] HAVE A GOOD EXPERIENCE QUICKLY.” proposed a controversial ban on menthol cigarettes and flavored cigars, products preferred by an estimated 18.5 million U.S. smokers. “Menthols are about one-third of all cigarettes sold in the United States,” said Don Stuart, managing partner, Cadent Consulting Group. “They have a flavor profile that is a little less harsh on the throat, and they’re considered to be a gateway to broader smoking. Canada and Europe already ban menthol tobacco.” Over the years, convenience-store retailers relied on major tobacco companies to provide c-stores with no-cost store fixtures, which were then stocked with tobacco products. 46 JULY 2022 convenience.org

EMBRACING LED In 2022, technology impacts almost everything people do, including c-store shopping, and some retailers are exchanging their old-fashioned back bars for LED screens that display digital messages. Rick Sales is president of Abierto, a digital signage company in York, Maine, that provides electronic signage, such as menu boards, to the convenience industry. Digital signs are frequently used at the back bar, allowing retailers to quickly update tobacco prices from any browser. This is important since prices have been changing about once a quarter for the past few years. “The way the product is displayed doesn’t change much, but a digital sign provides the back bar with a cleaner, more modern look,” Sales said. “It’s a better experience for the tobacco consumer because it’s easier to read, and the information is in one place. This centralized system allows category managers to ensure that stores meet all the rules [for tobacco retailing] and lets them devote more time to growing the category.” At the end of the day, the c-store customer “wants to be in the store for less than six minutes,” said Sales. “Messaging can help them have a good experience quickly.” In Europe, tobacco products are no longer visible in some outlets. Instead, retailers use a digital screen at the back bar, plus technology that automatically dispenses the merchandise

“THEY’RE NOT TOBACCO BACK BARS ANYMORE. THEY’RE CONTROLLED RETAIL AREAS WHERE YOU SELL A VARIETY OF PRODUCTS.” to either the store employee or the customer after the customer’s age has been verified and the product is paid for. That technology comes from GM Global Solutions, a Spanish producer of machinery and software for point-of-sale applications. “It’s a huge step in my opinion,” said Kalva. “It solves many problems, such as theft, shrink and proper management of age-restricted products.” Digital signage is being used to promote tobacco products—though on a more modest scale—in some U.S. outlets. “These are smaller displays—think of something the size of your phone. Manufacturers use them to

focus attention on individual products,” Kalva said. “I don’t think we’ll ever have one big screen where everyone shares the space, especially with the bigger players.” Not all c-stores can adopt digital signage, but that doesn’t mean the existing back bar can’t undergo a face lift to make it more attractive to customers. “You can make a dramatic change to the back bar by taking everything out and starting from scratch,” Lawshe said. “Don’t try to squeeze in more things. Re-envision the entire space. Think about what you’d do in a perfect world. The answer to that question will lead to greater sales.”

Back Bar Merchandising One size does not fit all when it comes to merchandising the back bar. The best planogram depends on your individual store and your customers, experts say. “Look at what products are providing the best return on your investment,” said Mark Schueller, director of marketing, Premier Manufacturing. “Look at your product mix and your customer base and do the things that are best for your business, not for a suppliers’ business.” “Some retailers dedicate a section of the back bar to new products, and they reset that section more often than the rest of the back bar,” said Sharon Kalva, chief operating officer at C-StoreMaster. “Retailers should put thought into their product portfolio, new innovative products and what’s selling the most. The more planning that goes into it, the less resets you must do. The retailers who are successful right now are those who are agile, who are

keeping up with the latest and greatest products in the category and making sure they’re compliant. Plus, they give consumers options.” According to NielsenIQ, c-store dollar sales of nicotine pouches increased 470% in the first half of 2020. One brand Kalva recommends is ZYN, a tobacco-free

pouch from Swedish Match that comes in several flavors. Swedish Match predicts that sales of ZYN will increase seven times in the next four years, from three million cans sold last year to 23 million in 2025. “They’re the market leader in that segment,” Kalva said. “Customers love the product.” NACS JULY 2022 47

Consider This Make the back bar more attractive and heighten the customer experience with these tips.

• Manage clutter at the point of sale and on the back bar. • Add LED lighting to enhance the appeal of back-bar merchandise while saving energy. • Create a designated area for each tobacco product—nicotine pouches, snuff, cigarettes, vape—as well as health-andbeauty or other items in the space. • Use professional signage inside the store and on store windows to communicate tobacco pricing and special offers. • Because smokers are brand loyal, stay in stock. 48 JULY 2022 convenience.org

“YOU CAN MAKE A DRAMATIC CHANGE TO THE BACK BAR BY TAKING EVERYTHING OUT AND STARTING FROM SCRATCH.” Already, many retailers have increased the frequency of back-bar resets. “It’s not a once-a-year thing anymore,” said Kalva. “I have customers who do it every two or three months, and some do it once a year. Once a quarter is probably adequate. There is a lot of uncertainty now, especially with the regulatory situation. Retailers are being more flexible. They think ‘this is legal now, but I don’t know where that’s going. Until then, I’ll continue to maximize my footprint for operational efficiency.’” DRESSING UP THE BAR Marco Company of Fort Worth provides grocery and convenience retailers worldwide with in-store merchandising tools and is often enlisted to refresh the POS area. “One idea would be to put a new surround around the back bar—wood or laminated—to dress it up,” said Deanna Cooper, vice president of sales, Marco Company. “That would give a clean line around a common wire fixture and give you a top shelf to display other products. Some retailers may put their phonecharging equipment, health and beauty and other items there—items that can’t be out on the floor due to high theft.” Recently, Marco jazzed up existing back bars by installing stained red oak cabinetry in the space. “It’s like furniture,” Cooper said.

While marijuana laws vary from state to state, industry observers expect cannabis to be legalized nationwide in the future. Owners of CBD dispensaries are researching the best ways to sell those products in-store. “The CBD market has exploded, and [dispensary owners who can legally sell those products] are looking into c-store models,” said Cooper, who has consulted with several operators. “Some want to do a walk-up counter, but none of the products will be visible. Customers will order their purchases through a touchscreen.” The c-store back bar continues to morph. Expect the future fixture to embrace more high-tech enhancements, such as colorful digital messaging, and don’t be surprised if SKUs merchandised there include cellphones and shaving cream. And stores will continue to need an attractive, convenient way to safely merchandise tobacco products and tobacco alternatives. “Tobacco sales have been eroding for a long time in the U.S., and that will continue at a slow, predictable pace,” said Stuart. “Cigarettes aren’t going to fall off the cliff.”

Pat Pape worked in the convenience store industry for more than 20 years before becoming a full-time writer. See more of her articles at patpape.wordpress.com.

mariusFM77/Getty Images

Var 50 JULY 2022 convenience.org

ariety Is the Spice of Life Mixed packs allow c-stores to boost assortment and sales opportunity among adult beverages.

M BY TERRI ALLAN

ohammad Hammad is glad he trusted his gut. The owner of Chicago’s South Loop Market chain of convenience stores, Hammad took a chance on an emerging beverage category and its unique packaging model a few years ago, and he’s pleased he did. “Variety packs for hard seltzers are working as they were designed to,” the retailer said. “They’re giving consumers the opportunity to taste a range of flavors. Then, when they find the flavor they like, they’ll come back and buy a pack of that.” Variety packs of hard seltzers—as well as craft beers—are selling so well at the nine-store chain, they’re outperforming their respective categories, Hammad noted. Similarly, Chris Long, director of category management, age verified at Kum & Go, said, “We’ve leaned in aggressively on variety packs,” particularly for hard seltzers and ready-to-drink cocktails. The multistate chain offers between 15 and 30 different variety packs, depending on the size of the store, and for some brands, “we prefer to take on the variety pack over a single-flavor pack,” Long reported. He attributed the strong response from consumers to variety packs—typically 12-packs of three or four different flavors or styles—to hard seltzers like White Claw and Truly. “Seltzers have brought back variety packs,” said the Kum & Go executive, noting that the mixed packs were first popularized by craft breweries such as Boston Beer a few decades ago. NACS JULY 2022 51

I’ve noticed customers come in for non-variety packs, see the mixed packs and purchase both.”

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Indeed, according to Ryan LaMontagne, senior director, category development at Anheuser-Busch, “hard seltzer variety packs have propelled growth over the last year,” accounting for 62% of the dollar share and 76% of the dollar growth in c-stores. “Variety packs offer a way for 21+ shoppers to explore taste profiles by trying more than one flavor, while also having the ability to share with others,” he said. C-store operators agreed that much of the success of hard seltzers can be attributed to the mixed packs. “The subtle taste difference of hard seltzers lends themselves to variety packs,” said James Kerrigan, the owner of Jake’s One Market, with two locations in Vermont. “Consumers can easily sample through the different flavors.” At Skinny’s convenience store in St. Helens, Oregon, owner Lane Attrash reported that variety packs for hard seltzers and ranch waters are selling well, while mixed craft beer packs have slowed. The store stocks about two dozen variety packs, all merchandised in the cold vault. Shoppers of craft beer

variety packs tend to be quite knowledgeable about the offerings and styles, while hard seltzer shoppers are “more experimental,” Attrash remarked. BENEFITS ABOUND In addition to trial, variety packs provide consumers with an easy shopping solution. “It’s one thing if a consumer wants to take his time and peruse the aisles a bit, but if he’s running into the store to grab a few items and some beer for a cookout, it’s much easier to say, ‘Oh, I’ll just grab this mix pack,’” noted Tim Kast, brand manager at Harpoon Brewery. With c-stores’ reputation as in-andout outlets, variety packs can be ideal for the channel. “It’s great to have a pack that offers a variety of options,” Kast said. Mixed packs also provide benefits to retailers. Hammad has observed that the packs are often impulse buys. “I’ve noticed customers come in for non-variety packs, see the mixed packs and purchase both,” the Chicago retailer said. At Kum & Go, variety

innovatedcaptures/Getty Images

packs provide “SKU efficiency,” Long said. “You can offer one SKU in place of three or four,” he explained. Eric Clark, director of off-premise chain accounts, New Belgium Brewing, marketer of the fast-growing Voodoo Ranger Hoppy pack, added that with a price point of about $20 or more a 12-pack, mixed packs help drive “craft beer credibility for retailers and boost a store’s average transaction dollars.” Like other products in the cold vault, variety packs can present challenges, too. Space is the biggest concern. “Limited space in c-stores is always a battle, so retailers have to be more precise with their decisions since there are 50% less SKUs on average in a c-store than there are in grocery or mass,” remarked Kevin Kraft, channel director at FIFCO USA, which markets variety packs for Labatt Blue Light and Labatt Blue Light seltzer. “Larger package sizes mean fewer units on shelves, which means more time and effort being spent on making sure your shelves are reloaded and stocked,” added Kast.

MEANINGFUL MERCHANDISING To optimize space, Clark recommends that c-stores merchandise craft beer variety packs in the well of the cold vault, along with other 12-packs. “The well provides a better pack-out than the shelves, and it’s where the consumer expects to find the package,” he noted. At Kum & Go, malt-based variety packs are placed in the cooler, while wineand spirits-based options—like Crown Royal whisky canned cocktail variety packs—are merchandised on warm shelves. Harpoon’s Kast sees opportunity to merchandise variety packs throughout the store. “If you have the space for endcap or satellite displays, make use of it,” he advised. “The cooler is always crowded, and moving shelves around to make room for 12-packs comes with pluses and minuses. If you have an opening on the floor for a small 10-case variety pack stack, it could be a great way to get additional eyes on the product and take advantage of impulse shoppers.” Anheuser-Busch’s LaMontagne recommends that retailers consider sales performance and contribution when stocking variety packs. “Variety packs play a key role in the assortment and should be prioritized on shelf based on sales mix, velocity and refreshing the SKU mix based on current performance and on-trend and differentiated innovation,” he remarked. “When 21+ shoppers are looking at the shelf, they’re not viewing variety in the same way that they would view a single flavor pack. So, it’s important to ensure easy navigation with clear brand blocking for ease of shopping.” With merchandising and category management tactics in place, retailers see continued opportunity for mixed packs. “Variety packs are here to stay,” said Hammad. “People like to try different things, and that’s not going to change.”

If you have an opening on the floor for a small 10-case variety pack stack, it could be a great way to get additional eyes on the product and take advantage of impulse shoppers.”

Terri Allan is a New Jerseybased freelance writer, specializing in the beverage industry. She can be reached at terri4beer@aol.com and on Twitter at @terriallan.

NACS JULY 2022 53

Reignited More relevant than ever, rolling products are ready for reinvention.

Across our lines of business in tobacco, cigarette tubes, rolling papers and cones, we maintain ownership at every stage of the supply chain.”

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AS WE LOOK AT THE NEXT FEW YEARS, WHAT’S IN STORE FOR TOBACCO AND ROLLING PRODUCTS? This decade is going to continue to be transformational. It certainly started off with a major disruption—the pandemic and lockdowns accelerated the pace of change in the marketplace. While we’ve seen plenty of trends in this turbulent timeframe turn out to be temporary distractions, the rolling category is due to see sustained growth. While headlines today holler about the global supply chain, Republic Brands is exceptionally well positioned due to its vertical integration and 200-year history serving customers. Across our lines of business in tobacco, cigarette tubes, rolling papers and cones, we maintain ownership at every stage of the supply chain. That’s why we’ve been stable and consistent in reliably providing our customers with rolling products.

WHY SHOULD C-STORE RETAILERS LOOK TO PAPERS, CONES AND ROLLING PRODUCTS AS A NEW SALES OPPORTUNITY? Adult smokers’ attitudes have changed in a short period. They’re open to more formats than ever. This includes unique materials in rolling papers like all natural, real rice fibers from the Camargue Delta in southern France in OCB Brown Rice Rolling Papers. We’ve seen a steady rise in our line of ready-made cones with OCB® Bamboo Cones, JOB® Virgin Unbleached Cones, and e-z wider® Organic Hemp cone-z™. Among adult tobacco consumers 21+, we are seeing the transformation of the back bar in convenience stores. As the repertoire of total tobacco continues to evolve, combustibles will still represent 50% of tobacco sales for c-stores. For adult tobacco consumers whose repertoire includes leaf tobacco, we see roll your own (RYO) and make your own (MYO) as more relevant than ever. Customers get freedom of choice and always fresh, high quality products at a much lower price point that fits today’s economic realities—while retailers carry products that drive store visits and profits.

This interview is brought to you by support from Republic Brands, a NACS member.

AND WHO IS THE TYPICAL CUSTOMER? Adults 21 and older are customers of rolling products and are more aware of simple ingredients, sustainably grown and harvested materials, and responsible manufacturing processes in the products and brands that interest them. According to a report published by Statista, nearly 90% of respondents would buy a product with a “social environmental benefit.” With the cost of living rising fast while inflation impacts housing, fuel, and staples of everyday living, consumers are looking for maximum value without paying a premium. HOW CAN RETAILERS CAPTURE THESE CONSUMERS’ ATTENTION? The first priority is making sure adult consumers clearly see that the products they want are available and in stock. This exciting new era in RYO and MYO is a growth opportunity for c-stores across the U.S., and a unique opportunity to offer the products consumers want—where and when it’s more convenient for them to shop. Our iconic portfolio of brands such as OCB®, JOB® and e-z wider® plus RYO/MYO mainstays TOP®, Gambler® and Premier®, can help lead the ongoing transformation in rolling products, accessories and merchandise.

HOW CAN THESE PRODUCTS FIT INTO EXISTING PLANOGRAMS? Republic Brands changed our name in 2021 to reinvigorate the brand portfolio and introduce new product offerings to address the rapidly changing needs of the convenience channel while retaining its reputation as a trusted manufacturer and developer of sustainably sourced products. Adult consumers want more choices, and they’re increasingly looking for them in the convenience channel. Today, Republic Brands provides sales-driving solutions in traditional and alternative markets that today’s adult consumers are actively shopping. WHY DO TODAY’S CUSTOMERS GRAVITATE TOWARD YOUR BRAND? Republic Brands leverages its Plant To Puff supply chain that’s upheld by ISO and GMP standards of sustainability, ethics and environmental responsibility to meet rising demand for cones, rolling papers, rollers, injectors, accessories and more. Plant To Puff ensures this portfolio of brands reaches into a greener world with products that are contemporary, smart and sustainable.

The first priority is making sure adult consumers clearly see that the products they want are available and in stock.”

Andrew Panagoplos Vice President, Sales apanagoplos@republicbrands.com www.republicbrands.com

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Cool New Products Guide This advertorial-style guide of services and packaging appears monthly and is an information-packed tour of ideas and approaches that can change how consumers view your store or choose your brand. It spotlights the newest thinking in convenience and fuel retailing and gives you an advance look at ways of staying in front of industry trends. Products are categorized the same way we organize the Cool New Products Preview Room at the NACS Show each year in October— New Design, New to the Industry, New Flavors, Health & Wellness, Green (EcoFriendly), New Services and New Technology. Products are considered “new” this year if they’ve been introduced since October 2021. The products featured here also can be seen in the Cool New Products Discovery Center at www.convenience.org/coolnewproducts.

NEW TO THE INDUSTRY

Derall Derall Boost

America’s #1 Focus Enhancement Brand

Derall Boost is for highly-motivated individuals who demand laser-like focus and improved cognitive performance. Derall Boost should not be compared to caffeine pills, or any other type of “energy” products. Derall Boost’s proprietary formula provides the ultimate nootropic experience giving consumers the ability to “Tap Into” unrecognized potential to quickly and efficiently complete any task, project, or hurdle in their daily lives. “Where Focus Goes, Energy Flows”- Tony Robbins CALL 516-447-3823 OR VISIT US AT WWW.DERALLBOOST.COM TO BECOME A WHOLESALE PARTNER. 56 JULY 2022 convenience.org

NEW TO THE INDUSTRY

Ty Inc. Squishy Beanies

Want to carry our product? Please contact Peter Olbrys at 630.432.3329 or polbrys@tymail.com about bringing Ty into your locations.

NEW TO THE INDUSTRY

Bidi Vapor, LLC

FIFCO USA

BIDI® Stick

Seagram’s Cocktails 12 Pack Slim Cans

11 Flavors Derived from Tobacco

Mixology Made Easy

Premium, innovative, and sustainable. These are key qualities of the BIDI® Stick, a disposable e-cigarette that is available in 11 flavor variants with nicotine derived from tobacco. Designed and engineered to deliver adult consumers 21 and over a unique and premium vaping experience, the device comes in a single pack, 10-pack cartons and a 100-pack acrylic display case. The components of the BIDI® Stick are 60%-95% recyclable, utilizing only high-grade, high-quality, sustainable components. For more information, visit http://wholesale.bidivapor.com.

NEW Seagram’s Escapes Cocktails combine the full flavor of classic cocktails with the nutritionals and ABV of seltzers! Our slim can variety pack comes loaded with four 100 calorie, 5% ABV options: Strawberry Margarita, Pineapple Mule, Lemon Collins, and Grapefruit Paloma. For consumers looking for a lighter option without sacrificing flavor, Seagram’s Escapes Cocktails are a perfect pick. Available now! For more info, visit seagramsescapes.com/cocktails or call (585) 546-1040.

NACS JULY 2022 57

NEW TO THE INDUSTRY

NEW FLAVORS

Scooter’s Coffee

The Hershey Company

Scooter’s Coffee Grab ‘N Go Almond Milk Lattes

Jolly Rancher Berry Gummies

Grab ‘N Go Lattes Available Now!

Jolly Rancher Berry Gummies

Grab one for now, for later, for anytime you crave our world-class 100% arabica coffee blended with smooth, dairy-free almond milk and all-natural flavors! Brent Bird, Sr. Mgr. National Accounts brent.bird@scooterscoffee.com

It’s safe to say these Jolly Rancher Gummies are BERRY good, bursting with juicy berry flavor in every mouthwatering bite. Each pack of Jolly Rancher Gummies Very Berry has five flavors in soft and chewy form: Blue Raspberry, Blackberry, Wild Berry, Black Cherry and Wild Strawberry. Enjoy this berry flavor ride on the go with your gang or keep them just for you.

INDEX NEW FLAVORS NEW FLAVORS

The Hershey Company.................................................. 58

NEW TO THE INDUSTRY

Bidi Vapor LLC..................................................................57 MMS Distribution LLC.................................................... 56

The Hershey Company Reese’s Snack Bar

Reese’s Snack Bar Named “Best Sweet Snack” by the judges of NCA Sweets & Snacks Expo Most Innovative New Products Awards! Your day just got sweeter, and nuttier. Reese’s Snack Bars are the perfect mix of crispy, crunchy, salty and sweet flavors, sure to put an extra spring in your step. These tasty treats feature peanut butter creme, crisp whole grain brown rice, crunchy roasted peanuts and smooth milk chocolate. Each 2-oz. pack comes with two bars so you can bookend your morning break with deliciousness. 58 JULY 2022 convenience.org

FIFCO .................................................................................57 Harvest Roasting LLC dba Scooter’s Coffee ........ 58 TY INC. ................................................................................57

GAS STATION GOURMET

Three Men and a C-Store

Yabbos’ unique twist on drive-thru has made it a food and beverage destination. BY AL HEBERT

hree guys who never worked in the c-store industry wanted to bring something unique to south Louisiana: a drive-thru store. It’s a simple system. “You enter the store via the drive-thru line. A waitress takes your order and enters it into the mobile POS system. The customer pays and drives off with their order,” explained Blake Belaire, co-owner of Yaboos drive-thru convenience store.

Sarah Johnson, head cook, grills up Yabbos’ original burgers, which are 8-ounce 100% homemade patties.

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Blake Belaire, an engineer and contractor by trade, ran across the design in Dallas, Texas. “They have liquor barns. I thought it would be a good concept to have a c-store with drive-thru daiquiris and food.” His partner Keefe Duhon saw something similar in Ohio. They started kicking around ideas with local entrepreneur Lee Venable. They found the perfect location down the road from the Broussard Sports Complex. “There are events there 48 out of 52 weekends a year at the complex,” said Belaire. In February 2022, Yabbos opened its doors. SECOND TO NONE Louisiana is known for food packed with spices, rich flavor and some “kick” —as well as a long history of beloved family recipes. Belaire, Duhon and Venable knew they had to hit the ground running with menu items that were second to none. Fortunately, they had a few foodies in the house. General Manager Adam Brewer, head cook Sarah Johnson and co-owners Duhon and Venable knew how to take food over the top. First, they decided on a different plate lunch each day, with that same item on the menu each week. Customers can plan their week around Cajun favorites such as meatball stew, jambalaya and

shrimp stew. And with chicken giant Raising Canes Chicken Fingers a stone’s throw away, the Yabbos team realized size, preparation and sauce would be key to winning the tenders’ battle. Large tenders and “Max’s Secret Dip Sauce” help to dwarf the competition. “Our tenders are generous, and our dip is much better,” said Belaire. Yabbos’ original burger is also popular with customers. Brewer said, “It’s 100% homemade 8-ounce patty,” and he explained that the unique seasoning profile sets it apart. “You’re not gonna taste another burger like this in the area,” he said. You can sense the pride in Brewer’s description of the burger—after all, it’s his recipe. In fact, everything on the menu was created by the Yabbos team, right down to the boiled crawfish, which are huge and spicy. “We use our Yabbos original seasoning in the water to boil them and post boil. If you want to eat really good crawfish that are big, you come here,” said Brewer. DRIVE-THRU DAIQUIRIS There’s also a drive-thru daiquiri window on one side of the building, as well as a full bar. “In Louisiana, to have a drive-thru daiquiri window, you have to have a certain amount of square footage

Customers drive through the Yabbos c-store, where a waitress takes their orders. Adam Brewer, general manager, displays chocolate chip cookies ready for the oven, and Sarah Johnson’s kitchen crew shows off the day’s plate lunch special.

What’s in a Name? People might ask, “Is Yabbo a person?” Owner Blake Belaire shared that Yabbos comes from the movie “Hocus Pocus.” The owners were trying to settle on a name, and Duhon’s daughter was watching the movie. “The word ‘Yabbos’ came up in the movie, and we decided on that. We thought Yabbos was original, unique and catchy,” he explained.

to seat people. During the planning process we decided to use it as a full bar,” explained Belaire, adding, “most of the traffic is on the c-store side.” With temperatures in this part of the country reaching 90 degrees before June, customers are rolling in for the drive-thru daiquiris. “On the weekend we could sell 75 to 100 daiquiris a day at the drive-thru. We have a few specialty daiquiris that we blend. The most popular are the Yabbos Fuel and Cajun Cloud. Yabbos Fuel has our strongest alcohol content,” explained Brewer. SOCIAL MEDIA Yabbos regularly posts its menus on Facebook, but a visit from a local TikTok influencer sent sales through the roof in one week. “A local foodie did a TikTok

video going through the drive-thru line … She filmed herself eating the crawfish. Because of her, we had people who lived five minutes away, who’d never heard of us, come in. We were not prepared for it. That wasn’t expected in our business trajectory. It didn’t stop for three or four days straight,” said Brewer. Belaire offered some perspective. “It opens your eyes to influencers. It was shared 35,000 times. If you would’ve told me that TikTok could have done that I would’ve laughed at you. We doubled sales overnight—especially crawfish, we sold 360 pounds of crawfish in one night.” There’s still a few hurdles for Yabbos to overcome. “People don’t want to come here to eat because it’s a convenience store,” said Belaire. Once they come, however, it’s easy to change their mind. Al Hebert is the Gas Station Gourmet, showcasing America’s hidden culinary treasures. Find him at www.GasStationGourmet.com. NACS JULY 2022 61

CATEGORY CLOSE-UP FROZEN DISPENSED BEVERAGES

Frosty Fun BY SARAH HAMAKER

n the first warm day of spring this year, I asked my high school senior if she wanted anything from our local 7-Eleven. Her eyes brightened immediately as she responded, “A Slurpee!” At the c-store, she mixed three flavors together for her own custom-blended slushie. Her delight reminded me how tightly connected frozen dispensed beverages are with warm temperatures—and how much kids, teens and adults still gravitate toward the cool, refreshing drinks. “Depending on where your store is located, sales of frozen dispensed beverages typically spike in the summer and dip in the winter,” said Jayme Gough, research manager, NACS. FROSTY SALES In 2020, frozen dispensed beverage sales were ahead of 2019 for the first quarter, but then the pandemic forced many retailers to shut down all or part of their foodservice programs, including self-dispensed beverages. However, 2021 sales recovered, closely mirroring monthly sales of 2019 and 2018, rather than 2020, according to CSX data. While the smallest of the foodservice subcategories, frozen dispensed beverages typically bring in high margins. In 2021, gross margins for frozen dispensed improved by 2.08 percentage points to 65.37%, which boosted the category’s gross profits by 30.6% to $1,623 per store, per month. Overall, the cate62 JULY 2022 convenience.org

gory represented 1.15% of in-store sales last year, and 5.4% of foodservice sales, according to NACS State of the Industry data. “Getting foodservice programs back online in 2021 drove increased sales for the category,” Gough said. At the 14 Y-Not Stop stores in Louisiana, frozen dispensed beverage sales are down year over year for some stores, “but frozen is performing better than other dispensed beverage categories on a unit sales year-over-year percent-change basis,” said Annie St. Romain Gauthier, CFO/co-CEO for St. Romain Oil Company, which operates the chain. “However, we opened our two newest stores in June 2021 and March 2022 with enhanced frozen programs that are outselling existing stores by a strong lead. So, we’re circling back to existing stores with those enhancements to boost the category across all locations.” FREEZING FLAVORS Fun flavors are a major sales driver in the frozen dispensed beverages subcategory. “Rotating flavors to maintain variety can keep the frozen beverage experience fresh for repeat customers and interesting to newer shoppers,” Gough said. When it comes to flavors, The Coca-Cola Company sees frozen beverage growth linked to two emerging trends—snacking and indulgence. “Current flavor trends in frozen dispensed beverages are looking to offer consumers a treat for the snacking

Frozen dispensed beverages had a gross margin percentage of

65.37% in 2021.

Source: NACS State of the Industry Report of 2021 Data

Mixing frozen flavors, such as tea and lemonade, is seeing a resurgence.” viennetta/Getty Images

Frozen dispensed beverages delight consumers of all ages.

ROTTSTRA/Getty Images

occasion,” said Rebecca Johnson, senior manager of category marketing, frozen beverages, The Coca-Cola company. “Mixing frozen flavors, such as tea and lemonade, is seeing a resurgence.” The company is pairing Minute Maid Lemonade and Gold Peak Tea in frozen uncarbonated to create a frozen tea and lemonade flavor. At The ICEE company, “current flavor trends range from summer fruity flavors, such as mango or strawberry, to health-forward flavors with functional ingredients, such as added vitamins and immunity boosters like vitamin C, to indulgent comforting treats, such as added candy mix-ins,” said Natalie Peterson, vice president, marketing, The ICEE Company. Swirled frozen beverages incorporating several flavors at once are also trending. Y-Not Stop’s frozen dispensed beverages feature “flavors with a broader appeal than kids looking for primary-color sugar,” like red cherry or blue raspberry flavors, Gauthier said. “That’s been helpful to the category’s growth. We continuously revise our offer, freshening it up as needed, to keep customer interest high.” For Kyle Freebairn, CEO of Freezing Point LLC, maker of Frazil, flavor rotation is paramount to a successful frozen dispensed beverage program. “According to our data, we see a significant performance difference for stores that rotate flavors versus stores that don’t,” he said. “As the number of flavors a store rotates goes up, the average performance of those stores does incrementally better than stores that rotate flavors less often or not at all.”

HOT TECH The frozen dispensed beverage category has experienced recent innovation in technology and equipment, providing retailers with an even greater-tasting product for consumers. For example, The ICEE Company’s newest equipment allows operators to offer up to 32 different flavor combinations with a two-valve machine. “The new machine lets consumers design their frozen beverage by selecting their own personal combination of flavor add-ins to their frozen base,” Peterson said. “Consumers have always created their own flavor combinations, and this machine allows them to do that with more options, intensity and excitement.” Nitrogen-infused frozen drinks have become more popular as well, with both Coca-Cola and ICEE offering machines carbonating with nitrogen instead of carbon dioxide. “As consumers’ tastes continue to evolve, we’re exploring new ways to deliver premium frozen carbonated beverages with nitrogen,” said Melinda Pritchett, director of category strategy and innovation, The Coca-Cola Company. “By adding nitrogen versus CO2, which is most typical, the texture becomes smooth and velvety, completely changing the frozen beverage experience.” In addition, Coca-Cola sees traditional frozen beverage dispensers continuing to change by incorporating digital messaging, the ability to add flavor shots for greater customization and smaller in-store footprints for the machines. “Equipment is changing to meet product innovation and the needs of c-store operators,” Pritchett said. No matter a retailer’s frozen dispensed beverage machine, Freebairn emphasized the importance of having equipment that’s on, working and full. “To help stores monitor their frozen dispensed beverage equipment, we’ve developed a connected machine module that alerts our office and the store if the machine isn’t on, working or full in order to help retailers keep customers supplied with the frozen dispensed beverages they love,” he said.

Industry Sales

% of In-Store Sales

0.99% 1.15% 2020

2021

Avg. Monthly Sales/Store

$1,963 $2,482 2020

2021

% of Stores Selling

94.9% 93.3% 2020

2021

Source: NACS State of the Industry Report of 2021 Data

NACS JULY 2022 63

CATEGORY CLOSE-UP FROZEN DISPENSED BEVERAGES Per Store, Per Month Sales

$785

$800

n 2019

n 2020

n 2021

n 2022

$700 $600 $500 $400 $300 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Source: CSX LLC; csxllc.com

CSX, the engine behind category metrics and NACS State of the Industry data, provides current and customizable tools for financial and operational reporting and analysis in the convenience industry. Retailers can measure their company by any of the myriad metrics generated via our live database. Contact Chris Rapanick at (703) 518–4253 or crapanick@convenience. org for a complimentary executive walkthrough.

64 JULY 2022 convenience.org

Convenience store operators also can offer more variety in the slush category with limited time offers and a larger selection in a “wall of frozen,” Peterson said. “C-stores can offer a large and rotating variety to keep things exciting and new for consumers who come back to try their favorite seasonal flavor or the latest LTO. By creating an exciting frozen destination, a retailer can expect to see continued growth in frequency and loyalty.” UNFREEZING SALES The summer months provide a wonderful opportunity for convenience retailers to promote and highlight frozen dispensed beverages. “While we compete directly with QSRs in this space—which have also upped their offerings for frozen dispensed beverages—convenience retailers can still have an edge by bringing in fresh, new flavors and running summertime promotions,” Gough said. For example, Gough suggested retailers tie frozen beverage promotions to national summer holidays like Independence Day and regional events, such as festivals or sporting events, to create buzz for the category. “Some retailers even offer summer discounts or expanded loyalty rewards or bundle frozen beverages with another item for additional incentives,” she said.

migin/Getty Images

The Power of CSX Data

BESTING QSRS Convenience stores no longer corner the market on frozen dispensed beverages, with more quick-service restaurants (QSRs) offering their own versions. “Many foodservice customers are entering the frozen category using frozen uncarbonated beverage granita equipment,” Pritchett said. “This equipment has a lower cost of entry but still serves a quality beverage.” However, Coca-Cola believes convenience retailers have a distinct advantage over QSRs “in the frozen dispensed beverage category based on the ability to offer consumers many product options at once,” Johnson said. “We know consumers love variety in slushies. … C-stores often have multiple barrels running various flavors and brands, so shoppers have the option of something different and unique each time they visit.” Frazil’s Freebairn agreed. “Being deliberate in flavor rotation keeps things fresh and interesting,” he said. “Also, highlight what a c-store offers that a QSR doesn’t—the ability to custom blend flavors. People enjoy self-dispensing, and that mixing element is part of what makes frozen dispensed beverages a fun and exciting category and a uniquely c-store experience.”

Subcategory Performance Frozen Dispensed

% of Category Sales

Avg. Sales/Store

Avg. GP$/Store

Gross Margin %

2020

2021

2020

2021

2020

2021

2020

2021

Frozen Non-Carbonated

58.9%

61.6%

$1,157

$1,530

$753

$1,047

65.03%

68.41%

Frozen Carbonated

20.4%

20.2%

$400

$501

$273

$340

68.37%

67.94%

Other Frozen Dispensed Beverages

20.7%

18.2%

$406

$452

$217

$236

53.35%

52.23%

$1,963

$2,482

$1,243

$1,623

63.29%

65.37%

Total Frozen Dispensed 100.0% Beverages

100.0%

Source: NACS State of the Industry Report of 2021 Data

Focusing on the unique experience of frozen dispensed beverages at c-stores can also increase sales. “There is no easy way to replicate frozen beverages at home. Convenience stores function as a daily stop, an impulse visit and a road trip destination where consumers can experience the unique, permissible indulgence of frozen beverages,” Peterson said. Pritchett of Coca-Cola recommended displaying color segmentation to create

a rainbow of products to maximize frozen beverage offerings. “Also, products that create nostalgia, like frozen Fanta Blueberry Vanilla, which came back this summer from the early 2000s, are a popular option,” she said. “Consumers want unique and novel flavors they can’t get elsewhere.” Overall, the future of frozen dispensed beverages in convenience stores is bright. “C-stores have an opportunity to deliver bold innovation, which can cre-

ate an exciting beverage destination,” Pritchett said. Y-Not Stop’s Gauthier added, “I think the future is bright for this small but key—and high profit—c-store category.” Sarah Hamaker is a freelance writer and NACS Magazine contributor based in Fairfax, Virginia. Visit her online at sarahhamakerfiction.com.

CATEGORY CLOSE-UP PACKAGED BEVERAGES

Nenov/Getty Images; Olegback/Getty Images

Beverage Boom

66 JULY 2022 convenience.org

Packaged beverages soar, thanks to product innovation. BY TERRI ALLAN

hile labor, supply and fuel concerns abound for convenience store operators, the cold vault has been a saving grace. Packaged beverages, specifically, are firing on all cylinders and serve as a key profit center and trip driver for retailers. “It’s been a great recovery,” said Jayme Gough, NACS research manager, of packaged beverages’ performance last year. Following subdued trends for much of 2020, conditions began to shift on a monthly basis starting in March 2021, she reported, “and continued throughout the year.” As a result, average store sales of packaged beverages jumped higher than in 2020, as well as 2019 and 2018. “Trips came back a little bit last year,” Gough explained of the improvement, “although they’re still not back to 2019 levels. And all subcategories registered increases in average store sales and gross profits, although some performances were better than others.” Indeed, Reilly Robinson Musser, vice president of marketing and merchandising at Robinson Oil Corp., reported that package beverage sales are up 15% at the company’s Rotten Robbie stores in California. “All categories are up for us,” she said, with energy drinks, carbonated soft drinks and bottled waters as top performers.

Packaged beverage sales accounted for

23.3%

of in-store gross margin contribution in 2021. Source: NACS State of the Industry Report of 2021 Data

According to the NACS State of the Industry Report of 2021 Data, packaged beverage sales surged 14.4% year over year to $33,683 per store, per month, from $29,439. That followed just small gains for the category in both 2020 and 2019. And the category continues to be a profitable one for retailers. “Packaged beverages are the most profitable of all categories for c-stores,” Gough remarked, accounting for 23.3% of inside gross margin contribution last year. “A lot of in-store profit comes from packaged beverages,” Gough said. Heat map data from PDI Insights Cloud indicated that 7 a.m. is the busiest time for packaged beverage sales in c-stores. “That’s when people come in for their caffeine,” Gough explained, “whether it’s energy drinks, RTD coffee drinks or CSDs.” FULL OF ENERGY Energy drinks grew its lead as the top packaged beverages subcategory (accounting for 26.8% of total category sales in 2021) with a remarkable average-store sales gain of 14.4% last year. Gross profit jumped 19.9%. Continued strong demand for established energy drinks propelled the segment last year, while new products and flavors also received strong response from consumers. Gough noted that energy drinks, among other beverage segments, are being impacted by a “blurring” of subcategories, such as with Starbucks Baya, a sparkling energy drink powered by caffeine from the whole coffee fruit. Amid the wave of new entries, Musser reported that Red Bull and Monster remain the top-performing energy drinks at Rotten Robbie. Carbonated soft drinks enjoyed an average-store sales gain of 9.1% last year, while gross profit jumped 11.3%. Gough attributed the strong showing for the No. 2 packaged beverage subcategory to the

Industry Sales % of In-Store Sales

16.78% 17.67% 2020

2021

Avg. Monthly Sales/Store

$29,439 $33,683 2020

2021

% of Stores Selling

99.7% 99.8% 2020

2021

Source: NACS State of the Industry Report of 2021 Data

NACS JULY 2022 67

CATEGORY CLOSE-UP PACKAGED BEVERAGES

Per Store, Per Month Sales

n 2019

$40,000

n 2020

n 2021

n 2022

$37,293

$35,000

$30,000

$25,000

$20,000 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Source: CSX LLC; csxllc.com

68 JULY 2022 convenience.org

tremendous growth in recent years. According to Carlton Austin, director of convenience retail strategy and commercialization at The Coca-Cola Company, chilled coffee is one of the company’s fastest growing segments in c-stores. “Our chilled coffee category, which includes our popular Dunkin’ RTD products, grew 44% in 2021,” Austin reported. OVERFLOWING WITH INNOVATION Several factors are driving the strong performance of packaged beverages. Increased store traffic is one. “As pandemic restrictions eased, consumers became more mobile,” remarked Kent Montgomery, head of industry relations at PepsiCo. “We saw sales rise by double digits in the convenience and gas station channel, driven by core business and new innovations,” he explained, pointing to products like zero-sugar offerings in sports drinks and CSDs, the growth of energy drinks and new Mountain Dew flavors. Martello added that “immediate consumption growth is returning as mobility has increased.” As a result, Keurig Dr Pepper’s single-serve CSDs have enjoyed mid to high single-digit sales increases.

Ivan-balvan/Getty Images

7 a.m. was the busiest time for packaged beverage sales in c-stores.”

continued demand for core products and comfort brands from consumers in the aftermath of the pandemic. Kevin Martello, vice president, national retail sales, convenience and industry relations at Keurig Dr Pepper, said sales of the company’s flavored CSDs outpaced overall CSD trends in c-stores last year. “Dr Pepper was one of the fastest growing major CSD brands in the U.S. last year,” he said, while Sunkist, A&W and Canada Dry also contributed to increased dollar sales. Bottled water, meanwhile, experienced a 22.1% gain in average-store sales and a 27.3% increase in gross profits in 2021. “This subcategory has come back with strong gains compared to 2020,” Gough remarked of the subcategory that was negatively impacted by the pandemic. “As an industry, c-stores faced several challenges due to COVID-19, but as everything reopens, convenience is one of the fastest growing channels for bottled waters, particularly premium waters,” added Thomas Conquet, marketing director at Nestlé Premium Waters. Sales of the catchall “other” packaged beverages subcategory also grew at a double-digit rate last year, driven by ready-to-drink coffees, which have seen

Subcategory Performance Packaged Beverages

% of Category Sales

Avg. Sales/Store

Avg. GP$/Store

Gross Margin %

2020

2021

2020

2021

2020

2021

2020

2021

Energy Drinks

26.8%

$7,890

$9,027

$3,205

$3,778

40.63%

41.85%

Carbonated Soft Drinks

21.6%

20.6%

$6,371

$6,951

$2,528

$2,813

39.67%

40.47%

Other Packaged Beverages

14.8%

15.1%

$4,345

$5,095

$1,861

$2,283

42.84%

44.80%

Bottled Water

11.7%

12.5%

$3,455

$4,218

$1,810

$2,303

52.38%

54.61%

Sports Drinks

8.7%

9.5%

$2,558

$3,205

$1,133

$1,491

44.28%

46.54%

Juice/Juice Drinks

6.8%

6.5%

$2,001

$2,190

$953

$1,062

47.63%

48.50%

Iced Tea (Ready to Drink)

7.0%

6.4%

$2,050

$2,163

$959

$1,046

46.80%

48.37%

Enhanced Water

2.6%

2.5%

$770

$835

$337

$381

43.79%

45.59%

Packaged Beverages Total

100.0%

$29,439

$33,683

$12,786

$15,157

43.43%

45.00%

Anton Starikov/Shutterstock

Source: NACS State of the Industry Report of 2021 Data

The packaged beverages category is also brimming with innovation, driving trial and expanding occasion opportunities. “Both innovation and base growth are needed to drive the category,” remarked Austin, noting that in c-stores “consumers are looking for their favorites and wanting to discover something new.” Among new offerings from Coca-Cola are Coca-Cola with Coffee and bottled Minute Maid Aguas Frescas. New products and flavors are also a priority at PepsiCo, Montgomery said, pointing to entries like Pepsi Nitro, Mountain Dew Spark and Mountain Dew Flamin’ Hot. “Data revealed that younger consumers love more spicy flavors, and this has proven true,” he said. Limited-time-only CSDs are also popular. Coca-Cola Creations entries such as Starlight and Starlight Zero Sugar launched in February and will remain in the market until August, according to Austin, while a new LTO program for Fanta will be released this July. At Keurig Dr Pepper, Martello reported that the LTO Dr Pepper Dark Berry will return this year. Convenience retailers acknowledged the wave of new packaged beverage

entries. At Hat Six Travel Center in Evansville, Wyoming, merchandise manager Erin Breeden attributed nearly all of the store’s “fantastic” packaged beverage growth to new energy drinks and flavors, including the likes of Alani Nu, Ghost and Celsius. “They’ve been able to get a leg up on the leading brands, which have been hampered by supply issues,” she said. And consumers have been receptive. “Everyone wants what’s new,” Breeden remarked. At OK One Stop in Ardmore, Oklahoma, manager Elsa Douglas said sports drinks offerings have proliferated. “We have 19 flavors alone for BodyArmor,” she noted, adding that BodyArmor Edge has been a particularly strong performer. Health and functionality demands from consumers are also dramatically impacting the packaged beverage space. “Consumers want beverages that embrace more active lifestyles, like zero-sugar options,” said Montgomery, “but as they adapt to new routines in post-pandemic life, they’re more focused on product function.” Chris Kinch, vice president, distributor sales, at Nestlé Premium Waters, added that bottled water drinkers also desire functionality. “Consumers are more educat-

Dr Pepper was one of the fastest growing major CSD brands in the U.S. last year.”

NACS JULY 2022 69

CATEGORY CLOSE-UP PACKAGED BEVERAGES

MERCH MADNESS Following a phenomenal year of growth for packaged beverages, convenience retailers want to keep the momentum going. Suppliers said it’s possible by adhering to effective merchandising and marketing strategies. Austin encouraged retailers to focus on capturing shoppers who may not have intended to purchase a beverage during a visit. “Find ways to interrupt their shopping trip, and present an opportunity for them to leave with a

ADVERTISER INDEX Contact Information

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Altria Group Distribution Company.......................Inside Front Cover AGDCTradeRelations@Altria.com www.altria.com www.tobaccoissues.com Calico Brands Inc. (Scripto)................................................................................65.. (800) 544-4837 www.calicobrands.com Cash Depot.................................................................................................7.. (800) 776-8834 sales@cdlatm.com www.cdlatm.com Charleys Philly Steaks.........................................................................................25 www.charleys.com Cool New Products Guide............................................................56-58 www.convenience.org/Media/NACS-Magazine/Cool-New-Products

Crane Payment Innovations........................................................................42-43 www.cranepi.com 70 JULY 2022 convenience.org

Contact Information

beverage in hand,” he said, via tactics like incremental placements throughout the store. Martello recommended that signage at the cold vault be clear and concise to emphasize must-buy pricing and promotional offers. “Digital engagement and customized programs” will also strengthen loyalty and return on investment, the Keurig Dr Pepper executive said. Understanding customer need is critical to growing packaged beverage sales, Montgomery added. “Convenience and relevance play a more important role than ever before in many shoppers’ value equations,” he said. “Understanding how this varies for different shopper segments can drive trips and loyalty.” Terri Allan is a New Jersey-based freelance writer, specializing in the beverage industry. She can be reached at terri4beer@aol.com and on Twitter at @terriallan.

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Dover Fueling Solutions....................................................................... 35 www.doverfuelingsolutions.com

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ElectrolitUSA............................................................................................41 www.electrolit.com

NACS Retail Membership......................................................................................4 www.convenience.org/membership

FIFCO USA................................................................................................49 (Seagram’s escapes Spiked) www.seagramsescapes.com/spiked/

Premier Manufacturing Inc................................................................................. 5 www.gopremier.com

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Keith Homan/Getty Images

Our chilled coffee category, which includes our popular Dunkin’ RTD products, grew 44% in 2021.”

ed and engaged in vetting and selecting brands than ever before,” he said, and c-stores can benefit. “Lower calories, better hydration and functionality are top of consumers’ minds, and leveraging this can lead to future success.” Douglas said she’s already seeing the trend at her store. “Nobody wants to drink their calories or sugar anymore,” the Oklahoma retailer said of demand for zero-sugar CSDs. “They’d rather get it from a candy bar.”

BuzzBallz.com

To learn more, visit: www.UptownCocktails.com

BY THE NUMBERS

Filling Baskets Despite Inflation Rising fuel prices and inflation have historically translated into customers managing their cash-on-hand and discretionary income between the dollars that go into their fuel tank and the funds that could be used inside the store. This means that when the cost to fill up increases, the likely response is a decline in inside store sales. Time—or the perceived lack of it—is also a factor. Last year saw the resumption of more-typical pre-pandemic routines for many consumers, who needed to commute to

TIME CRUNCH AND RISING PRICES ARE LEADING FUEL CUSTOMERS TO OPT OUT OF IN-STORE SHOPPING Why didn’t you buy products at this store today?

I don’t need anything from the store today

43.3% 44.8% 1. OPTIMIZE CUSTOMERS’ TIME

20.0%

I’m on a limited/ strict budget right now

I have children in the car with me Doesn’t have what I need

19.1% of shoppers indicated that curbside influenced their site selection, and 26.4% of customers are interested in a drive-thru offer on site.

22.1%

Not enough time

Too expensive

work, run errands and get their kids to activities. In the 2021 NACS Convenience Voices survey, the number of fuel-only shoppers who indicated they weren’t coming inside the store because of “lack of time” increased year over year by two percentage points to 22.1%. The potential for lost sales attributed to “not enough time” will likely increase as more customers return to their commutes and household activities. What’s more, 5.7% of gas-and-go customers surveyed also reported a perception that convenience products “are too expensive.” This is in addition to the 13.3% of fuel-only customers who didn’t shop inside of the store because they were “on a strict or limited budget.” Both influences were reported more frequently in 2021, pointing to the fact that inflationary pressures and associated perceptions are weighing on shoppers. Overall, the perceived lack of time, limited budgets and premiumization associated with convenience products were key sources of resistance, the NACS survey found. However, there are strategies that retailers can implement to win trips.

13.3% 12.8% 2021 survey

5.7% 3.7%

2020 survey

2. CUSTOMIZE PROMOTIONS

30% of shoppers noticed a promotion while visiting, and 15.3% noticed promotions were received via mobile.

6.4% 8.0% 5.2%

3. OFFER VALUE BRANDS

71.1% of convenience shoppers were likely to purchase store brands at their current location.

5.4% Source: 2021 NACS Convenience Voices Survey

NACS Convenience Voices is packed with valuable, proprietary insights you can only get from NACS. Leveraging the ubiquity of mobile technology enables more precise targeting, expanded geographic reporting, powerful multimedia feedback and more. Visit www.convenience.org/voices to learn how to participate. 72 JULY 2022 convenience.org

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Congratulations to the 2022 winners!