NACS Magazine July 2021

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convenience.org | JULY 2021

TOP OF MIND

These brands are driving inside sales and winning over customers.

LOW-KEY CATEGORIES GAIN GROUND BEVERAGE BOOM:

Coffee Crossovers Spiked Seltzers Craft Beer



JULY 2021

34 42 48 54 58 60 64 Cover Art by Beyond Definition STAY CONNECTED WITH NACS

 @nacsonline  facebook.com/nacsonline  instragram.com/nacs_online  linkedin.com/groups/1776505

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he Hot Sellers T A look at the brands driving inside sales, plus advice from category managers for accelerating growth. idden Gems H During the pandemic, low-key categories gained new luster. essons in Leadership—Live L At the NACS Leadership Forum, industry leaders reflected on the leap into the future and the necessary innovations they implemented. affeine Fix C Ready-to-drink coffee and its many variants brew up opportunity for c-stores. eyond Beer B A Q&A with Boston Beer Co. Modeling

a Food Safety Culture

Introducing the first, global food safety maturity model for convenience stores. rushing on Craft Brews C Local brewers and c-stores collaborate on unique flavors that create consumer buzz. eltzer Surge S Retailer enthusiasm bubbles over for spiked seltzers.

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

CONVENIENCE.ORG

JULY 2021 |

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JULY 2021

We want to make eating healthy affordable and delicious.

Consumers sought out their favorite beverages for comfort during an uncertain time.

P.90

IDEAS 2 GO, P. 30

06 Convenience.org 08 From the Editor 12 NACS News 22 Good Work 24 Inside Washington

Colonial Pipeline hack showed industry vulnerability and why ties to Capitol Hill are crucial; what ESG policies could mean for the industry.

80 Gas Station Gourmet

Back under family ownership, Stuckey’s is striving for a turnaround.

82 Global Trends

Congratulations to the NACS European Convenience Retail Award Winners.

86 Category Close-Up

Sales of frozen dispensed beverages are climbing as summer heats up; c-stores bank on packaged beverages.

96 Back Page

Zoom offers healthy choices inside the convenience store and outside on the forecourt.

74 Cool New Products 2

| JULY 2021

PLEASE RECYCLE THIS MAGAZINE The presence of an article in our magazine should not be permitted to constitute an expression of the association’s view. CONVENIENCE.ORG

iStock.com/Magone

30 Ideas 2 Go


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VOLUME 20, ISSUE 7

JULY 2021

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

Get inside consumers’ minds. And shape your future accordingly. This year, you won’t just know why. You’ll see why.

Sara Counihan Managing Editor (703) 518-4278 scounihan@convenience.org Lauren Brooks Digital Content Manager (703) 518-4283 lbrooks@convenience.org CONTRIBUTING WRITERS Terri Allan, Carol Angrisani, Sarah Hamaker, Al Hebert, Pat Pape DESIGN Beyond Definition www.beyond-definition.com

ADVERTISING What’s NEW this year?

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Photo & Video: See what promotions and displays shoppers find compelling.

Geofencing will enable the most targeted, specific information ever.

Fully Digital & Interactive Shopper Interface: Advanced functionality, technology & capabilities at your fingertips.

Regional Cuts will let

Stacey Dodge Advertising Director/Southeast (703) 518-4211 sdodge@convenience.org Jennifer Nichols National Advertising Manager/ Northeast (703) 518-4276 jnichols@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

you compare different geographic and market conditions.

NACS BOARD OF DIRECTORS CHAIR: Kevin Smartt, Kwik Chek Food Stores OFFICERS: Lisa Dell’Alba, Square One Markets Inc.; Brian Hannasch, Alimentation Couche-Tard Inc.; Andy Jones, Sprint Food Stores Inc.; Ken Parent, Pilot Flying J LLC; Victor Paterno, Philippine Seven Corp. dba 7-Eleven Convenience Store; Don Rhoads, The Convenience Group LLC; Jared Scheeler, The Hub Convenience Stores Inc. PAST CHAIRMEN: Frank Gleeson, Aramark Northern Europe; Julie Jackowski, Casey’s General Stores Inc. MEMBERS: Chris Bambury, Bambury Inc.; Chris Coborn, Coborn’s Inc. Little Dukes; Joseph M. DePinto, 7-Eleven Inc.; Bhagdeep S. Dhaliwal, Dhaliwal & Associates Inc.; George Fournier, EG America LLC; Anne Gauthier, St. Romain Oil

Company LLC; Varish Goyal, Loop Neighborhood Markets; Christine Hogan, Wheels Convenience Stores; William B. Kent, The Kent Companies dba Kent Kwik Convenience Stores; Sydney Kimball, Shell International Petroleum Company Limited; Chuck Maggelet, Maverik Inc.; Ina (Missy) Matthews, Childers Oil Co.; Charles McIlvaine, Coen Markets Inc.; Lonnie McQuirter, 36 Lyn Refuel Station; Glenn M. Plumby, Speedway LLC; Robert Razowsky, Rmarts LLC; Richard Wood, Wawa Inc. SUPPLIER BOARD REPRESENTATIVES: Rick Brindle, Mondelēz International; Brent Cotten, The Hershey Company STAFF LIAISON: Henry Armour, NACS GENERAL COUNSEL: Doug Kantor, NACS

NACS SUPPLIER BOARD CHAIRMAN: Rick Brindle, Mondelēz International

VICE CHAIRMEN: David Charles, Cash Depot; Kevin Farley, GSP; George Ubing, E&J Gallo Winery

Coca-Cola Company; TJ Lynch; Vito Maurici, McLane Company Inc.; Bryan Morrow, PepsiCo Inc.; Sharon Porter, Saputo USA LLC, dba Saputo Convenience; Lesley D. Saitta, Impact 21; John Thomas, iSEE Store Innovations LLC; Dean Zurliene, Monster Beverage Company

PAST CHAIRMEN: Kevin Martello, Keurig Dr Pepper; Brad McGuinness, Qopper Inc.; Drew Mize, PDI

RETAIL BOARD REPRESENTATIVES: Steve Loehr, Kwik Trip Inc.; Chuck Maggelet, Maverik Inc.

MEMBERS: Blake Benefiel, Altria Group Distribution Company; Alicia Cleary, Anheuser-Busch InBev; Tony Gaines, NVIP LLC; Mike Gilroy, Mars Wrigley; Josh Halpern, FIFCO USA; David Jeffco, Krispy Krunchy Foods LLC; Tim Knight; Kevin M. LeMoyne,

STAFF LIAISON: Bob Hughes, NACS

CHAIRMAN-ELECT: Brent Cotten, The Hershey Company

SUPPLIER BOARD NOMINATING CHAIRMAN: Joseph Vonder Haar, iSEE Store Innovations LLC

More Control: You will have the ability to add specific questions.

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 employees of nonmember companies at a rate of $70 per year. Please add $15 for delivery outside the United States. Subscription requests: nacsmagazine@convenience.org POSTMASTER: Send address changes to NACS Magazine, 1600 Duke Street, Alexandria, VA, 22314-2792 USA. Contents © 2021 by the National Association of Convenience Stores. Periodicals postage paid at Alexandria VA and additional mailing offices.

convenience.org/voices

1600 Duke Street, Alexandria, VA, 22314-2792

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WHAT’S ONLINE | JULY 2021

What’s top of mind in convenience? We’ll tell you.

Benchmark Better

Download our weekly podcast today and gain access to industry knowledge and trends — all in 24 minutes or less! Tune in at conveniencematters.com

Episode

#287 24/7 Day: Thanking Everyday Heroes 24/7 Day unites the convenience industry’s important role in supporting communities and celebrating frontline workers. Find out how you can get involved on July 24th at 247Day.org.

This year, the NACS State of the Industry Report of 2020 Data was released as a digital-only report, and it’s the convenience and fuel retailing industry’s premier benchmarking tool and the most comprehensive collection of data and trends. New chapters in this year’s report include: • The Convenience Shopper chapter, which provides valuable consumer insights from NACS Convenience Voices data • The Regional Performance chapter, which drills down to provide comprehensive regional data in all six NACS regions Don’t forget about the digital NACS State of the Industry Compensation Report of 2020 Data. This report provides critical benchmarking data and up-to-date standards in the key human resource categories of compensation, turnover, benefits and recruitment. It also breaks down the newest available numbers in the convenience industry and is considered an essential guide for HR professionals. Purchase both digital reports today at www.convenience.org/SOI.

In Our Corner

Did you know that NACS has a blog? Convenience Corner, updated monthly, covers topical information, such as the “why” behind convenience, taking advantage of 4/20 day and food retail. The recent post “Does the President Control Gas Prices?” has been the No. 1 most viewed page among all NACS websites in 2021. In the post, Jeff Lenard of NACS explores what’s really behind the rise and fall of gas prices. Check out the blog at www.convenience.org/conveniencecorner. CONVENIENCE.ORG


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FROM THE EDITOR

Brood X cic

t he ead nails H h s fi g o D ck tail! c an ne d c o

Editing this month’s magazine made me curious to branch out in the RTD canned cocktail/hard seltzer categories. 8

| JULY 2021

dog snacks

Drink Up

L Kim Stewart Editor-In-Chief

ad a s , a k a ,

ike July, ready-to-drink coffee and cocktails are smoking hot right now, with sales still growing and a ton of new products to explore, so I’m trying to keep up. I’m not a coffee drinker. Loose-leaf lavender Earl Grey tea leaves steeped in a proper ceramic tea pot with water boiled in an electric kettle get me going most mornings. I blame my failure to develop a taste for coffee on my grandmother, who let me try a cup when I was 5 years old. Absolutely disgusting. I enjoy the smell of brewing coffee, but there’s a disconnect between how coffee smells and how it actually tastes, to me at least. I do, however, like cold brews (thank you Panera Madagascar Vanilla Cream Cold Brew!) and bottled RTDs like Starbucks Mocha Frappuccino, which was one of the top 10 sellers last year in the packaged beverages category (see “Hot Sellers” and “Caffeine Fix”). I’ve seen so many ads recently for Chobani Coffee Cold Brew With Sweet Creamer that when I saw it at my local Harris Teeter—2/$7—I put two 32-ounce cartons in my shopping cart. Needless to say, the Chobani cold brew was a huge hit in my house. With 85 milligrams of caffeine (compared with about 50 milligrams in my usual Earl Grey cup), the cold brew left me more awake than usual on my Beltway commute. Editing this month’s magazine (see “Seltzer Surge”) made me curious to branch out in the RTD canned cocktail/hard

brews from Crushing on cold nera Chobani and Pa

seltzer categories beyond the White Claw, High Noon and Cape Line that I probably indulged in too much last summer as “two weeks to flatten the curve” stretched into months. I’m not very far into this RTD journey, so a recent outdoor get-together with my sister’s family was the perfect opportunity to show up with a variety of RTDs in the alcohol space. Some of the concoctions we tried were iffy (too much coconut, for instance), some were light on calories but also taste, and some have earned their spot in our garage fridge. One of those is from Delaware-based Dogfish Head Distilling Co., which released its first ready-to-drink canned cocktail in 2017. If you like whiskey sour cocktails, I recommend Cherry Bergamot Whiskey Sour from Dogfish. (Note: Any products I mention here are my own endorsements.) Next up, craft beer collaborations between convenience stores and breweries (see “Crushing on Craft Brews”)! I’m hoping summer finds you healthy of mind and body, so you can step out and enjoy some of the people and activities you may have missed last year. In my neck of the woods, the cicadas are calling to each other, the neighborhood pool is alive with happy kids and it’s nearly time for an after-work libation. Cheers, my friends!

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NACS NEWS

NACS Show Pre-Conference Workshops

L

ooking to further you or your team’s category management knowledge or build skills in multi-unit leadership? NACS offers two advanced courses that can be completed while in Chicago on day one of the NACS Show.

CATEGORY MANAGEMENT CERTIFICATION Earn the NACS Certified Convenience Advanced Category Management Certification (CCACM) through the completion of a Advanced Category hands-on education session at the 2021 Management NACS Show. Comprised of key strategic 5 Tuesday, October planning and analytical skill-building . p.m 30 .-3: 9 a.m pliers programs, the six-hour interactive sup and ers buy to le ilab Ava workshop is tailored for experienced (50 spots available) Cost: $499/person category management and merchandising professionals from retailers and suppliers in the convenience and fuel retailing channel.

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MULTI-UNIT LEADERSHIP Author Jim Sullivan brings the principles from his bestselling book, Multi-Unit Leadership: The 7 Stages of Building Profitable Stores, Multi-Unit to the NACS Show for a Leadership one-day workshop to Tuesday, Octob er help retail c-store man9 a.m.-3:30 p. 5 m Available to bu . agers build the needed yers (50 spots avai only skills to transition to labl Cost: $399/per e) son multi-unit leaders. In this six-hour interactive workshop, Sullivan addresses one of the most challenging transitions in a store leader’s career: the move from single-store manager to multi-store manager. Attendees should read the book Multi-Unit Leadership: The 7 Stages of Building Profitable Stores, which will be provided to all registrants prior to the workshop. Register for these workshops today at www.nacsshow.com/register. CONVENIENCE.ORG

iStock.com/Rawpixel

Completion of the online NACS Certified Convenience Category Manager (CCCM) course prior to this event is strongly encouraged since this advanced program is designed for people who already have an understanding of basic category management principles. Drawing on the fundamentals included in the online NACS Advanced Category Management curriculum, this in-person workshop will incorporate industry data and offer collaborative work sessions designed for maximum learning and retention. Upon completion, each participant will earn a CCACM certificate from NACS and Impact 21.


Become a Master NACS established the NACS Master of Convenience designation in 2019 to acknowledge the hard work and investment that NACS members have made in their personal leadership development. It is awarded to convenience retailers who have attended three or more of the five NACS Executive Education programs. To celebrate and recognize their achievement, each year NACS Master of Convenience recipients are invited to attend the invitationonly NACS Leadership Forum.

Kelly Bucher

Gary Price

Anne Gauthier

Congratulations to the 2021 NACS Masters of Convenience: •K elly Bucher, director of product management, Casey’s • Anne Gauthier, CFO and Co-CEO, St. Romain Oil •G ary Price, executive vice president of truck care, Love’s Travel Stops To learn more about the five NACS Executive Education programs, visit www.convenience.org/ leadership or contact Brandi Mauro, NACS education program manager, at bmauro@convenience.org.

NACS Welcomes General Counsel Doug Kantor has joined NACS as general counsel. Kantor most recently served as a partner at Steptoe & Johnson and prior to that practiced at Collier Shannon & Scott. He also served as special counsel and deputy chief of staff at the Department of Housing and Urban Development. Kantor brings to NACS professional insight from his experience as a litigator and political appointee to help develop solutions to public policy issues related to the convenience and fuel industries. In addition to his extensive public policy advocacy work, Kantor’s legal experience includes CONVENIENCE.ORG

appellate litigation, campaign finance law counseling, privacy law counseling, defending state attorney general and congressional investigations, litigating securities enforcement actions and managing class action suits. During his tenure as outside counsel to NACS, Doug Kantor he made instrumental contributions to NACS government relations initiatives, particularly in the payments, tobacco and fuels areas. Kantor received his B.A. from the University of Virginia and a J.D. from Yale Law School.

JULY 2021 |

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NACS NEWS

NACS Debuts Digital Age Verification With Live Demo Henry Armour, NACS president and CEO, and Kevin Smartt, CEO of Texas Born (TXB) and 2020-21 NACS chairman, demonstrated the groundbreaking NACS TruAge universal digital age-verification system for Leadership Forum attendees in May. “Society is demanding more accountability from business,” said Armour. “Age verification for the purchase of alcohol, tobacco, vape and in the future, cannabis, is more important than ever. It’s something that our customers and communities care deeply about, and we can do it better than ever.” The ability to responsibly sell legal, age-restricted products—today and in the future—is critically important to the convenience retailing industry. For store clerks, checking IDs should be

Henry Armour, NACS president and CEO, and Kevin Smartt, CEO of Texas Born (TXB) and 2020-21 NACS chairman, discuss the NACS TruAge universal digital age-verification system at the NACS Leadership Forum.

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simple, safe and reliable. It should also speed up the checkout process, shut down sales to minors and protect people’s privacy. Of the many learnings that have emerged from the pandemic, convenience retailers have seen accelerated demand for frictionless shopping experiences, along with extra services like curbside pickup, drive-thru solutions and delivery. “We’ve seen that contactless payment has increased,” Smartt said of his TXB stores (formerly KwikChek). “We want to have a frictionless environment that allows the customer to shop in whatever way they want and give them the option of receiving their purchases in-store, at the curb or at their house,” he said. With regulators crafting policies for how alcohol and vaping products—including a future that includes CBD products and legal cannabis—are sold and who sells them, Armour said it’s the right time “to go from analog to digital in the age-restricted space.” TruAge is supported by more than 133 retail companies that represent 22,000-plus convenience store locations in the United States, plus four industry point-of-sale (POS) providers. Molson Coors Beverage Company is the first major global beer company to support TruAge. The technology isn’t just for convenience stores. Any retailer of age-restricted products can use TruAge to securely verify a customer’s age at all points of sale. It is free to retailers, consumers and POS providers, and its relevant intellectual property will be placed in the public domain—removing significant barriers to adoption. In the future, retailers can incorporate TruAge into their own apps, so customers can seamlessly transact purchases no matter where they go, whether a convenience store, a restaurant or a bar, as well as online. The digital system verifies a purchaser’s age, not identity. A buyer presents his or her driver’s license, Continued on page 16 CONVENIENCE.ORG


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NACS NEWS

which is scanned, and the TruAge system creates an encrypted, single-use identity token in the cloud that verifies the purchaser’s age, date of birth and driver’s license issuer state, and that information goes into the store’s T-log. In the future, using the TruAge app, consumers will onboard their government-issued picture ID or driver’s license, Conexxus Executive Director Gray Taylor explained. The first transaction will take about 15 seconds longer than normal, but after

that, the age-verification process is seamless and customers won’t have to show their driver’s licenses again, just the app. “Using the TruAge mobile system, no personal information is captured or stored. That’s super important,” Armour said. “We’re just verifying age; we’re not verifying identity.” Learn more about the TruAge program and opportunities to participate at www.convenience.org/TruAge.

MEMBER NEWS SUPPLIER LTI announced the promotion of industry veteran Matt McEwen to drafting manager. In this role, McEwen will oversee the department that works closely with LTI customers to design the custom serving solutions that meet their needs. Confectioner Perfetti Van Melle announced that Francisco “Paco” Tello has been named vice president, operations, for Perfetti Van Melle North America. Tello expands his duties to oversee Perfetti Van Melle’s end-to-end supply chain for the U.S. and Mexico.

Matt McEwen

Fancisco "Paco" Tello

Advanced Digital Data Inc. announced that Andy Katsigiannis was hired as director of customer support and hardware operations. The company also announced that Roger Keyser, vice president of customer support and hardware operations, has retired after nearly 40 years with ADD Systems. Seneca Companies has made the following personnel announcements: • M andy Lozier joined Seneca as safety coordinator. • J odi Solomon was promoted from director of marketing to vice president of marketing. •M ike Freese took on the role as director of inside sales and DSS. • Steve Cox was named the Denver branch manager. •B ill Yarkosky joined Seneca as an electrician and project manager.

Paytronix Systems Inc. announced that Charles R. Gray has been named its new chief revenue officer. Gray will lead Paytronix global sales, partnership and channel strategy.

Interface Security Systems announced that it has appointed Brian Garavuso as its chief technology officer.

Core-Mark Holding Company announced that Phil Miller has joined the company as senior vice president of the East region.

Swisher has appointed Zack Crafton as vice president, corporate innovation. In this position, Crafton will be working to diversify Swisher’s products and brands. Phil Miller

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Zack Crafton

CONVENIENCE.ORG


When it’s your time to lead.

Leaders are made, not born. NACS Leadership for Success Class of 202 21 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 2021 program.

Justin Allih Racetrac Petroleum, Inc. Leigh Buckner Tri Star Energy, LLC Jeff Gamm Love's Travel Stops & Country Stores

Chris Norder Love's Travel Stops & County Stores Kelly Putnam Reid Petroleum Corporation Janie Reese Tri Star Energy, LLC

Debbie Goins Herdrich Petroleum Corporation Dallas Heckel Love's Travel Stops & Country Stores Linda Lefkowitz EG America LLC Roger Messer Tri Star Energy, LLC Carlos Morales Love's Travel Stops

Ryan Royse EG America LLC Dustin Saldivar EG America LLC Lewis Taylor Love's Travel Stops & Country Stores Jerry Warford Herdrich Petroleum Corporation

& Country Stores

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

convenience.org/leadershipforsuccess


NACS NEWS NEW NACS MEMBERS NACS welcomes the following companies that joined the association between April 16 and May 15, 2021. 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 SUPPLIER MEMBERS HUNTER CLUB BRONZE

C-Store Master Huntsville, AL www.cstoremaster.com

NEW SUPPLIER MEMBERS A&E Balm Company West Des Moines, IA www.udderbalmonline.com AEVI Paderborn, Germany www.aevi.com/index.html Aqua Case Scottsdale, AZ www.aquacase.net

Arla Foods Inc. Basking Ridge, NJ www.arlausa.com

Defy Denver, CO www.drinkdefy.com

BioMicrobics Inc. Lenexa, KS www.biomicrobics.com

Fuel Door Gloves LLC West Palm Beach, FL

Brown Bag Unlimited LLC dba Nature's Crush Naples, FL www.naturescrushpopcorn.com Cali Kulture Tucker, GA www.calikulture.com Citysense USA LLC Santiago, Chile www.citysense.co Dailys Premium Meats Kansas City, MO www.dailysmeats.com

GEN Z Brands Tulsa, OK www.drinkgenz.com Healing Bottoms Corporation Chicago, IL www.healingbottoms.com Hoplark LLC Boulder, CO www.hoplark.com Lit Culture Atlanta, GA www.litculture.com Lucy Goods Los Angeles, CA www.lucy.com

Mirage Wholesale Group LLC dba Mirage Vapes Elizabeth, NJ www.miragevapes.com Mooney Farms dba Bella Sun Luci Chico, CA www.bellasunluci.com Nepa Wholesale Inc. West Palm Beach, FL www.nepa2wholesale.com Nichols Farms Hanford, CA www.nicholsfarms.com Ohio Lottery Commission Cleveland, OH Performance Brands dba PumpCup Promotionals Sunrise, FL www.buypumpcup.com

Pop Vapor Co. LLC Atlanta, GA www.popvapor.com

Tao Bitcoin LLC Rockwall, TX www.taobitcoin.com

Sani-Spire Joliet, IL www.sanispire.com

Terrasero Inc dba Vida/ NxtGen CBD Las Vegas, NV www.vidacbd.com

Seneca Companies Des Moines, IA www.senecaco.com

The C Store Depot Inc. Tampa, FL

Shekel Scales 2008 Ltd Kibbutz Beit Keshet, Israel www.shekelonline.com

WorkJam Montreal, QC, Canada www.workjam.com

Slowstop Guarding Systems San Antonio, TX www.slowstop.com

Zahren Enterprises Inc. Valley Stream, NY www.zahrentech.com

Table Mountain Sales LLC Golden, CO

NACS Calendar of Events SIGNATURE EVENT NACS Show October 5-8, 2021 | Chicago, IL

GLOBAL

NACS Convenience Summit Asia August 17-19, 2021 | Virtual

GOVERNMENT RELATIONS

NACS In Store Throughout 2021 | Stay tuned …

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LEADERSHIP

NACS Executive Leadership Program at Cornell University July 25-29, 2021 | Ithaca, NY NACS Financial Leadership Program at the Wharton School of the University of Pennsylvania August 1-6, 2021 | Philadelphia, PA NACS Women’s Leadership Program at Yale School of Management October 26-28 and November 2-4, 2021 Live Virtual

NACS Innovation Leadership Program at MIT Sloan School of Management October 31- November 5, 2021 | Cambridge, MA NACS Marketing Leadership Program at Kellogg School of Management, Northwestern University November 14-19, 2021 | Evanston, IL For more information about these NACS events, visit www.convenience.org/events. For the most up-to-date information on event cancellations, please visit www.convenience.org.

CONVENIENCE.ORG


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NACS NEWS

BY THE NUMBERS

Enhanced Water Sales Heat Up One packaged beverage subcategory that has experienced high growth in recent months is enhanced water. This subcategory outpaced all nonalcoholic packaged beverage subcategories in sales growth across March (40.4%) and April 2021 (106.4%) on a year-over-year basis. Low calories, an enhanced mouthfeel, higher level of purity and improved hydration qualities are factors drawing consumers to enhanced water offerings. Although the enhanced beverage subcategory is nuanced in nature, a few specific types have separated themselves from the pack. Nutrient enhanced and distilled water had the highest sales volume and growth percentage increase between February and April 2021. Perfect/balanced pH and ionized alkaline distilled water product sales also increased substantially during this time frame. Among the top 30 selling enhanced water brands from February to April 2021, the following three had the highest increase in sales growth: • 62% - Core Perfect pH Water With Electrolytes (23.9 ounces) • 56% - Glacéau Smartwater Perfectly Balanced pH With Electrolytes (23.7 ounces) • 55% - Lifewater pH Balanced With Electrolytes for Taste (23.7 ounces) Growth in enhanced water has not been lost on the largest packaged beverage providers. Nestlé’s March 2021 purchase of enhanced water producer Essentia follows Keurig Dr Pepper’s acquisition of water bottler Bai in 2016 and Coca-Cola’s purchase of Vitamin Water in 2007. Emerging provider The Alkaline Water Company established partnerships with convenience retailers Yesway and CEFCO in February and April 2021, respectively, further boosting enhanced water’s position in the $230 billion global bottled water market. YEAR-OVER-YEAR MONTHLY SALES GROWTH PERCENTAGE

110% 100% 90% 80% 70% 60%

iStock.com/artisteer, somchaij

50% 40% 30% 20% 10% 0% -10%

JANUARY 2021

Enhanced Water

FEBRUARY 2021 Bottled Water

Juice Drinks

MARCH 2021 Ready-to-Drink Iced Tea

APRIL 2021 Carbonated Soft Drinks

Source: NielsenIQ

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WE’RE

D E R O N O H


GOOD WORK

Let’s Celebrate

T

his year marks Weigel’s 90th anniversary and to celebrate, the company—and East Tennessee’s oldest local dairy since 1931— is running a “90 Years for Us, 90 Days for You” campaign from May 3 to August 1. “It is such an honor to have our vendors support this special milestone in Weigel’s history,” said Bill Weigel, chairman and CEO. “It’s a tribute to the qualities and legacy this company was founded on 90 years ago and to the great management and team members we have in our stores today. They have helped us grow, and we thank them for helping us celebrate our 90th anniversary in a huge way.” To commemorate the anniversary, Weigel’s created a special birthday cake milk. “After seeing the excitement and success behind our Peanut Butter Chocolate milk, we knew we had a unique opportunity to continue into our anniversary celebration,” said Weigel. Weigel’s 90-year history is something to celebrate, but so is its future. Increased loyalty focus, expansion into new markets, driving private brands to the

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marketplace and creating sweepstakes on a quarterly basis is its marketing department’s focus for 2021 and beyond. “This is an exciting time to be a part of the Weigel’s family. We are hoping to use the ‘90 Years for Us, 90 Days for You’ celebration to help springboard us into the future. It is an achievement not many companies reach. We see this as a great opportunity to start moving on our biggest goals and strategies of the future,” said Nick Triantafellou, director of marketing. Meanwhile, Savannah-based Colonial Group Inc. is marking a major milestone in its history. On July 21, 2021, Colonial will celebrate 100 years in business. CONVENIENCE.ORG


“When my grandfather, Raymond McAllister Demere, returned to Savannah after serving with distinction in World War I, he recognized the need to supply fuel for the new internal combustion engines powering vehicles replacing the horse and buggy,” said Robert H. Demere Jr., chairman of Colonial Group. “He established the company that would become Colonial Group in 1921 and built his first service station in 1923 at the corner of Drayton and Charlton.” Demere Jr. represents the company’s third generation of family leadership, and during his tenure as president and CEO, he was responsible for much of the growth that led to the development of the company’s 10 current divisions. Today, his two sons,

Christian and Houstoun, are continuing the legacy as fourth generation leaders. “There were three generations and 100 years of leadership before me,” said Christian Demere, president and CEO. “Over the years, there has been a lot of effort and sacrifice by many people to get the company where it is today. It’s a collective effort across the entire team of employees at Colonial, and I take great comfort and pride in knowing how many incredible people we have that support the company.” Colonial Group is one of America’s largest privately held companies. Colonial operates in numerous states, employs more than 2,000 people, spans diverse business sectors and continues to grow in the markets it serves.

IN THE COMMUNITY Rutter’s Children’s Charities raised more than $450,000 at its 19th annual charity golf outing, held May 3-4. This year’s event included the participation of more than 140 vendors, suppliers and partners. Funds raised from the charity outing will help support Rutter’s Children’s Charities’ various giving programs and initiatives throughout 2021. “After the year of the unknown, we’re very thankful to our suppliers and partners for their incredible support of Rutter’s and Rutter’s Children’s Charities in 2021,” said Chris Hartman, president of Rutter’s Children’s Charities. “All of their charitable contributions will benefit local children and charitable organizations throughout Rutter’s communities.” GetGo Café + Market chose Pittsburgh-area artist Ashanté Josey as the winner of its Spiked Slushies Cup Design Artwork Contest. Her winning artwork is featured on Spiked Slushies cups this summer at 46 GetGo locations across Pennsylvania and Ohio selling the quick-frozen malt beverages made with premium alcohol brands. GetGo also presented the Greater Pittsburgh Arts Council with a $5,000 donation to support programming. “The GetGo team appreciates the beauty art brings to our communities we live and work in, and we’re proud to

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be able to bring some of that to our guests this summer through Ashante’s art,” said Jon Cox, GetGo vice president and chief merchant. Alto-Shaam donated cooking and holding equipment to Thorntons’ non-profit community store in partnership with the Louisville Urban League. This first-ofa-kind store is operating as a sustainable not-for-profit venture with all profits from sales being reinvested by the Louisville Urban League to promote community equity and empowerment. “We are proud to support Thorntons’ in bringing fresh food and convenience to residents of West End Louisville as a partner in promoting community equity and empowerment,” said Leslie Hoffman-Banados, Alto-Shaam vice president of national accounts. Alta Convenience raised $40,000 for Wings for Life through its in-store donation campaign. In March and April, customers purchased paper “red wings” that were posted throughout stores. Wings for Life supports spinal cord research for people suffering from traumatic spinal injury.

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INSIDE WASHINGTON

Shut Down

Colonial Pipeline hack showed industry vulnerability and why ties to Capitol Hill are crucial.

O FACTS & FIGURES

100 million gallons of refined products are transported through the Colonial Pipeline every day

45%

of all fuel consumed on the East Coast is transported by the Colonial Pipeline

5,000 miles of Colonial Pipeline

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n Friday, May 7, the Colonial Pipeline learned some of its systems had been compromised by ransomware. While similar cybersecurity incidents have hit many vital organizations, such as cities and hospitals, this hack would touch more people than any other ransomware in the past. The hack did not reach all of the pipeline’s systems, but the company made the call to stop operations, which not only meant that products stopped moving through the pipe but also that terminals could not be accessed. With about 45% of the fuel used on the East Coast flowing through the Colonial, the effects of the shutdown spread rapidly—especially in the Southeast to the Mid-Atlantic area. Until the pipeline started operating again, there was going to be dislocation. However, decisions by regulators would help ease that dislocation (or make it worse).

The attack on the Colonial Pipeline was a prototypical example of why NACS spends years building relationships throughout the federal government and educating policymakers about the industry. There are some policy issues that NACS works on methodically, knowing the goals and potential outcomes. And then there are the issues that no one can predict like the Colonial Pipeline hack. NACS was in contact with federal officials at the White House, the Department of Transportation and the Environmental Protection Agency during the weekend following the hack’s discovery to emphasize the magnitude of the pipeline shutting down for multiple days and to start conversations about regulatory waivers that would be needed to minimize the impact of the coming shortages. By Sunday, May 9, it was clear that the problem did not have a quick fix, and CONVENIENCE.ORG

gettyimages.com/Bloomberg

BY DOUG KANTOR


government action was needed. But that didn’t mean government officials understood the severity of the problem yet. The Biden Administration, being new on the job, was eager to do the right thing and to understand the problem but did not have a lot of experience with motor fuels distribution. That day, however, the Federal Motor Carrier Safety Administration issued a waiver on the hours-of-service limits that truck drivers could work in affected states. This allowed truck drivers additional flexibility to move more fuel longer distances. It also helped with the problem of truck drivers waiting hours at the rack before they could pick up a load to transport it in the first place. On Monday and Tuesday of that week, NACS organized calls between some of the most active members of the industry in the affected areas and administration officials to talk about what needed to be done. NACS also collected information from members and provided it multiple times per day to White House staff and at the agencies. Regulators listened … and started to take action. Then on Tuesday, the EPA issued waivers on requirements for reformulated gasoline and Reid vapor pressure in affected areas. Those waivers were key to providing some fungibility of product so that different types of gasoline could be moved to different places without concern about the regulatory walls typically in place. The fact that the incident occurred during the process of the annual changeover from winter to summer gasoline meant that available fuel was already low, and the entire episode was more challenging for NACS members. NACS also requested that the administration waive weight limit restrictions to allow each truck to carry larger loads to its destination. There were several legal complexities that made it difficult for a federal waiver to be granted, but after discussing potential solutions, the administration determined that CONVENIENCE.ORG

the already-existing federal emergency declaration relating to COVID-19 could be used to justify support of any state requests for weight limit waivers. The states then began getting those requests approved immediately upon declaring their own emergencies. On Tuesday, following requests from NACS and others, the administration began evaluating the Jones Act and shipping availability. The Jones Act requires ships that transport goods between two U.S. ports be U.S.-flagged ships built in the U.S. and with American crews. That limits the ability of fuel shipments to be diverted to areas of need in an emergency such as the pipeline shutdown. By Wednesday, the administration was approving individual waivers of the Jones Act. Such waivers are rarely granted, and the fact that it was done in this situation is a testament to the administration’s concern, as well as the advocacy undertaken to convince them that decisive action was needed. In the end, the administration took all of the actions NACS advocated—even when it had to take a circuitous route to get them approved. And NACS continued its work with the administration to ensure that the fuel waivers stayed in place long enough to provide some flexibility for other potential squeezes on supply, such as the increased demand for fuel that is typical during the Memorial Day weekend. While the pipeline hack caused serious problems, the situation was improved by government action. Providing the information and advocacy necessary for those actions to take place is central to the NACS mission. Numerous NACS member companies were essential in these efforts, as they funneled information to NACS and took many calls with public officials on short notice to explain the state of play. The crisis also proved to be an opportunity for NACS to build on its relationship with the new administration, which will help the industry on future policy issues— expected or unexpected.

The crisis proved to be an opportunity for NACS to build on its relationship with the new administration.

Doug Kantor is NACS general counsel. He can be reached at dkantor@convenience.org.

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INSIDE WASHINGTON

Climate Corner WHAT ESG POLICIES COULD MEAN FOR THE INDUSTRY

As a part of the climate debate, ESG has been receiving a lot of attention by the media and lawmakers in Washington. Financial institutions and institutional asset owners, such as mutual funds, pension plans, commercial banks and insurance companies, are integrating or considering integrating some sort of “sustainable investing,” often referred to as ESG, in their investment portfolios. ESG refers to three central factors in measuring the sustainability and societal impact of an investment in a company or business: environmental, social and governance. Investors are increasingly considering ESG issues to help manage investment risks and apply these nonfinancial factors as part of their analysis process to identify material risks and growth opportunities. ESG provides a specific set of criteria that companies can measure against and report. ESG performance ratings and reports show investors a company’s efforts to mitigate risks and generate sustainable long-term financial returns. ESG criteria are standards for a company’s operations that socially conscious investors use to screen potential investments. Environmental criteria look at how a company performs as a steward of nature and what actions a

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company is taking to reduce its carbon footprint. Pressure from shareholders, investors, lenders, insurers and internal stakeholders is leading many businesses in the fuel and transportation energy sector to incorporate ESG planning into their corporate operations, whether it be a large publicly held corporation or a small privately held business. Though ESG reporting is voluntary in the United States, over two dozen countries have some sort of regulatory mandates on ESG disclosure. In addition, the Biden Administration and Congress are looking at ESG-related regulations and legislation. In Congress, several bills have been introduced regarding ESG and sustainable investing. From banning retirement investment plans of federal employees from investing in fossil fuels, to establishing disclosure requirements regarding a business’s impact on climate-related risk and mitigation plans, to requiring issuers of securities to annually disclose to shareholders certain ESG metrics and their long-term strategies, to establishing a Sustainable Finance Advisory Committee within the Securities Exchange Commission (SEC), there is strong interest in codifying ESG requirements among many policymakers. The Biden Administration is also actively pursuing ESG policies. President Biden recently signed Executive Order “Climate-Related Financial Risk,” which advances several ESG-related policy initiatives, including amending federal acquisition regulations to require major federal suppliers to publicly disclose greenhouse gas emissions and give preference to contracts with less emission. The order also includes a directive to several agencies to incorporate climate-related standards and ESG metrics for federal lending programs. With over 600 frameworks on ESG metrics, the SEC has stated its intent to standardize ESG disclosure reports. In recent public comments, SEC officials have stated that the SEC’s role is to help create an effective ESG disclosure system and stressed the importance of creating a single global ESG reporting framework. In other statements, officials have stated that publicly traded companies should be expected to provide comprehensive sustainability/ ESG disclosures. CONVENIENCE.ORG

istock.com/Mari_C

BY PAIGE ANDERSON


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INSIDE WASHINGTON

With the convenience and fuel retailing industry selling over 80% of the motor fuels in the United States, ESG requirements will have an impact on retailers. Whether it be publicly traded convenience retailers having to disclose ESG-related

Paige Anderson is the NACS director of government relations. She can be reached at panderson@convenience.org.

information or privately held retailers seeking investors, insurance coverage or loans, depending on what information is required and what information is used to make a financial decision, ESG policy will have an impact on the industry.

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, 2021, are: J. Scott Apter Apter Industries Inc.

Doug M. Beech Casey’s General Stores Inc.

Julie Jackowski Casey’s General Stores Inc.

Ted Asprooth NACS

Blake Benefiel Altria Group Distribution Company

Steve Kimmes Kimmes Enterprises LLC

Tony Battaglia JUUL Labs Chad Beck Core-Mark International Inc.

Brent Cotton Hershey Company Kevin Farley GSP

Peter D. Krueger Nevada Petroleum Marketers and Convenience Store Association

Henry Latifzadeh Callaway Oil Inc. dba Ultra-Fuel

Jigar Patel SAASOA

Roy Strasburger StrasGlobal

Kevin Rice Hathway

Mike Wilson Cubby’s Inc.

Lonnie McQuirter 36 Lyn Refuel Station

Joe Roenna Eby-Brown Company LLC

Donald P. Zietlow Kwik Trip Inc.

Jordan Nicgorski JUUL Labs

Eva Strasburger StrasGlobal

TJ Lynch Hospeco Brands Group

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C-STORES

HVAC

800•922•0972

addsys.com 6/14/2021 3:43:19 AM CONVENIENCE.ORG


ONE VOICE This month, NACS talks to Kevin Farley, chief operating officer, GSP.

Kevin Farley

What does NACS political engagement mean to you, and what benefits have you experienced from being politically engaged? Being engaged with NACS has been a great part of being in this industry and for me, personally. Being engaged politically has also been a great experience. As a supplier, we often talk about our specific services, but being with suppliers and retailers, we often talk about the political issues that matter to the industry. These conversations really open your exposure to the challenges that we face as an industry.

What federal legislative or regulatory issues keep you up at night? Right now, I think one of the largest issues in front of us as an industry is EV charging infrastructure and how to develop an open and competitive marketplace for EV charging. The regulatory environment is inconsistent today, and over time, this lack of clarity will play a larger role in how consumers adopt new fueling options like EVs. The convenience and fuel retailing industry has been the steward of the fueling business, and I think it is imperative for Congress to put us at the table as a leading voice moving forward in offering all fuel options to future drivers. What c-store product could you not live without? I am sucker for new products. I love trying basically everything at the NACS Show. (Thankfully, we are going have it this fall in Chicago!) Outside of NACS, I tend to find myself going into stores looking for new products and then buying way too many.

Half Horz.indd 1 CONVENIENCE.ORG

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IDEAS 2 GO

Zoom-ing Into the Future

This gas station, c-store and car wash offers healthy choices inside and out. BY SARAH HAMAKER

We’re the first in the St. Louis area to have almost all of our electricity from solar panels.

Solar panels on Zoom’s forecourt canopy are the main source of the gas station’s energy, a first in the St. Louis area. In addition to fuel pumps on the forecourt, there are charging stations for electric vehicles.

Z

oom takes the health of its customers and environment seriously. “Healthy for the environment and healthy for our customers—this is a store that cares about being green,” said Biede-Tsion Fesseha, manager at Zoom in St. Louis. The genesis of Zoom had its roots in a vision by its founders “to be a healthy

SEE MORE! Ideas 2 Go showcases how retailers today are operating the convenience store of tomorrow. To see videos of the c-stores we profiled in 2020 and earlier, go to www.convenience.org/Ideas2Go.

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solution in the neighborhood,” Fesseha said. “And we’re definitely living up to that standard with our fresh salads and sandwiches and other healthy fare, both inside and out.” GREEN ON THE OUTSIDE The greening of Zoom starts with the exterior of its building. “We’re a solar-powered gas station, convenience store and car wash,” he said. Solar panels on the forecourt canopy are the main source of the gas station’s energy. “We’re the first in the St. Louis area to have almost all of our electricity from solar panels,” Fesseha said. The glasson-glass solar panels, manufactured by Prism Solar Technologies, have the capability of generating 35% more energy per watt than traditional modules, as well as CONVENIENCE.ORG


ABOUT

Zoom lowers its environmental impact by buying from local suppliers whenever possible. Healthy meals to-go, including sandwiches, salads and wraps, are made fresh onsite.

offering dependable performance in lowlight conditions. The store also has charging stations for electric vehicles alongside its traditional gasoline pumps. “It’s a small market, but we have seen the number of people using it grow since installing those EV chargers,” Fesseha said. Another way Zoom lowers its environmental impact is through its commitment to buy local. “What better impact on the environment than having low miles for delivery?” Fesseha said. “We try our best to buy local for in-season produce and other goods. It’s really not that difficult to make those partnerships.” Zoom connects with local businesses through Good Natured Family Farms, an alliance of 100 family farms within a 200-mile radius of Kansas City, Missouri, not far from St. Louis. Local products on Zoom shelves include jams, jellies, fresh produce, honey and pickled items. While Fesseha conceded that the local price isn’t always the least expensive, Zoom’s customers appreciate the freshness of the products and what the store is trying to do. “We’ve gotten good feedback from customers about our selection and the way we work with local vendors and farmers as much as possible,” he said. GREEN ON THE INSIDE Within its 7,000 square feet, Zoom offers a wide variety of healthy snacks, as well as the more usual convenience store fare. CONVENIENCE.ORG

Name of company Zoom

“We have high-end snacks, like baked chips and pretzels,” he said. “Our size allows us to have a diverse amount of products, so we’ll have $1 bags of chips, as well as $6 bags of chips.” The store stocks bottles of kombucha and has a large selection of liquor. “We make sure our liquor prices are comparable to warehouse prices, and we do a very good business because of that strategy,” Fesseha said. For example, a typical bottle of wine might sell for $10 at a similar retailer, but he lowers the price to $6 to compete with liquor chains. “We’re always having

Date founded 2018 # of stores 1 Website www.zoomstl.com

BRIGHT IDEAS Like many convenience stores, Zoom in St. Louis partnered with a delivery service to meet customer demand. But instead of delivering prepared food, Zoom teamed up with Drizly to bring liquor directly to customers. “We’re a border store near the Illinois-Missouri state line, and with prices higher in Illinois, we wanted to provide an option for everyone,” said Biede-Tsion Fesseha, manager at Zoom. The partnership started in January. “It took a while to set it up, but we saw immediate results,” he said. One of his goals for 2021 is to expand that delivery to include foodservice and store products, as well.

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CELEBRATE 24/7 HEROES

The NACS Foundation is uniting the convenience industry to honor heroes supporting our communities 24/7/365. This July 24 (24/7 Day), the NACS Foundation is uniting convenience stores in recognizing first responders, medical personnel and American Red Cross volunteers who work around the clock, 24/7, serving our communities to ensure people don’t face emergencies alone. The annual event helps raise awareness and donations for the urgent humanitarian needs of the Red Cross and spotlights our industry’s critical role in supporting local heroes and the communities we serve. Join our mission to amplify the good work done every day in local communities across America by visiting 247day.org.

THANK YOU TO OUR 24/7 DAY PARTNERS AND SPONSORS: OFFICIAL MEDIA PARTNER

COMMUNITY LEADER SPONSOR

#ConvenienceCares #247Day The American Red Cross name, emblem and copyrighted materials are being used with its permission, which in no way constitutes an endorsement, express or implied, of any product, service, company, opinion or political position. The American Red Cross logo is a registered trademark owned by The American National Red Cross. Should you require a receipt, please donate by calling 1-800-RED CROSS (1-800-733-2767), or give online at redcross.org


a sale, especially in our wine or beer section,” he said. “When I offer sales or special deals, we move more product, so I try to do that as much as possible across as many categories as I can.” The key is not waiting for manufacturers to offer discounts for an in-store deal. “We often do our own two-bottle special because we’ve seen the increases when we give our customers those incentives to buy now,” he said. While he does participate in manufacturer deals, he has come up with his own system of rotating sales to keep customers coming back for more. In addition, Zoom focuses on healthy meals to-go, including sandwiches, salads and wraps made fresh onsite from locally sourced food. “For example, our wings are baked, not fried,” Fesseha said. The grab-and-go case has salads, sandwiches

Zoom is always having a sale, says manager Biede-Tsion Fesseha, and the key is not to wait until a manufacturer offers a discount for an in-store deal.

and fruit cups of pineapple, melon or apple that sell for $1. “We want to make eating healthy affordable and delicious,” he said. Above all, Fesseha said Zoom is about making people feel welcome. “We want them to enjoy the fact that we have a clean store and friendly employees,” he said. “It’s a pretty simple thing, but that’s what we aim for each day.”

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

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4/15/2021 7:30:55 AM


THE

A look at the brands driving inside sales, plus advice from category managers for accelerating growth. BY KIM STEWART code e QR tal NAC S h t n i S c a h e d ig str y y! Indu der t to o r te of t h e a t a to d a D 0 St a 2 0 2 r t of Re p o

A

n ever-present challenge for category managers is picking the right mix of brands and products to meet the expectations of customers and keep them coming back—not only for their go-to snacks, beverages and tobacco but also helping them to discover new products. Last year, inside sales for convenience stores were both extraordinarily challenging and rewarding, so for category managers, relying solely on 2020’s performance to

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manage assortment this year isn’t going to cut it. Reviewing point-of-sale data and keeping tabs on what’s trending in key categories can lead to a smart mix of products—in addition to focusing on prices, promotions and placement. The NACS State of the Industry (SOI) Report ranks center-store convenience top categories by gross margin contribution. In this year’s report of 2020 data, top margin contributors included: packaged beverages (19.02%), cigarettes (13.92%), other tobacco products (5.80%), salty snacks (4.84%), candy (4.34%), beer (3.49%), alternative snacks (2.17%), general merchandise (2.04%), packaged sweet snacks (1.64%) and dairy and deli (1.23%). CONVENIENCE.ORG


SELLERS Leveraging insights from NielsenIQ, we take a look at the brands that propelled growth in 2020, as well as the performance marks they made in early 2021. Below, we dig into the top brands in seven of the top 10 NACS categories. PACKAGED BEVERAGES Retailers rely on their cold vault to drive trips and profits; innovation is critical to fueling the role this category plays in overall store performance (see “Profitable Pours” on page 92). In 2020, packaged beverages delivered a 3.9% gain in average sales per store, compared with 2019, according to NACS SOI data. “We’ve seen continued growth over the years but massive growth in 2020,” said Jim Jacko, senior category manager, Coen Markets, at the 2021 NACS State of the Industry Summit. For the first time last year, energy drinks contributed more to category sales than carbonated soft drinks, accounting for 28.5% of packaged CONVENIENCE.ORG

beverage sales. Three of the 10 best-selling brands in the convenience channel last year were energy drinks: Red Bull, Monster and Bang. The energy drink trio continued to count among the top sellers for the first quarter ended April 3, 2021, notching sales of $920.8 million, $810.9 million and $190.1 million, respectively. Coca-Cola is a perennial consumer favorite and continues to grow. The brand slipped from its No. 2 perch in 2020 to No. 3 in the first quarter of 2021 behind Monster Energy. Sprite, Coca-Cola and Cherry Vanilla Coca-Cola were trending flavors, according to NielsenIQ. Bang is a relatively new brand to the category and continues to post distribution gains. Breaking into the NielsenIQ 2020 top 10 brands list with ACV distribution at 90%, the energy drink is gaining ground fast. Last year, it increased its presence in the channel by 15.4% and in the first quarter increased ACV to 95.1%. Bang focuses on unique

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and innovative flavors. The brand’s Candy Apple Crisp flavor was a particular hot-seller last year, according to NielsenIQ data on the top 20 UPCs by category based on dollar sales. “Bang, in the energy drink segment, is a brand I still see on the bottom shelf in some c-stores, and it has performed very well on reports from data-tracking firms. That should be in a visible spot in a cooler set,” Bill Nolan, a partner with Business Accelerator Team, an Arizona-based consulting firm, shared with NACS Magazine in April. Starbucks Frappuccino leveraged surging consumer interest in ready-to-drink coffee (see “Caffeine Fix” on page 54). It was the biggest gainer in terms of dollar sales and units, up 14.2% and 11.6%, respectively, in 2020, according to NielsenIQ. RTD coffee is innovating with emerging new brands. “We have an underlying generational shift in the coffee category,” Jacko said, pointing to evidence that younger consumers prefer the innovation RTD coffee beverages give them. The Starbucks brand saw a 25.9% year-over-year sales increase in the first quarter, with an ACV of 98%. Nolan advised category managers to keep pace with new brands on the market. “Know what the top sellers are and evolve with the category segment. Evaluate inventory levels and assortment to have what’s needed but not be overstocked, which drains profits and drives up costs.” Said Jacko, “Look at what products are making money, and let those metrics dictate what goes into your sets. Look at the past few years, and if you see brands growing, take note.”

TOP 10 PACKAGED BEVERAGE BRANDS (Based on 2020 total dollar sales) Brand

Sales

Units

%ACV

Red Bull (Red Bull North America Inc.)

99.6%

Coca-Cola (The Coca-Cola Co.)

99.5%

Monster (Monster Energy Co.)

98.9%

Mountain Dew (PepsiCo Inc.)

97.8%

Gatorade (PepsiCo Inc.)

98.2%

Dr Pepper (Keurig Dr Pepper)

98.0%

Bang (Vital Pharmaceuticals Inc.)

89.8%

Pepsi (PepsiCo Inc.)

98.7%

Gatorade Series 02 Perform (PepsiCo Inc.)

96.2%

Starbucks Frappuccino (PepsiCo Inc.)

97.5%

Source: NielsenIQ for Total Convenience, 52 Weeks Ended December 26, 2020

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CIGARETTES AND OTP Cigarette sales exploded in 2020 as smokers dealt with the stress of the pandemic and for many, the freedom of choosing when and where they could light up as they worked from home. Sales of cigarettes rose 3.6% year over year. Two premium brands—Newport and Natural American Spirit—increased both average dollar sales per store and units in 2020 and carried the momentum into the first quarter of 2021. All other brands lost units but gained sales in 2020, except for Pall Mall and L&M, both premium brands. Newports and Kool, widely sold across the convenience landscape, belong to a subcategory—menthols—that is increasingly under regulatory scrutiny. The U.S. Food and Drug Administration (FDA) in April disclosed that it is working on proposed tobacco standards to ban menthol as a flavor in cigarettes and ban all flavors—including menthol—in cigars. “Retailers should be using the momentum in sales that we have now to continue growth for 2021,” said Laura White, category manager for cigarettes at Atlanta, Georgia-based RaceTrac, during the NACS SOI Summit. Consider your point-of-sale (POS) data to make informed decisions and keep up with current trends and sales patterns, White advised. Explore other partnerships with small or new distributors to better track innovations and trends within the category, she said. The other tobacco products (OTP) category increased sales 4.5% in 2020, led by growth in smokeless tobacco, cigars and other nicotine products. Innovative formats such as nicotine pouches and alternative smokeless products have helped generate excitement from customers looking for alternatives to other forms of tobacco. ZYN NT from Swedish Match, for example, soared 113.6% in dollar sales and 110.1% in units last year and extended growth into the first quarter, with sales up 52.8% and units up 49.9%. ACV increased from 62.4% in 2020 to 71.5% by the end of the first quarter as more c-stores carried the brand, and there’s still plenty of room for growth. While JUUL lost sales (-20.4%) and units (-17%) in 2020, the brand remains the No. 2 sales leader in OTP, behind Altria’s Copenhagen moist smokeless tobacco. In the first quarter of 2021, JUUL sales rose 2.8%, and units grew 4.6%. An up-and-comer in the e-cigarette subcategory is RAI’s VUSE Alto, which skyrocketed 175.4% in year-over-year sales and 226.7% in units in 2020. The closed e-cigarette cartridges are sold in four flavors, with each available in three nicotine levels. Cigars also gained share in the OTP category as smokers indulged during the pandemic, increasing from 17.9% in 2019 to 19.7% in CONVENIENCE.ORG


TOP 10 CIGARETTE BRANDS (Based on 2020 total dollar sales) Brand

2020. ITG Brands’ Backwoods Wild ‘N Mild, for instance, saw sales rise nearly 20% in 2020, and units grow 8.6% year over year. BEER Beer enjoyed a stellar performance last year, with average store sales up 18% over 2019, NACS SOI data show. Fueled by a shift from on-premise to off-premise consumption trends as bars and restaurants were closed, customers snapped up multipacks of their go-to brands and tried hard seltzers and other flavored malt beverages (FMB). Average store sales of FMBs climbed 71% over 2019, propelling FMBs into the No. 2 position among beer subcategories behind only premium beer. The surge in hard seltzers—and in the wine category, canned cocktails—is partly driven by consumers’ growing tastes for low-carbohydrate, low-sugar, low-calorie drinks (see “Seltzer Surge” on page 68). Younger demographics of legal drinking age increasingly favor spiked seltzers. The top nine brands had ACVs of 80% or more in the U.S. convenience channel, while Busch Light had an ACV of 62.8%, marking an opportunity to stock the lighter beers consumers may be buying elsewhere. “Make sure you’re staying ahead of the trends in beer and have the right assortment of flavor profiles for your local customers’ tastes,” Tom McReavy, senior vice president of sales at California’s Stone Brewing Co., told NACS Magazine in June.

Sales

Units

%ACV

Marlboro (Altria)

99.4%

Newport (RAI)

98.5%

Pall Mall (RAI)

95.5%

Camel Crush (RAI)

96.5%

Natural American Spirit (RAI)

95.1%

L&M (Altria)

90.1%

Camel (RAI)

95.9%

Winston (ITG Brands)

89.9%

Maverick (ITG Brands)

64.3%

Kool (ITG Brands)

82.5%

TOP 10 OTP BRANDS

(Based on 2020 total dollar sales) Brand

Sales

Units

%ACV

Copenhagen (Altria)

93.3%

JUUL (Juul Labs)

79.5%

Grizzly (RAI)

94.3%

Middleton’s Black & Mild (Altria)

95.3%

Skoal (Altria)

89.8%

VUSE Alto (RAI)

72.8%

Swisher Sweets (Swisher International)

93.2%

ZYN NT (Swedish Match)

62.4%

Backwoods Wild 'N Mild (ITG Brands)

73.9%

Garcia Y Vega Game (Swedish Match)

69.4%

Source: NielsenIQ for Total Convenience, 52 Weeks Ended December 26, 2020

TIPS FOR SUCCESS: MAVERIK Lindy Smith, senior director, category management, Maverik, offers this advice: Now more than ever remember the four Ps: Product, Price, Placement and Promotion. It’s time to go back to the basics of merchandising. Category managers at Maverik—Adventure’s First Stop execute a fifth P: People. CONVENIENCE.ORG

• Product is something produced that is marketed and sold. Bring in items that people want. If a customer won’t purchase it then it’s taking up valuable space. • Price so we can all do our part to keep the economy stable. Push back on escalating manufacturer costs so retails stay affordable to the people we serve. • Placement is key to every product having a home that makes it easy for people to shop. Give greater visibility to items with higher sales and gross margin.

• Promotion is intended to encourage one more item in the basket, and loyalty offers retain the people who shop with us. COVID-19 has changed shopping behaviors and demands that are higher than supply. So, fewer, bigger and better promotions allow you to reallocate time toward stock conditions. • People are our most valuable commodity, including the customers we serve, our store and Base Camp corporate headquarters employees. Keep them safe, and treat them better than they expect to be treated.

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White Claw hard seltzer is an FMB subcategory leader. Average dollar sales surged 173.5% in 2020, with units up 83.1%. Although 81.3% of c-stores carried White Claw last year, the stores that didn’t carry it missed out on potential sales. White Claw remained the biggest gaining brand for the first quarter of 2021 and increased its ACV to 86.7%. Competition in the FMB subcategory is heating up. Anheuser-Busch, for instance, is looking to make inroads into FMB sales with fruit-flavored Bud Light Seltzer, launched in 2020, and appeal to younger adults’ penchant for exotic flavors with

TOP 10 BEER BRANDS

(Based on 2020 total dollar sales) Brand

Sales

Units

%ACV

Bud Light (Anheuser-Busch)

98.5%

Modelo Especial (Constellation Brands)

85.1%

Michelob Ultra (Anheuser-Busch)

93.0%

Coors Light (Molson Coors Beverage Co.)

97.1%

Budweiser (Anheuser-Busch)

98.4%

Miller Lite (Molson Coors Beverage Co.)

91.0%

Corona Extra (Constellation Brands)

93.5%

White Claw Hard Seltzer (Mark Anthony Brands International)

83.1%

Natural Light (Anheuser-Busch)

80.3%

Busch Light (Anheuser-Busch)

62.8%

TOP 10 CANDY BRANDS

(Based on 2020 total dollar sales) Brand

Sales

Units

%ACV

Reese’s Peanut Butter Cups (Hershey Co.)

97.7

Snickers (Mars Wrigley)

98.2

M&M Peanut (Mars Wrigley)

97.4

KitKat (Hershey Co.)

97.1

Hershey’s Milk Chocolate

96.6

Skittles (Mars Wrigley)

96.6

Wrigley’s Extra (Mars Wrigley)

94.2

SweeTARTS (Ferrara)

83.2

Twix Caramel (Mars Wrigley)

93.8

5 Gum (Mars Wrigley)

92.0

Source: NielsenIQ for Total Convenience, 52 Weeks Ended December 26, 2020

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citrusy Bud Light Peels and Bud Light Chelada, featuring “a fiery kick of clamato and spices.” In June, Anheuser-Busch released a limitededition Bud Light Seltzer Retro Summer Pack and Icicles, with three classic flavors: Cherry Limeade, Blue Raspberry and Summer Ice. Icicles are sold in two-ounce slim cans. Bud Light Seltzer in 12-packs was among NielsenIQ’s top 20 UPCs by category for 2020. Boston Beer Co.’s Truly Hard Seltzer was another strong seller, particularly the Berry Mix Pack. Category leaders Bud Light, Coors Light and Budweiser gave up units last year, compared with 2019, slipping by 2.9%, 1.9% and 2.2%, respectively. Premium beer Michelob Ultra and import Modelo Especial saw average dollar sales and units grow by double digits. In the first quarter, Modelo, Michelob and Corona Extra remained strong, while Heineken nudged its way into the top 10 with sales up 11.8% and units up 12.1%. It’s worth noting that Twisted Tea, an FMB hard iced tea from Boston Beer Co., is a fast-gainer, ranking No. 11, just behind Heineken. CANDY Americans indulged in candy during the pandemic, especially chocolate confections and in shareable package sizes. Among non-chocolate bagged candies, gummies and sour candies picked up market share. SweeTARTS brand sales in the convenience channel in 2020 rose 19.4%, more than any other brand in the top 10, while units increased 10.6%. And with an ACV of 83.2%, the brand isn’t as prevalent in convenience stores as chocolates, gum and mints. Chicago-based Ferrara Candy Co. is innovating new flavors, colors and textures in the SweeTARTS line, recently introducing fruity SweeTARTS Twisted Rainbow Ropes and SweeTARTS Mixed Berry Bites with a berry-punch flavored filling. Looking at NielsenIQ’s top 20 UPC data for 2020, two new products Mars introduced last year performed well: Starburst Swirlers, a soft chewy candy; and Skittles Dips, yogurt-covered fruity candy. Marking a shift, non-chocolate candy brands were the big movers in the first quarter of 2021. Starburst, Life Savers (Mars), Air Heads (Perfetti Van Melle), Haribo (Haribo GmbH & Co.), Trolli (Ferrara) and Sour Patch (Mondelēz) all saw double-digit sales and unit growth. Two things in the candy aisle that consumers didn’t grab last year were gum and mints. Industry watchers say that’s largely because of the mask-wearing, social distancing and work from home practices spurred by the coronavirus pandemic. Last year marked a 23.6% decline in average store sales for candy rolls, mints and drops and a 24.2% drop in average store sales of CONVENIENCE.ORG


gum, NACS SOI data indicate. Wrigley’s Extra and Wrigley’s 5, two leading brands in the candy category, experienced double-digit drops in sales and units last year. As states lift mask mandates and social distancing for vaccinated people, sales of gum and mints are expected to grow. Mars Wrigley’s EXTRA Gum in May launched a new marketing campaign and film, “For When It’s Time,” celebrating in a whimsical way re-emerging into public life. “As a company and as a brand, we are committed to creating better moments and more smiles for consumers,” said Ivonne Andreu, senior director of gum and mints, Mars Wrigley U.S. “With increased vaccinations and consistent dedication to staying vigilant, we hope this film reminds everyone there are brighter days ahead.” Moving out of the pandemic, consumers are still looking to treat themselves, but there’s continued interest in lowering sugar intake, and manufacturers are working on better-for-you confectionary options. Hershey, for example, aims to expand its reduced sugar products and this spring agreed to acquire Lily’s Sweets, a candy company known for Stevia-sweetened chocolate bars, peanut butter cups, baking chips, chocolate covered nuts and caramels. SALTY SNACKS Interest in bolder flavor profiles and shareable package sizes carries over into the salty snacks category. In 2020, salty snacks’ in-store sales rose 4.27% over 2019. “New priorities for salty snacks have emerged in a post-COVID world,” Kelley Gutierrez, category manager for candy and snacks at MAPCO Express Inc., said during the April NACS SOI Summit. “We’ve seen the hot and spicy flavor segment blow up,” she said. Indeed, 14 of the top 20 UPCs in the salty snacks category last year

leaned on the bold/spicy flavor profile to capture sales, according to NielsenIQ. PepsiCo’s Frito-Lay unit dominates the salty snacks category, accounting for all but two of the top 10 leading brands in NielsenIQ’s 2020 ranking. According to Frito-Lay’s latest Snacking Index, consumers say they are willing to try new products and flavors, but they continue to reach for the classics, so stocking their tried-and-true favorites is a must. In Frito-Lay’s Snacking Index, 32% of consumers surveyed in 2021 said they preferred new, spicy and bold flavors, compared with 25% in 2020. Millennials and Gen Z showed a stronger preference for new tastes, with 45% saying they prefer new, spicy and bold flavors for summertime snacking.

TOP 10 SALTY SNACKS BRANDS (Based on 2020 total dollar sales) Brand

Sales

Units

%ACV

Doritos (Frito-Lay)

96.5

Cheetos (Frito-Lay)

96.0

Lay’s (Frito-Lay)

96.1

Ruffles (Frito-Lay)

93.8

Funyuns (Frito-Lay)

91.7

Chester’s (Frito-Lay)

88.6

Pringles (Kellogg Co.)

94.7

Fritos (Frito-Lay)

93.0

Barcel Takis (Grupo Bimbo)

56.4

Munchies (Frito-Lay)

90.5

Source: NielsenIQ for Total Convenience, 52 Weeks Ended December 26, 2020

TIPS FOR SUCCESS: KUM & GO Chris Long, director of category management – age verified, Kum & Go, offers this advice:

NielsenIQ, IRI as an example) to make the best decisions, but do not wholly rely on this. Category management is part art, part science, and the best category managers balance this well.

Remember the fundamentals. Your category will not be successful, despite all of your innovation and creativity, without a firm foundation of the right product, price, promotions and presentation. It is cliché but true.

Mitigate out-of-stocks with a plan. Specific to OOS, when building any set, make sure you have the right DOS (days of supply) on the shelf to handle the volume of each product. I have always found four days of supply is a good place to start.

Leverage data. Use your internal data + supplier data + syndicated data (NACS,

Be forward looking. Many times, especially when building POGs,

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movement is the only metric used. This is dangerous because it only shows what you have done, not where you are going. It is like driving and only looking in the rearview mirror. In addition to unit movement, at least look at sales dollars and profit dollars, in addition to where you think the next big category leap will be through your research and experience. Listen to your customers. They give you feedback every single day by how they spend their dollars.

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With their spicy and sour flavor profile, Takis are a fast-growing salty snack especially popular with younger demographics. Launched in Mexico in the late 1990s, Takis entered the U.S. market in 2006 via sales through convenience stores. The rolled tortilla chips are made by Barcel USA, a unit of Mexico-based Grupo Bimbo, which deems Takis “one of the most important brands” of its snacks portfolio. Grupo Bimbo ranks among the fastest growing brands, moving up to 6th place in terms of dollar sales and units for the first quarter of 2021. ALTERNATIVE SNACKS C-store shoppers are gravitating toward alternative snacks, with continued interest in low-carb, high-protein eating styles like Keto and betterfor-you options. Traditionally, meat snacks like Slim Jims and Jack’s Links have powered the alternative snacks category, which also includes health/energy/protein bars, granola/fruit snacks and other alternative snacks. Other alternative snacks and health/energy/protein bars accounted for the second- and third-largest contributions to the category at 30.2% and 22.3%, respectively, according to NACS SOI data. Jack Link’s dominates the alternative snacks category in terms of scale and innovation. In 2020, the brand’s sales in the convenience channel grew 11.1%, and units increased 8.9%. In addition, sales of Jack Link’s’ Squatch XXL meat

TOP 10 ALTERNATIVE SNACKS BRANDS (Based on 2020 total dollar sales) Brand

Sales

Units

%ACV

Jack Link’s (Link Snacks Inc.)

93.2

Old Trapper (Old Trapper Smoked Products Inc.)

43.5

Slim Jim Giant Slim (Conagra)

86.8

Slim Jim Monster Size (Conagra)

78.1

Slim Jim (Conagra)

72.5

CLIF (Clif Bar & Co.)

78.0

Jack Link’s Squatch XXL (Link Snacks Inc.)

59.2

Welch’s (Promotion in Motion Inc.)

67.5

KIND (Mars Inc.)

68.1

Kellogg’s Rice Krispies Treats (Kellogg Co.)

87.1

sticks climbed 8.8%, and units increased 7.9%. With flavors ranging from Original to Teriyaki to Sweet and Hot, Jack Link’s accounts for eight of the 20 leading alternative snacks products. A big mover was Jack Link’s Extra Hot Wild Heat beef jerky in a snack bag size. Slim Jim, a brand that has been a meat snack c-store staple for decades, has innovated with bigger sizes, new flavors and new formats like beef jerky and bigger meat sticks. The Monster Slim Jim meat stick, for example, is twice the size of a Giant Slim Jim in flavors like Honey BBQ and Hot AF, while the Savage Slim Jim is three times as big as the Giant Slim Jim. The Monster Slim Jim in the mild flavor saw sales and units explode in 2020, both up more than 11,000% year over year, while the Slim Jim Savage meat stick in Original flavor surged more than 10,000%, according to NielsenIQ. PENROSE pickled sausages from Conagra, which are available in three savory and spicy flavor profiles, pushed into the top 10 leading brands in the first quarter. Only 63% of c-stores carry them. As a brand, Kellogg’s Rice Krispies Treats recorded lower sales and units in the c-store market last year but did gain traction with a new product: Kellogg’s Rice Krispies Treats Dunk’d, included in the health/energy/protein bars category, came to market in 2019 and saw a strong uptake. Fruit snacks from Welch’s also saw a small sales uptick in 2020, though units slipped. In the first quarter, Welch’s sales rose 26.3%, and units climbed 20.4%. Among fruit snacks to watch on NielsenIQ’s list of the top 20 UPCs is Fruit Gushers by General Mills in Super Sour Berry and Mixed Berry flavors. Sales of health/energy/protein bars contracted as the work-from-home economy curtailed consumers’ morning visits to convenience stores for portable snacks and other refreshments, and that trend extended into 2021. Sales and units of CLIF, KIND and Nature Valley all fell in the first quarter. Ahead of the pandemic, the energy bar market enjoyed strong growth, and it is expected to regain momentum this year as consumers are on the go.

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

Source: NielsenIQ for Total Convenience, 52 Weeks Ended December 26, 2020

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PROPANE

HIDDEN

GEMS CLEANING SUPPLIES

DURING THE PANDEMIC, LOW-KEY CATEGORIES GAINED NEW LUSTER.

BY CHRIS BLASINSKY

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PAPER TOWELS

C

onvenience stores have never been known as a prime venue for purchasing toilet paper and cleaning supplies. However, during a year without a retail playbook, these “hidden gems” attracted previously infrequent shoppers and boosted in-store sales for many convenience stores. At the NACS State of the Industry Summit in April, Jake Vogel, director of category management and procurement at Kwik Trip Inc., shared how shoppers turned to convenience stores during the height of the 2020 coronavirus pandemic to meet their immediate needs in categories routinely shopped in other channels. CONVENIENCE.ORG


These hidden gems—products that are not top-selling categories for most stores—played an impressive role in total industry sales reaching a record $255.6 billion in 2020, despite fuel volatility and demand destruction and a near 14% drop in transactions compared to 2019. PANDEMIC NECESSITIES Immediate consumption and speed of service in convenience retail often means products like cleaning supplies, paper products and laundry care are deemphasized in marketing and planograms. This all changed by April 2020 as the industry embraced shoppers making pantryloading trips for these products, which had left aisles of empty shelves in other retail channels. Even as global supply issues caught up and panic buying calmed, consumers continued to

Guests really focused on cleaning their homes and purchased these items in the larger sizes to extend their usage. buy products like toilet paper, paper towels and cleaning supplies because they were available— and convenience stores continued to benefit from this behavior. “People were panic buying so much that if they did find these products, they felt obligated to buy even if they didn’t need them,” he said.

Stores That Sold Perishable Grocery Staples Were Rewarded in 2020 YoY Product Sales Increase & Margin Change (2019-20)

BUTTER

SALES: 30%

MARGIN: -9%

EGGS

SALES: 28%

MARGIN: -16%

BREAD

SALES: 4%

MARGIN: 1%

DELI MEATS

SALES: 15%

MARGIN: 38%

Source: CSX ; www.csxllc.com CONVENIENCE.ORG

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We need to be prepared to transition our stores fundamentally for a new target consumer. NACS State of the Industry data found that paper towels, toilet paper and disposable dishware and cups boosted in-store sales as more people stayed home, cleaned and cooked more and shifted from indoor to outdoor gatherings. These changes in social behavior led to significant growth for key disposable items, said Vogel. Households cleaned and did laundry more often throughout the pandemic, leading to more customers purchasing cleaning supplies in larger pack sizes in 2020 than prior years. Customers relied on c-stores for bleach, all-purpose cleaners and laundry detergent that grocery or mass merchandisers had run out of, which gave the channel an opportunity to fill the gap. “Guests really focused on cleaning their homes and purchased these items in the larger sizes to extend their usage,” Vogel said, noting that some manufacturers did not have product available in the conventional c-store size. “They struggled to keep the pipelines full, so we took anything we could get. With constant pressure on all the

channels for the fill-in trip, c-stores were prepared to meet the needs of customers looking for these essentials,” he said. Convenience stores also experienced tremendous growth in the health and beauty care category, thanks to sales of masks and hand sanitizers. “As expected, items like hand sanitizer and masks in a variety of sizes and quantities showed sales that didn’t exist a year ago,” Vogel said, adding that these also provided customers a sense of safety while shopping in c-stores. Although some pandemic necessities were paper products, the sales growth “didn’t necessarily translate to margin growth,” said Vogel, adding that some of the margin erosion “is likely tied to the availability of products due to demand and supply chain availability, and retailers took what was available just to keep their shelves full.” The million-dollar question is how much inventory of these products is too much as retailers move toward a post-pandemic climate? “The sales will always likely be here, but they will never be what they were at the peak of the pandemic,” predicted Vogel. ASSORTMENT SHIFTS Kwik Trip, which self-distributes from its commissary in La Crosse, Wisconsin, to its Kwik Trip and Kwik Star stores daily, had “a leg up” on its competitors as supermarkets, club stores and

Larger Size/Multiuse Pantry Item Sales Increased in 2020 YoY Product Sales Increase (2019-20)

FLOUR

5 lb: 42%

4 lb: 35%

BOUILLON

32 oz: 47%

7.9 oz: 32%

COOKING OIL

128 oz: 42%

40 oz: 35%

PANCAKE MIX

32 oz: 47%

SOUP/STEW

10.5 oz: 23%

15 oz: 15%

DRIED/SHELF STABLE FRUIT/VEGETABLE

64 oz: 28%

16 oz: 28%

Source: NielsenIQ Total U.S. Convenience, 52 Weeks Ended December 26, 2020

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More Outdoor Gatherings Increased Sales of Seasonal Items YoY Product Sales Increase (2019-20) drugstores experienced out-of-stocks,” shared Vogel. The situation created an opportunity for Kwik Trip to grow commodity sales because the company manages its supply chain end to end by producing and shipping to stores. “We saw a sales increase on eggs, milk, butter, bread and fresh meat that escalated from doubling and tripling just overnight,” he said, adding that these sales trends continued for days as Kwik Trip replenished its stores. “We saw this as an opportunity for guests who historically didn’t shop our stores to create a habit because we were always in stock. We had product at a value price and on a consistent basis,” said Vogel. Although commodities like butter, bread, eggs and deli meats saw historic increases throughout the pandemic, Vogel cautioned that adding more space to these emerging categories “is likely not fiscally responsible due to the margins being so tight, but having them represented in your store is always an opportunity.” Meal prep and meal building were opportunities many retailers seized as more customers discovered what they had been missing by not frequenting their local convenience store: meal solutions. “This is an opportunity for guests to finally discover what we have available in our stores,” said Vogel. Because manufacturers were only producing specific sizes of certain items to counter supply chain disruptions, during the peak of the pandemic there were noticeable sizing disparities related to conventional c-store items. For example, tortilla shells in 30-count packs, 16-ounce boxes of pasta and 80-ounce bags of grains wouldn’t typically find space on c-store shelves. “This is still relevant today as we continue to see disruption in the supply chain keeping these items in stock for our consumers,” said Vogel. Large-size products for multiuse pantry items met the needs for customers looking for baking and meal solutions, especially families that prep three meals a day. Flour, cooking oil, soups/stews, bouillon, pancake mix and dried shelf-stable fruits and veggies experienced year-over-year sales growth in 2020. And don’t forget the ketchup! Condiment sales were also strong, a signal that consumers were willing to shop convenience stores for meal pairings. “All the additional SKUs we sell in our [Kwik Trip] stores showed significant growth this past CONVENIENCE.ORG

Source: NielsenIQ Total U.S. Convenience, 52 Weeks Ended December 26, 2020

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It’s taking what we’ve learned and applying it to future situations, like annualized seasonal weather occasions, that can impact us for short periods of time. year,” Vogel said, adding that these self-stable grocery items gave infrequent customers a reason to shop a c-store in a new way. NEW BEHAVIORS Stay-at-home orders also created new consumer behaviors and in-store sales potential. Casual social outings at bars or restaurants or large family dinners transitioned to backyard gatherings where smaller groups could safely hang out. “While this was happening, it created a shopping occurrence in convenience stores for huge sales growth on seasonal products like propane, firewood, insect repellent and household cleaning supplies,” said Vogel, suggesting that these items have sales potential moving forward because they do not have shelf-life challenges. “The risk is minimal to keep these products in stock and take advantage of impulse, short-notice sales because most of these items are spur-of-the-moment purchases,” he said.

SURVEY SAYS … A March 2020 NACS retailer survey found that convenience retailers saw an increase in sales of grocery staples as customers increasingly turned to their local convenience store for pantry items, with more than half of all retailers (52%) saying their grocery sales increased. Convenience stores traditionally sell immediate consumption items—80% of all products sold at a store are consumed within an hour—but they pivoted to provide items for home use: 52% said they added more cleaning/ toiletry items, 31% emphasized ready-to-heat meals and 28% showcased multipack/bulk items.

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Then there’s the “I need it now” consumer, who was looking to purchase products like toilet cleaner and drainpipe cleaner quickly and at the nearest store. “If inventory of these products is kept in your assortment, a fill-in trip exists,” said Vogel. “We need to be prepared to transition our stores fundamentally for a new target consumer,” Vogel suggested, noting that these new shoppers are coming out of the pandemic with a better understanding of the products sold in their local c-store. “We now have the opportunity to keep these new infrequent guests coming into our stores—that is our advantage over our competitors,” he said. Speed of service is also an advantage convenience stores have over other channels. “Consumers want to get somewhere, shop it quickly and minimize any contact they have with people. This is our chance to outshine all our competitors,” said Vogel, adding that these customers “have never shopped our stores harder than they have now. We have an opportunity to keep them and give them reasons to stay instead of making excuses about how we can’t compete.” KEEP THE SHINE The hidden gems of 2020 amplify the importance of a convenience retailer’s supply chain and recognizing opportunities that capture consumer demand for the next big thing. “It’s taking what we’ve learned and applying it to future situations, like annualized seasonal weather occasions, that can impact us for short periods of time,” Vogel suggested, citing products like sidewalk salt for snow and ice storms and charcoal for backyard barbecues. The second half of 2021 is proving that the stayat-home trend of 2020 is continuing. “We’ve been discovered as a viable shopping experience,” Vogel said, noting that the opportunities for convenience retailers to sell daily essentials will help keep new customers coming back well into the future. hris Blasinsky is the NACS C content communications strategist; she can be reached at cblasinsky@convenience.org.

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LESSONS IN LEADERSHIP

LIVE!

BY KIM STEWART, ERIN PRESSLEY AND PAT PAPE

G

athering in Kansas City where NACS was founded 60 years ago, more than 180 convenience retailer and supplier leaders safely came together in May for the NACS Leadership Forum—live and in-person. The annual invitation-only event convenes retailers and suppliers to explore future-focused issues relevant to the convenience industry. The three-day forum is a powerful catalyst to align leaders, explore new strategies and fuel collaboration. WHAT’S NEXT Kicking off the first day, Derek Gaskins, CMO, Yesway; Kevin Lewis, CMO, Circle K/Alimentation Couche-Tard; and Tracey Hughes, executive vice president, Wallis Companies, shared their perspectives on the past 18 months and what’s coming up next for the c-store industry.

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At the NACS Leadership Forum, industry leaders reflected on the leap into the future and the necessary innovations they implemented.

NACS CEO and President Henry Armour, moderator of the panel, set the stage by sharing that he looks at major disruptions—like the pandemic—as a chance to reset the table, and any time you reset, new opportunities emerge. Lewis of Circle K reiterated that starting with the consumer remains critical. Digital transformation was happening before COVID-19, and the industry was making reasonable strides, but then everything went “so much faster so quickly, and we had to begin to act like start-ups and e-commerce companies … Our ability to tell our story and have differentiated offers is even more important now that online has become a great equalizer.” Hughes shared that Wallis couldn’t take the time to get something just right before it went to market. “If we did normal, we’d be left behind,” she said. But learning from failure is critical, and

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Wallis is seeing uptick in both customer counts and sales. Gaskins of Yesway said that he and colleagues felt an even stronger sense of purpose during the pandemic. Customers would say, “thank goodness your foodservice is still open; this is the first time I’ve had a hot meal in weeks that I have not had to cook myself.” When asked by Armour what eye-opening innovation across all retail was most noticed by panelists, Hughes shared that the pop-up phenomenon—brands going to where customers are—was most intriguing. “How can we bring our c-store brand to where people are?” she asked. Lewis shared details about Ratatouille—a crowdsourced TikTok musical production created

Lori Stillman, NACS vice president of research, shares five keys to the future of convenience in her keynote. Kevin Smartt, CEO of Texas Born (TXB) and 2020-21 NACS chairman, and Henry Armour, NACS president and CEO, took the stage to discuss the NACS TruAge universal digital age-verification system.

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in six months. No one who participated in the production’s creation ever met in person, and the rights to produce the event were granted 24 hours before launch. The program aired for only 72 hours to 350,000 people and reached essentially the same amount of people as a combined two years of soldout Broadway shows. The diverse crowd of participants generated $2 million for the Actors Fund. “What can we learn from this?” Lewis asked. “How do we deliver on the consumer needs not only defined by our current capabilities but on the opportunities this whole new world provides?” he posed. Gaskins touted QR codes. “What’s old is new again,” he said, and while this is the second time around for QR codes, “now they solve a problem.” Armour asked if any of the companies represented changed the way they think around leading their teams and tackling labor issues. “I’m a changed man,” said Gaskins of this past year. “To see our people risk their lives to go to work galvanized us, and it was powerful to witness.”

Convenience retail leaders gathered in Kansas City, where NACS was born 60 years ago, for three days of learnings.

Lewis left attendees with positive feedback on the industry’s future: “Our ability to deliver as an industry against customer core desires is fundamentally different than what big box and dollar can do. We are a store of the community in ways no one else is.” INNOVATION AS COMPETITIVE ADVANTAGE “An innovative culture is the only competitive advantage [in business] today,” according to Soren Kaplan, award-winning author of Leapfrogging and The Invisible Advantage and an affiliated professor at the Center for Effective Organizations at USC’s Marshall School of Business. Kaplan, who presented on day two, stressed the need for businesses to innovate quickly and take advantage of the opportunities presented from disruptions caused by the pandemic, including changes in e-commerce, consumer shopping habits and digital technology. The pandemic has inspired people to want to do good. “They are worried about climate change, and they want to reduce food waste, but plastic is the evil villain these days,” he said. “Plastic bashing will continue to increase, and doing good for the environment represents a business opportunity.” He pointed out several examples of how businesses used innovative thinking in response to challenges. Chili’s saw sales crash as restaurants closed. In response, Chili’s created a digital brand called “It’s Just Wings” and used its underutilized kitchens to prepare wings and fries that were promoted and delivered by DoorDash. “Overnight they created a virtual pop-up brand, a $150-million-a-year business,” Kaplan said. Another success is the startup Bottomless, which sells roasted-to-order coffee by mail. Each customer places her bag of coffee on Bottomless’ digital smart scale, which is connected to Wi-Fi. The scale keeps track of the package’s weight and communicates to the Bottomless team when the

“An innovative culture is the only competitive advantage [in business] today.”

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customer’s supply runs low. Then, another bag of coffee is automatically shipped. “This is not just about coffee,” Kaplan said. “This platform could provide automatic replenishment on anything. It’s just another example of digitization of the supply chain and enhancing the convenience experience.” So, how do business leaders create a culture of innovation in their own organizations? First, define innovation for your organization. Are you in the food business or fuel business? Kaplan suggests that c-stores are in the “helping people in the morning” business or “meeting people’s basic needs any time” business. “If you broaden what business you’re in, you see new opportunities,” he said. And you always want customer feedback. “Convenience stores are a petri dish,” he said. “You can test things in stores and talk to customers in real time.” FIVE KEYS TO THE FUTURE Retail accelerated five to 10 years into the future over the course of just one year, and convenience retailers are thinking differently about how to meet shoppers’ needs, said Lori Stillman, NACS

vice president of research. Stillman said Gen Z, in particular, is going to be forever affected by the pandemic year that they’ve spent behind screens and social distanced from friends and extended family. This cohort prefers technology, self-service and personalization. They also lead in adoption of voice-based technology, making voice-based search a critical area that the convenience industry needs to figure out, Stillman said. “This is a group that’s going to reshape how we must connect with them in the future,” Stillman said. The key question: How do we meet the future needs of these shoppers in convenience? Stillman asked. It comes down to five focus areas: innovation, safety, technology, service and experience. Pay attention to innovation, which necessitates looking at the challenges the industry faces differently. All generations care about safety, so visible hygiene and cleanliness, along with good lighting, are table stakes. “We cannot forget experience,” Stillman said. “As our world becomes increasingly digital, the importance of delivering an enjoyable experience cannot be dismissed.”

LEADERS INNOVATE, OTHERS HESITATE

There has never been a bigger opportunity for leaders to lead and innovate their way into a future that they and their teams can be proud of, Andy Ellwood, executive coach and former startup operator, told attendees. When chaos feels like the new status quo, leaders find ways to move forward with confidence and take calculated risks. “What is the desire stack you most want to win?” he asked. “Dynamic leaders who are obsessed with solving a problem are leaders who are going to win.” Ellwood advised figuring out pain points that customers would pay to eliminate. The pandemic caused a lot of us to say, “I don’t actually want to do that again,” Ellwood said. Retailers need to have “courage to continue to ask questions” to say, “This is the way we’ve done things in the past, but it isn’t the way that it always has to be done.” He added, “Find ways to disrupt yourselves internally. Find ways to ask questions that no one has asked.”

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The industry needs to not only win the last mile but also capture the significant opportunities that come from winning the first mile: expanding the basket ring of the customer already in our stores. Food plays an important role. “Our foodservice offer is very well connected to our packaged beverage offer,” Stillman said. Think about food-to-go offers, take-home meals and comfort foods like mac and cheese and banana pudding—things that consumers showed during the pandemic that they were willing to buy from convenience stores. Americans have been cooking at home more but also have menu fatigue, so think about providing simple ingredients for shoppers to take home and make. Or suggest food pairings with beverages and desserts. Continue to meet shoppers where they are and give them lots of options, she advised. Whether that’s private-label food and beverage items or taking friction out of the checkout process with technology. “Service is [also] so important—it’s at the heart of what we do,” she said. “We’ve got to get our staff engaging with shoppers” and make every customer interaction meaningful. As Stillman noted, “We have 165 million chances every day to offer a friendly smile.” LOYALTY-BUILDING EXPERIENCES For many leaders, both inside and outside the convenience industry, the pandemic produced a fundamental shift in how they listened to and crafted solutions that addressed customer needs, Joseph A. Michelli, Ph.D., said on the final day of the Leadership Forum. Michelli is an organizational consultant and author of Stronger Through Adversity: World-Class Leaders Share PandemicTested Lessons on Thriving During the Toughest Challenges, among other books. For his latest book, Michelli interviewed a cross-section of companies, from Airbnb to Zappos to Dairy Queen, to gather learnings from the pandemic and in particular, how customers have changed. “We have to look through the lens

of the customer,” he said. “Provide people with what they want, when they want it, where they want it, as effortlessly, immediately, consistently, personally and memorably as possible,” he said. This applies to employees, too. “Happy employees equate to happy customers,” he said. Customers still are going to expect clean stores, and they want value. “Loyalty programs really mattered in 2020,” Michelli said. “Customers wanted more than ever to be recognized for doing business with you.” Grab-and-go and curbside pickup showed customers that they don’t have to linger in stores or go inside at all. “We have to compete against other customer experiences that our customers are having elsewhere,” he said. He prompted Leadership Forum attendees to write a legacy statement and build a lasting brand that elevates lives. “What do you want to be known for?” he asked. The universal lesson, he said, is that “adaptive human-centric businesses win!”

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

Erin Pressley is the NACS vice president of media and education. She can be reached at epressley@convenience.org.

Pat Pape worked in the convenience store industry for more than 20 years before becoming a writer. Her portfolio can be seen at patpape.wordpress.com.

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fix Ready-to-drink coffee and its many variants brew up opportunity for c-stores.

P

BY TERRI ALLAN

ackaged ready-to-drink (RTD) coffee is flying off the shelves at Country Corner Grocery & Deli in Eastsound, Washington. The products are doing so well that the store recently added a dedicated RTD coffee cooler adjacent to its fountain dispenser, according to manager Liz Longworth, while space in the walk-in cooler has also been expanded. Longworth credits the drinks’ convenient packaging, array of flavors and dairy and non-dairy options for the surge. “There are so many new options that allow almost every customer’s needs and wants to be met,” she said.

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Indeed, RTD coffee is, well, hot. “Readyto-drink coffee is a $3 billion category,” noted Brandan Strickland, brand director at Cola-Cola Co.’s North American operating unit, adding that from 2017-19, dollar sales of RTD coffees shot up 16%, per NielsenIQ data. Convenience stores are a key channel for the drinks, and beginning in 2022, NACS category definitions will break out RTD coffees as a packaged beverages subcategory. According to NACS State of the Industry data, with major subcategories like carbonated soft drinks, energy drinks and bottled waters factored out, RTD coffees helped

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Consumers are trading over to chilled RTD coffee drinks to satisfy their energy needs but still get the coffee flavor.

drive a 70% gain in average store sales of “other” packaged beverages last year. “There’s a lot of innovation within RTD coffee,” remarked Jayme Gough, NACS research manager, pointing to the growing popularity of products like canned lattes and other specialty drinks. Retailers also report strong trends for RTD coffee. “In today’s world, consumers are increasingly looking for their next caffeine fix,” said Chris Hartman, director of fuels, forecourt and advertising at Rutter’s. “While we continue to have success with roasted coffee, there’s evidence that consumers are trading over to chilled RTD coffee drinks to satisfy their energy needs but still get the coffee flavor.” Hartman added that the trend is here to stay as “customers are even more time starved and prefer grab-and-go options to traditional coffee.” Pandemic behavior is also spurring demand for RTD coffees. “Some traditional coffee drinkers have shifted their buying habits in an effort to reduce touch points,” remarked Hartman. “Perhaps some have gone to energy drinks and others to coffee RTDs.”

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Temporary shutdowns of foodservice operations, including hot coffee service, early in the pandemic may have contributed to last year’s strong growth, Gough added. Indeed, c-store sales of Dunkin’ iced coffee RTD beverages—one of the segment leaders—grew 9% in 2020, accounting for more than $80.5 million in sales, according to Strickland from Coca-Cola, which produces and distributes the brand. BLURRING THE LINES The growing popularity of RTD coffees has sparked a wave of line extensions and new entries, including those that cross into other drinks segments. Dunkin’ iced coffee RTDs launched Girl Scout cookie-inspired flavors earlier this year, such as Thin Mints, Coconut Caramel and S’mores. Greek yogurt manufacturer Chobani, meanwhile, entered the segment in January with Chobani RTD cold brewed coffees in four flavors. New brands also include those that are coffee hybrids—drinks enhanced with the beanderived beverage. Coca-Cola, for example, now markets Coca-Cola with Coffee and Coca-Cola with Coffee Zero Sugar. San Pellegrino sparkling water has expanded its Essenza line with coffeeinspired variants, and Diageo Beer Co. USA recently introduced Guinness Nitro Cold Brew Coffee beer. “Research shows that consumers are looking for new coffee experiences,” explained Strickland. “Coke with Coffee addresses this opportunity to extend beyond traditional category offerings and drive true incrementality by recruiting more drinkers to the RTD coffee category.” More than 50% of Coca-Cola drinkers and coffee loyalists enjoy both beverages on a regular basis, he noted, so “Coca-Cola with Coffee means they don’t have to make a choice between Coke or coffee when they need an afternoon pick-me-up.” Launched in January 2021, the new products had already generated $21 million in retail sales by March, Strickland reported. Coca-Cola with Coffee is available in three flavors—caramel, dark blend and vanilla—while Coca-Cola with Coffee Zero Sugar is marketed in dark blend and vanilla flavors. For c-stores, the new entries are supported with TV spots on pump screens, pump toppers, counter caddies, slim coolers and temporary racks, CONVENIENCE.ORG


while advertising promotes, “Sips like a Coke, finishes like a coffee.” Spiked coffee products are also making their way onto c-store shelves. Guinness Nitro Cold Brew Coffee beer, packaged in four-packs of 14.9ounce cans, launched in the spring, and according to Nikhil Shah, Guinness brand director, “We think there’s a natural fit for this product at convenience stores based on the success of the RTD coffee and alcohol categories.” In introducing the 4% alcohol by volume (ABV) brew, Diageo found that “there’s an authentic connection between Guinness and coffee,” Shah explained. “We roast our barley using the same process that coffee roasters employ when roasting their beans, so there’s an inherent symbiosis.” The brew is best enjoyed straight from the can or poured into a glass to activate the nitrogen-infusing widget inside the can, the company said. Wine-based Café Agave, meanwhile, has been available in c-stores for a few years, according to Ami-Lyn Bakshi, co-founder of Café Agave Inc. “It was created for c-stores as most carry beer and wine,” she said, and because the channel “is known for coffee.” Packaged in 187-ml. cans, Café Agave, with a 12.5% ABV, is ideal for daytime social activities, such as brunch, golf, tailgating and fishing, Bakshi said. Marrying alcohol and coffee is a perfect pairing, she noted. “Coffee and alcohol are among the most ubiquitous beverages. Combining them creates a big opportunity.” Hartman agreed. “The beer and alcohol categories are on fire with new innovation,” the Rutter’s executive said. Pointing to the success flavored malt beverages have enjoyed, he added, “There’s good opportunity for coffee to gain traction in the alcohol segment.” Rutter’s offers Pabst Hard Coffee in all its beer locations, and Hartman said “it’s doing quite well.” AFTERNOON DRIVE With the growth and proliferation of the RTD coffee segment, convenience retailers have been working to take advantage. Hartman said Rutter’s carries over 50 RTD coffees, and “we believe a variety of choices has been the key to our success.” The chain will sometimes run promotions to drive trial and give loyal customers a good deal. CONVENIENCE.ORG

Coffee and alcohol are among the most ubiquitous beverages. Combining them creates a big opportunity. At Handy Stop Market & Café in Lafayette, Louisiana, owner Bradley Cruice said that while he has seen the expanded selection, his store opts to focus on locally produced products over national brands. RTD coffees that have performed well for the retailer include products from Reve Coffee Roasters and Magnolia Moon, as well as Reve Local Coffee stout, a collaboration between the coffee roaster and Louisiana’s Parish Brewing Co. The hybrid drinks are perfect for “people who are looking for something new,” Cruice said. One key opportunity the emerging beverages offer c-store operators is as a traffic driver during the afternoon daypart. “RTD coffees are popular in the afternoon and are serving as either snacking occasions or as fillers between meals,” remarked Gough. According to Bakshi, 65% of adults drink coffee, and 50% of them consume the beverage in the afternoon. For this reason, Strickland recommended that retailers promote and merchandise RTD coffee products for multiple dayparts. Marketers and retailers alike don’t expect RTD coffees and their many variants to slow down anytime soon. According to Strickland, Coca-Cola is projecting continued growth through 2023. “I believe the ceiling is very high for these products,” said Hartman. “Retailers who position themselves with a healthy selection and dedicate the space needed for growth will lead the charge in continued success for RTD coffee sales.” 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.

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BEYOND

BEER

Todd Bollig Sr. Director Category Management & Shopper Insights www.trulyhardseltzer.com www.twistedtea.com

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Retailers clamor to take advantage of the buoyant sector comprised of hard seltzer and flavored malt beverages. WHAT DOES TODAY’S TYPICAL ALCOHOL BEVERAGE CONSUMER LOOK LIKE? Today is probably the hardest time ever for a retailer to allocate space and have the proper assortment for their stores, as there is not a typical beer shopper/ consumer anymore. At any given time, a retailer can be trying to service four generations of shoppers (baby boomers, Gen X, millennials and Gen Z), and each will shop the beer cooler differently. Combine this generational divide with an explosion in multicultural shoppers, and you can understand the complexity in trying to attract today’s consumers. As an example, baby boomers shop traditional beer first 80% of the time, while the ever-important Gen Z shoppers look at it differently and may only purchase traditional beer first 58% of the time. There is a big opportunity for the convenience store channel to attract these Gen Z and millennial beer shoppers. About a

decade ago convenience store operators began to expand their import beer offerings by carrying the lead import packages from Corona, Modelo and Heineken. The same opportunity exists today in “beyond beer.” By carrying the lead packages of Truly, White Claw, Mike’s Hard Lemonade and Twisted Tea, the c-store operator can attract valuable Gen Z and millennial shoppers. HOW DO RETAILERS KNOW HOW MUCH COOLER SPACE TO DEDICATE TO SELTZERS AND OTHER BEYOND BEER PRODUCTS? Since these products are growing rapidly, it is important that retailers focus on providing enough space for future growth and not focus solely on historical sales. Through May 23, IRI c-store data shows hard seltzers being 8.6% of beer dollars and growing 44% in the latest 13 weeks. Beer category sales are up 1.5% year to date (YTD). Based on this, we believe c-stores need to dedicate 10-12% of their cooler space to hard

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seltzers to capture future growth and profit opportunities. Our recommended approach is to expand segment space to meet future demand and reduce space on underperforming segments and SKUs. Right now, we are seeing shoppers trade up from sub-premiums and premiums into higher-end segments, including import and beyond beer. AND THEN THERE’S DETERMINING THE RIGHT ASSORTMENT … Yes, that’s right. We recommend a fourstep approach: 1. E nsure adequate days of supply on the core 80% of anchor brands and items. In the case of c-stores, Truly and White Claw represent 75% of the dollars and are growing 125% and 30% YTD, respectively. To ensure lead brand availability, these two brands should have at least 75% of the dedicated seltzer space. 2. A s space allows, add in your next best performing items. 3. Cut underperforming items to make room for innovation and continue segment growth. 4. A dd new items and brand innovations as space allows. The retailers who have taken this approach have driven hard seltzer to be over 15% of their dollars. ONCE THE ASSORTMENT AND SPACING IS ON TARGET, HOW CAN RETAILERS BEST MARKET BEYOND BEER PRODUCTS TO THEIR CUSTOMERS? Part of it is making sure the shopper knows that you have the items they are looking for. As an example, 42% of Gen Z beer shoppers of legal drinking age consider beyond beer items first when making their purchases1. It is important to reach this shopper digitally in retail promotions. Prominently display leading, growing brands so customers know they are available. Additionally, beyond beer segments are more unplanned and impulse decisions compared to traditional beer segments with shoppers being more engaged in

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store2. Ensuring beyond beer segments are properly blocked and early in flow on shelf, as well as strategically placed displays, will drive higher visibility to capture incremental purchases. CLEARLY THESE PRODUCTS ARE HERE TO STAY, SO HOW SHOULD RETAILERS PLAN FOR FUTURE GROWTH IN THIS CATEGORY? We see a lot of similarity between the energy drink segment and the hard seltzer segment. Eight out of 10 energy drink shoppers buy Monster and/or Red Bull and 8 out of 10 hard seltzer shoppers buy Truly and/or White Claw. C-stores have done a great job in grabbing the Red Bull and Monster energy drink shopper by

C-stores need to dedicate 10-12% of their cooler space to hard seltzers to capture future growth. focusing on those brands with the proper space allocation, product assortment and promotional activity. The seltzer segment is led by Truly and White Claw, while the FMB segment is led by Mike’s Hard Lemonade and Twisted Tea. Making sure the brands that are driving volume have the proper space allocation, product assortment and promotional activity will help your segment grow. Place your bets on the proven winners.

This article is brought to you by Boston Beer, a NACS supplier member.

1: C onsumer Decision Tree research, Vista Grande (March 2020) 2: C ategory Shopper Fundamentals, NielsenIQ (January 2021)

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Modeling a

FOOD

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SAFETY Culture Introducing the first, global food safety maturity model for convenience stores. BY CHRIS BLASINSKY

iStock.com/bsd555

T

he convenience industry’s present and future is food. Although the broad foodservice category took a hit in 2020 due to pandemic-related restrictions, for the past two decades foodservice has been a fast-growing category within the convenience store channel. More than 60% of the category is prepared food, which saw a 7.4% drop in sales in 2020, according to NACS State of the Industry data. Commissary, which is largely prepackaged foods and the only foodservice category with sales growth during the tumultuous second quarter of 2020, ended the year with 13.3% category sales contribution. These products conveyed a sense of confidence among c-store shoppers as safety and wellness shifted shopper behaviors. With new methods of getting product to consumers quickly and safely—drive-thru, curbside CONVENIENCE.ORG

pickup and delivery, for a few examples—convenience retailers that are serious about foodservice as a profit center should be consistently reviewing their food safety procedures, and that includes embedding food safety culture into an already-established company culture. While there is no one-size-fits-all approach to creating and sustaining an effective food safety culture, there is a shared goal: protecting public health. BUILDING THE MODEL After listening to several convenience retailers discuss how they measure their food safety maturity, NACS began working with Dr. Lone Jespersen, founder and principal of Cultivate, in 2020. Jespersen held the Six Sigma leadership role at Canadian-based Maple Leaf Foods, when in 2008, a Listeria outbreak took the lives of 23 Canadians. From that point until 2015, her focus became

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The model can help retailers understand where their food safety maturity is strong, in-between or weak.

developing and executing the company’s food safety strategy. Maple Leaf had to acknowledge that its culture needed to change. It needed to evolve beyond internal and external audits and internal self-assessments to look at employee mindsets and behaviors from the top down. In a recent NACS Convenience Matters podcast, Jespersen explains that among the company’s senior leaders, there wasn’t en established rhythm or acknowledgement that food safety performance and KPIs had to be at the table every day. “When you go through something like that, it changes who you are. And that’s why I wake up every day and want to work with my colleagues at Cultivate to avoid others from having to go through it,” she said. The experience at Maple Leaf led to Jespersen developing a five-stage maturity model with five dimensions that focus on bringing clarity to food businesses about their current culture of food safety. The five stages—Doubt, React, Know, Predict, Internalize—are the foundation of Cultivate’s globally accepted Food Safety Maturity Model, as well as the foundation for the global convenience store industry’s first and only NACS Convenience Store Food Safety Culture Maturity Model.

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The industry-specific model captured the feedback of nearly two dozen global convenience retail companies at various stages of food safety maturity. The group identified nine common topics related to food safety, ranging from risk awareness to food safety performance, systems oversight and governance, that can be mapped to five food safety cultural dimensions: •V alues and Mission •P eople Systems • Adaptability • Consistency •R isk Oversight By segmenting food safety culture into these five dimensions, the model can help retailers understand where their food safety maturity is strong, in-between or weak. This helps strengthen culture by focusing on the opportunities instead of broadly stating, “We want to improve.” For example, a strong leadership message can create energy among middle managers (Values and Mission), but if the culture measurements show a lack of enthusiasm among the middle managers (People Systems), then the leadership messaging may not be landing as intended. “Any cultural direction set by senior leaders is only valuable if it’s translated by middle managers into practices and norms with their teams,” said Jespersen. During the retailer interviews, several themes emerged around agility, invisibility and proximity. Agility: The pandemic aside, employees at the store level are accustomed to pivoting around changes such as new product launches and how they’re managed. “There’s an agility here that can be used for food safety,” said Jespersen. Invisibility: Of the 21 people interviewed for the NACS food safety culture model, only three had food safety in their title and the rest focused on foodservice while managing multiple other areas. “They’re not just focused on one area, and I think we have to CONVENIENCE.ORG


formalize food safety because it’s business critical,” she said. Proximity: This is different for convenience stores. “If you are a line operator in a milk powder plant, all you might see is stainless steel all day. It’s hard to translate that you can make somebody sick because you never see anything resembling product or people eating,” she said. However, in a convenience store, employees directly interact with customers all day. “Proximity is important because if you can look a customer in the eye and know you’ve just taken a shortcut and could have introduced something that can make someone sick, you’ve got to be a special person for that not to tug at your heartstrings,” she said. THE JOURNEY Convenience retailers can embark on their own food safety culture journey by acknowledging the evolution inherent in any type of culture. “First, we start by looking at being compliant and have a set of requirements so we deliver on those consistently. Then we go into the next stage, which

is the plan. Now we start to self-assess against the plan and rely on audits. And third, we evolve from that—we don’t need to have a regulator or somebody external or the audits to prompt us. We just act on food safety every day because it’s part of the success of our business. And that’s where we get to culture,” she said. Jespersen found that the convenience store sector is in the early stage of evolution when it comes to food safety, with many retailers still relying on store audits to ensure employees are acting on food safety requirements and procedures. “We are at a point now where we want to improve and deliver on what we trust, which is we walk into a convenience store, we pick up food or a drink and we trust inherently without questioning that it’s safe for consumption. If we really want to deliver on that consistently as an industry, we must get to the culture step in that evolution. “Unless we take that step into where food safety is just part of doing business, then we’re always going to be stuck in that mode where people get sick. And I don’t know about you, but I’m fed up with that status quo, and I want to bring it to the next level,” she said.

Scan the QR code to listen to Convenience Matters Episode No. 289 “Building Food Safety Into Your Company’s Identity” to hear more.

Chris Blasinsky is the content communications strategist at NACS and can be reached at cblasinsky@convenience.org.

For more information on the NACS Convenience Store Food Safety Culture Maturity Model, reach out to Chris Blasinsky with NACS at cblasinsky@convenience.org.

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CRUSHING ON

CRAFT BREWS Local brewers and c-stores collaborate on unique flavors that create consumer buzz.

shutterstock.com/ChairatTH

BY CAROL ANGRISANI

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K

wik Trip’s first collaboration beer got its start when category manager Kim Jenks sent an email to a local brewer with a subject line that read, “Crazy Idea for a Friday Morning.” The idea was anything but crazy. Rather, it was a novel plan for Kwik Trip, based in La Crosse, Wisconsin, and Karben4 Brewing in Madison, Wisconsin, to produce a beer made with Kwik Trip’s very own coffee. Karben4 jumped at the opportunity, and together the two companies produced several batches of Glazer Bean, a chocolate coffee stout brewed with Kwik Trip’s Karuba coffee. The limited-edition beer exceeded Kwik Trip’s expectations, so much so that the companies have launched three other collaboration beers since the November 2019 introduction of Glazer Bean. The Urge Tracker Peanut Butter Cup Ice Cream Stout hit shelves in February. The beer was inspired by Kwik Trip’s Nature’s Touch Urge Tracks ice cream. Karben4 added nitrogen into the cans to give it a creaminess and similar mouthfeel of ice cream. Prior to Urge Tracks, Kwik Trip and Karben4 launched Hot Spot Hazy IPA in April 2020 at the height of the pandemic. To underscore its exclusivity to Kwik Trip, the beer was named after Kwik Trip’s hot foods program. In May, Kwik Trip and Karben4 Brewing brought back the Hot Spot Hazy IPA just in time for summer. Kwik Trip shoppers love the collaboration beers because they are tasty and unique and feature attention-grabbing labels, said Jenks. “This drives traffic to the stores and awareness to our beer category,” she said. An added bonus is that customers who come in specifically for the beer often pick up incremental items. Such partnerships come at a time when craft beer is rising in popularity. The percentage of adults who drink craft reached 44% last year, up from 35% in 2015, according to the Brewers Association, the Boulder, Colorado-based trade association for craft brewers. These figures are expected to rise over the next few years as more of the Gen Z population enters the craft beer age range, according to the association. Data from NACS Convenience Voices indicate that 25 to 34 year-olds make up the largest share (47.5%) of craft beer purchasers in the convenience store channel, followed by 35 to 44 year-olds (31.3%) and consumers 24 and younger (15%). Males account for 62.5% of craft beer purchases.

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those doors,” Koga said. “What better way than to give them a beer that was made locally and specifically for them!” Along with Kwik Trip, other convenience stores are tapping into the limited-edition beer business with collaboration brews that incorporate their exclusive coffees, confections, baked goods and more. Sheetz, Wawa and OnCue are among them.

CONVENIENCE STORES ARE TAPPING INTO THE LIMITEDEDITION BEER BUSINESS WITH COLLABORATION BREWS THAT INCORPORATE THEIR EXCLUSIVE COFFEES, CONFECTIONS AND BAKED GOODS. When it comes to beer occasions, nearly 60% of shoppers participating in the NACS Convenience Voices mobile intercepts program said they purchased craft beer to relax either by themselves or with a significant other, and 23.6% said they would share beer to connect with close friends or family. “There is a big craft beer following in Wisconsin, and these drinkers tend to like to experiment with new offerings,” said Jenks. Convenience stores are the perfect fit for craft beer, said Zak Koga, co-founder and owner of Karben4 Brewing. “Convenience stores are (or will be) in every community in our country, and it makes a lot of sense to connect with the local community and put forth an honest effort to bring personal value to everyone who walks in

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SWEET BREWS Sheetz, the Mid-Atlantic chain with nearly 600 stores, has partnered with several breweries to incorporate the flavors of its exclusive products into limited-edition private label craft beer. In late May, Sheetz released its largest scale limited-edition craft beer to date: Project I Scream, Brew Scream, in partnership with Chicago-based Goose Island Beer Company. Brewed with Sheetz Bros. strawberry and banana puree, the limited-edition strawberry and banana milkshake IPA is a light and fruity beer with a hint of hop to balance the sweetness. The $7.99 four-packs of 16-ounce cans of Project I Scream, Brew Scream were available in Pennsylvania, Maryland, North Carolina, Ohio and Virginia. In partnership with Wicked Weed Brewing in Asheville, North Carolina, Sheetz released a limited-edition golden pale ale infused with Sheetz’ Glazed Vanilla Donut Holes this past holiday season. Four-packs of 16-ounce cans sold for $7.99 in Pennsylvania, North Carolina and Virginia. Among other beer collaborations, Sheetz connected with Hardywood Park Craft Brewery in Richmond, Virginia, to brew a wheat ale made with its private-label watermelon gummy candy. Called “Project Watt-Ahh-Melon Ring,” the tart watermelon beer was available for a limited time last year in select Sheetz stores in Virginia and North Carolina. More than 100 pounds of Sheetz-brand Watermelon Gummy Rings were used in the brewing process to provide fermentable sugars, as well as watermelon aromatics and flavors, said Brian Nelson, Hardywood’s head brewer. “Being part of this collaboration allowed Hardywood to reach new customers with an innovative beer concept that would have not come to life without the spirit and excitement brought to us through the Sheetz team,” Nelson said. CONVENIENCE.ORG


COFFEE PORTERS Wawa is another c-store chain that has raised a glass to collaboration brews. Along with getting a fill-up, snack or made-to-order hoagie, Wawa customers could get craft beers infused with Wawa’s own Winter Reserve coffee this past holiday season. The Pennsylvania-based chain with more than 850 stores along the East Coast released three limited-edition beers made with the specialty coffee over the holidays. The winter-themed brews included an English-style imperial oatmeal stout aged in Jamaican rum barrels for seven months. The new brews build on Wawa’s growing partnership with Pennsylvania-based 2SP Brewing. Wawa and 2SP have partnered for other collaborative beers, including “Snow Bird Reserve,” a craft beer created in celebration of its Northern customers who spend the winter in the South. Introduced in February 2020 in Wawa’s Florida

62.5%

15.0%

Male

24 years and younger

31.3% 35 to 44 year-olds

CRAFT BEER PURCHASERS

47.5%

25 to 34 year-olds Source: NACS Convenience Voices

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ONCUE WANTED TO CRAFT A BEER THAT TASTED LIKE MEMORIES OF CUSTOMERS' PERSONAL HOMETOWN HEROES. stores, the vanilla porter also was brewed with Wawa’s Winter Reserve Coffee. To strengthen the local connection, Wawa and 2SP involved Tampabased Coppertail Brewing in the project. Gary Kost, Coppertail Brewing’s marketing director, said the partnership is mutually beneficial because it enabled the brewers to reach new customers with a variety of packaging sizes. Snow Bird Reserve, for instance, was sold in single cans as well as in 12-packs and other packaging. This past December, the OnCue convenience store chain, based in Stillwater, Oklahoma, teamed up with Iron Monk Brewing Co., also in Stillwater, to launch a limited-edition craft beer named Hometown Hero. About 325 cases were sold over three months in OnCue stores, according to Dave Monks, Ph.D., co-founder of Iron Monk Brewing. He describes the lager as tasting bright and crisp, with “just a hint of malty goodness.” “Thoughts of your personal hometown heroes might just prompt warm recollections and thoughts of good times, and we wanted to craft a beer that tasted just a bit like those memories,” Monks said. Clearly, convenience stores are no longer limited to selling beer from only the big brands. Whether it’s a stout, lager, porter or other small-batch style, limited-edition craft beer can create excitement and a point of differentiation in a competitive market. Carol Angrisani is a New York-based writer who has been covering the food and beverage industries for more than 20 years. Visit her on Twitter at @carolangrisani1.

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Yellowimages.com/Pavel Gubin

The watermelon beer followed the release of an even more unusual brew: “Project Hop Dog,” an IPA brewed with Sheetz’ hot dogs. It was released last year in partnership with Neshaminy Creek Brewing in Croydon, Pennsylvania.


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Retailer enthusiasm bubbles over for spiked seltzers. BY TERRI ALLAN

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here’s snow on the ground and people are still coming in for their White Claws,” remarked Lenette Stoudt, owner of Tramway Market in Stateline, Nevada, in early spring. “White Claw is going crazy. Some months it’s our top-selling alcoholic beverage.” Similarly, Jon Manuyag, director of marketing at Oregon’s Plaid Pantry chain, reported, “Hard seltzers have become a prominent segment for us,” accounting for 13% of beer dollar sales, compared to nothing just a few years ago. “And they’re still growing at a double-digit rate,” the retailer said. At Texas Born (TXB) stores in Texas, Benjamin Hoffmeyer, vice president, marketing and merchandising, noted that the company has allocated

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more shelf space and promotional displays in its beer caves to spiked seltzers, including an entire cooler door in some locations “to take advantage of the sales and great margin trends.” In addition, the stores have added a number of seltzer single packages “to garner customer trial, which leads to larger take-home pack purchases,” Hoffmeyer said. Indeed, spiked seltzer sales in convenience stores are surging. According to the NACS State of the Industry Report of 2020 Data, hard seltzers helped grow average store sales of the flavored malt beverage (FMB) segment an incredible 70% last year, with

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“ S eltzers fit well into health and wellness trends we see within the category, where consumers are looking for lowcalorie and low-carb beverage options.” premium and above pricing that lifted the profitability mix for the beer category. FMBs have quickly become the No. 2 beer subcategory with a 15% share, after premiums at 32%. Spiked seltzer marketers see even more opportunity ahead for the products in c-stores. “The segment’s success comes from its ability to deliver on consumers’ desire for flavored and sessionable beverages,” said Joy Young, senior director, category development, at AnheuserBusch, which markets a number of hard seltzers. “On top of that, seltzers fit well into health and wellness trends we see within the category, where consumers are looking for low-calorie and low-carb beverage options.” Lauren Quaglia, national channel managerconvenience stores, at Boston Beer Co., marketer of the Truly brand, added, “There’s a massive opportunity for hard seltzer in c-stores. Household penetration is only at 3.5%, compared to 16% in grocery.” EXPANDING CHOICES Mark Anthony Brewing’s White Claw and Boston Beer’s Truly dominate the spiked seltzer category, but their quick success has sparked the entry of numerous brands by large and small

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marketers alike. At Plaid Pantry, the two leading brands account for at least 90% of hard seltzer sales, Manuyag said. As a result of the segment’s strong performance, “share of space is gaining with every update we do,” he noted. At TXB, in addition to White Claw and Truly, Anheuser-Busch’s Bud Light and Michelob Ultra’s hard seltzers, as well as Molson Coors’ Vizzy, are performing well, Hoffmeyer reported. “The proliferation of flavors and brands is giving customers a lot more choices,” he noted. Variety 12-packs have emerged as popular options within the hard seltzer space, and at Thorntons, they’re “far and away the best performing package,” remarked Doug Parker, director of category management. “Singles are also performing well and serve as a good entrance into the category for consumers,” he added. Overall sales of hard seltzers are growing at a double- or triple-digit rate at the chain, Parker said, bringing in new consumers to the segment, as well as pulling from the wine category. Beyond leading beer marketers, craft and nonbeer vendors are now involved in the spiked seltzer space. This year has seen the entry of brands under the Sparkling Ice, AriZona, Stewart’s and Topo Chico banners. “The AriZona consumer is already shopping in c-stores, and we believe that AriZona Sunrise hard seltzer will resonate with this consumer in a way that no other hard seltzer can,” said Karla Flores, director of innovation at Heineken USA, which distributes the brand. She sees particular opportunity for the seltzer’s 19.2ounce single-serve cans in c-stores. Stewart’s Enterprises also sees potential to leverage the iconic soda brand with Stewart’s spiked seltzers, now available in Eastern markets. Citing the Stewart’s brand’s strength in c-stores and independent retail accounts, Peter Strahm, CEO, said, “We felt there was no better way to marry such an iconic lifestyle brand than with that of an emerging, fun beverage category.” Among the flavors in the brand’s product line are root beer and orange cream. Also trending recently within the spiked seltzer space are lemonade and iced tea variants. “We have CONVENIENCE.ORG



“ T he proliferation of flavors and brands is giving customers a lot more choice.” seen tremendous success with both Truly Lemonade and Truly Iced Tea,” remarked Quaglia. The former launched in 2020 and the latter earlier this year, while Truly Extra hard seltzer, with an 8% alcohol by volume, was unveiled in March. Bud Light Seltzer Lemonade, meanwhile, was introduced in January, and according to Ramona Giderof, vice president, small format, at A-B, the line extension is contributing to the overall strong performance of the company’s hard seltzer portfolio. Plaid Pantry’s Manuyag applauded the new entries. “Innovation keeps the category moving,” he said. BALANCE IS KEY With hard seltzers performing so well, retailers said the most important tactic to driving sales is having enough supply to satisfy consumer

NEW CATEGORY DEFINITIONS RELEASED! NACS Category Definitions & Number Guide Version 8.0 was released in early 2021. Developed by the NACS Research & Technology Committee, this new version reflects significant updates to the last broad iteration (version 7.0 released in 2010). To view the latest updates, visit www.convenience.org/categorydefinitions. Alcoholic seltzer is one of 11 new subcategories that have been identified, as well as ready-to-drink coffee, bakery, E15 fuel and many others.

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demand. In general, there hasn’t been a need to price promote or offer discounts on the products, they noted. Prior to the pandemic, TXB stores did feature promotions on seltzers, but “when COVID hit, we pulled back because we were running out of stock,” Hoffmeyer reported. More recently, the stores have run features to garner trial of new brands like Truly Lemonade and Iced Tea. TXB also offers twofer deals on singles to encourage trial of different flavors, usually at two for $6 or two for $6.50. As with other beverages, convenience retailers need to ensure that they’re offering their customers the right spiked seltzer brands and packages for their needs. “It’s critical to maintain a balanced approach to space allocation across the full category,” remarked A-B’s Joy. “A balanced approach will enable retailers to capture new shoppers and maximize the growth of seltzers.” Flores suggested retailers consider the use of “secondary activation zones” via suction cups, ice bins and warm displays to test and evaluate brands and packaging. “These activation areas can be used to determine if there’s a customer base for these packages to earn their space in the cooler,” she said. Key holiday selling periods, such as during the summer and winter, should also warrant increased promotional frequency, Flores added. The meteoric rise of spiked seltzers could make some retailers cautious about the segment’s longevity. But that’s hardly the case. The expansion into lemonade and iced tea varieties will “fuel seltzer sales,” Hoffmeyer said. “I also see the next round of seltzer innovation going beyond just flavors and expanding into functional products like hydration, energy, CBD and ciders.” Parker agreed that the segment has just begun to scratch the surface. “Seltzers have proven that they’re here to stay,” he said. 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.

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OPIS Brand Power Ranking Report Discover every aspect of retail fuel brand performance for traditional gas brands as well as hundreds of convenience store and retail chain brands. Get competitor pricing behavior, estimated volumes, efficiency, and more for the past three years! Use this intelligence to sell more fuel and make smarter business decisions.

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COOL NEW PRODUCTS 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 2020. The products featured here also can be seen at www.convenience.org/coolnewproducts.

IC 1P K

20 # 20

UCT 2 OD

1 Q2 02

TOP PR

COMPANY

Baker Boy

PRODUCT

The Donut Hole® Individually Wrapped Donuts

Fully Finished, Retail-Ready Individually Wrapped Donuts

The COVID-19 pandemic has shined a light on the importance of food safety. More than ever, operators are under scrutiny to provide fresh products in safe, user-friendly packaging. Baker Boy’s The Donut Hole-branded Individually Wrapped Donuts are ideally suited for multiple foodservice segments — especially convenience stores. These donuts arrive frozen, and ready to thaw and serve in convenient retail-ready packaging. There’s something for everyone with 8 unique flavors, including Baker Boy’s signature Magic Ring® Filled Donuts — ring donuts featuring delicious filling in every bite — and popular classics like the Glazed Donut and Maple Long John. The Donut Hole donuts are the same high-quality foodservice donuts customers have come to expect from Baker Boy. These donuts have a wonderful fresh taste, are sealed for safety, require minimal labor, and lead to little product waste. Visit bakerboy.com and contact Baker Boy at thedonuthole@bakerboy.com to learn more.

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NEW FLAVORS

HEALTH WELLNESS

Federal Industries Island Merchandiser

Grab & Go Is the New Normal With the health concerns of COVID-19, Grab & Go merchandising is the new normal in C-Stores and Island Merchandisers are a great way to get more sales. -Maximize space and increase impulse sales with the walk-around merchandiser design -Adjustable shelving in two tiers to display premade food and beverages -LED top and undershelf lighting draws in customers Visit our website for more information at https://www.federalind.com

Krispy Krunchy Chicken® Krispy Krunchy’s® Sunrise Breakfast

Because Your Coffee is Lonely Krispy Krunchy® now has all dayparts covered! Our NEW Sunrise Breakfast menu allows operators to build a professional turnkey program with the support of our Krispy Krunchy® field team members. Our aim is to help reach additional consumers with easy-to-serve products that can be oven-baked or merchandised in a retail cold space. Breakfast items include Breakfast Sandwiches with Sausage, Bacon or Canadian-Style Bacon, Egg & Cheese, Breakfast Crispitos®, Empanadas, Blueberry Biscuits, & Honey Butter Biscuits. Visit krispykrunchy.com or call 1-800-290-6097 to learn more.

NEW FLAVORS

Rich Products RICH’S COOKIE PORTFOLIO

A Recipe for Success.

Authentic ingredients. More choices. Easy to execute. With Rich’s, you don’t need to be a cookie expert. Leave that to us. Between our doughs, specialty doughs, baked retail ready cookies, and baked bulk packed cookies, we have solutions for you, no matter how your business works. Always growing to serve you, we’ve recently welcomed Christie Cookie Co. to our portfolio — a beloved brand baking up dough, tray-packed and retail-ready goodness with real butter and plenty of premium inclusions. Find the classics to the unique, in every size, shape and flavor — Chart your own cookie course with our quick questionnaire to find the perfect cookie for your operation. Let’s discover your sweet spot, together, at richsusa.com/cookies.

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NEW TECHNOLOGY

Bitcoin Depot Bitcoin Depot’s Cryptocurrency ATM

Bringing Cryptocurrency to the Masses Since 2016!

Bitcoin Depot is the largest cryptocurrency ATM Network and an INC 5000 company offering users the ability to buy and sell Bitcoin and over 30 other cryptocurrencies instantly at thousands of locations across the United States. Our mission is to provide the most secure, convenient, and fastest cryptocurrency transaction. Our vision is to bring cryptocurrency to the masses. To partner with us or learn more about cryptocurrency, how to use a Bitcoin ATM, and to find the nearest Bitcoin Depot ATM location, scan the QR code above. For more information visit our website directly at https://bitcoindepot.com/. You can also call us at 678-435-9604 or send us an email to support@bitcoindepot.com

NEW TECHNOLOGY

Mashgin Inc. The Touchless Checkout System

Boost Store Profits by $800/Week With Instant Self-Checkout

Give customers a faster and safer checkout experience with Mashgin’s Touchless Checkout System. Mashgin uses computer vision to instantly identify multiple items at once without looking for a barcode—just place items down on the tray then pay. Convenience stores using Mashgin improve profit margins by over $800/week. Mashgin is already operating in over 300 convenience stores, cafeterias, and sports stadiums across the U.S. and has run over 14 million transactions to date. To see if Mashgin is right for you, reach out to our VP of Partnerships Jack Hogan at jack.hogan@mashgin.com. Learn more at www.mashgin.com

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NEW DESIGN

Monster Energy Company Monster Hydro

Hard-Charging Hydration

The New Monster Hydro design establishes clear “energy water” positioning, improves chug-ability, is preservative free and naturally flavored. Monster Hydro currently offers five refreshing flavors including the very popular watermelon and a zero-sugar offering. For more information, call (800) 426-7367 and visit www.monsterenergy.com

NEW TO THE INDUSTRY

PURELL® Brand PURELL® Foodservice Surface Sanitizing Wipes

Kills 99.9% of Viruses & Bacteria—No Rinse Required

Our newest innovation, PURELL Foodservice Surface Sanitizing Wipes are formulated for food-contact surfaces with no rinse required. Packed with powerful efficacy and a worry-free formulation, this wipe kills 99.9% of viruses and bacteria — including norovirus, Salmonella, Listeria, cold & flu. Kills Human Coronavirus (COVID-19) in 30 seconds. PURELL® Foodservice Surface Sanitizing Wipes make it easy to sanitize large hard-to-wash items, are always ready when speed is a priority, and leave a positive impression with customers. Demonstrate your commitment to a clean and healthy environment with PURELL branded products. Learn more by visiting GOJO.com/NACS

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COMPANY COMPANY

The Hershey Company PRODUCT

KIT KAT® DUOS Mocha + Chocolate

KIT KAT® DUOS Mocha + Chocolate KIT KAT® DUOS Mocha + Chocolate is that delicious combo of mocha coffee flavor and chocolate layering the KIT KAT® wafer everyone knows and loves. It is available at stores nationwide in both 1.5 oz. standard size and 3.1 oz. king size (3 oz.) bars. (Standard SRP $1.11, King SRP $1.66).

The Hershey Company PRODUCT

Reese’s Snack Cakes

New Reese’s Snack Cakes

New Reese’s Snack Cakes are the first-of-its kind mid-morning cake treat. Two soft baked chocolate cakes topped with Reese’s Peanut Butter Crème covered in REAL Milk Chocolate will satisfy your mid-morning sweet tooth and save your morning! Reese’s Snack Cakes (2.75 oz., SRP $1.99) are available nationwide exclusively at convenience stores.

COMPANY

Monster Energy Company PRODUCT

Rehab Monster Strawberry Lemonade

Rehab Monster Strawberry Lemonade & Refreshed Look

Get ready to REFRESH + RECOVER + REVIVE. Introducing the newest Rehab Monster flavor, Strawberry Lemonade, available in a 15.5oz size, that joins the refreshed Rehab Monster lineup including Tea + Lemonade, Peach Tea, Raspberry Tea, and Orangeade. The addition of Strawberry Lemonade kicks off the new look of the entire Rehab Monster family that gets new can designs and a refreshed formula stacked with Electrolytes, Vitamins, & Botanicals that help provide Advanced Hydration, Reduced Fatigue, and Increased Concentration. Strawberry Lemonade is nationally available beginning in March with updated Rehab Monster cans available in April. For more information, call (800) 426-7367 and visit www.monsterenergy.com

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INDEX NACS

HEALTH AND WELLNESS

Federal Industries..................................................................... 75 NEW DESIGN

Monster Beverage Company................................................. 77 NEW FLAVORS

NACS NACS Certified Convenience Advanced Category Management

Level-up Your CatMan Skills Give your category management skills a boost by gaining your Advanced Certificate at the NACS Show! This hands-on, in-person, pre-conference course is taking place October 5th in Chicago, and will help you implement strong disciplines across your team that will ultimately drive sales, reduce out-of-stocks and deliver new products to customers. Spots are limited! Learn more and register today: nacsshow.com/ preconference

Baker Boy Inc. ............................................................................ 74 Krispy Krunchy Foods LLC..................................................... 75 Monster Beverage Company................................................. 78 Rich Products............................................................................. 75 The Hershey Company............................................................ 78 The Hershey Company............................................................ 78 NEW TECHNOLOGY

Bitcoin Depot............................................................................. 76 Mashgin........................................................................................ 76 NEW TO THE INDUSTRY

GOJO Industries Inc................................................................. 77 NACS SOI Report...................................................................... 79 NACS

NACS Certified Convenience Advanced Category Management...................................... 79

NEW TO THE INDUSTRY

NACS NACS State of the Industry Report® of 2020 Data

Discover What’s Next—And How To Get There Faster

Today’s dynamic landscape requires agility—a balance of efficiency and effectiveness to free up resources and fuel new growth. You have to know where to invest in technology and how to harness data to deliver targeted, personalized offerings and customer experiences—it’s essential to winning trips and edging out competition. So, what’s next and how can you get there faster? For more than 50 years, our industry has relied on this report to answer this question and more. Understand the ‘big picture’ with data and analysis on economic, market and shopper dynamics; Maximize effectiveness and profitability with insider access to aggregate financial, operational and category data from more than 27,000 convenience stores across the U.S.; and Benchmark against top performers in the industry and determine key drivers to their success. Get your digital copy and reap the future-altering benefits. Convenience.org/SOI CONVENIENCE.ORG

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GAS STATION GOURMET

Roadside Revival Back under family ownership, Stuckey’s is striving for a turnaround. BY AL HEBERT

D

uring the Great Depression, W.S. Stuckey Sr. dropped out of school to pick cotton in Georgia, and as he toiled, he landed on an idea to buy pecans from local farmers and sell them at a roadside stand, along with candy—divinity, pralines and pecan rolls—made by his wife, Ethel. That pop-up effort eventually grew into what would later become a chain of convenience stores/travel centers known as Stuckey’s. By the early 1940s, he had three stores. During World War II, though, sugar rationing led to all but the original store in Eastman, Georgia, shutting down. Stuckey’s survived those war years by providing candy for the troops as part of their ration kits. When GIs returned home after the war, they remembered Stuckey’s and stopped at the stores as they vacationed with their families. America’s economy was on a rebound, and so was Stuckey’s. Stephanie Stuckey, granddaughter of W.S. Stuckey Sr. and CEO of Stuckey’s, said, “People started road tripping, and Holiday Inn and Howard Johnsons took off.” And when the interstate system was built, Stuckey’s adapted to the change and moved the locations to highway exits, becoming an early convenience store pioneer. “My grandpa came up with this elegant blue roof design. Land was affordable on the interstate. We became synonymous with the road trip when road trips became possible. We were part of the overall experience going on vacations in those woodie station wagons, visiting places like Weeki Wachi and Cypress Gardens,” she said. If you’re of a certain age, Stuckey’s was a muststop on vacation. Billboards along the interstate created anticipation for the next location. Browsing was often as much fun as the vacation destination. By the mid-1970s there were 368 Stuckey’s in almost 40 states. “In the beginning, we had no competition,” said Stuckey.

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Stephanie Stuckey, granddaughter of W.S. Stuckey Sr. and CEO of Stuckey’s, took over the company in 2020.

WHEN DID STUCKEY’S GET STUCK? Stuckey Sr. sold the company to Pet Dairy Corp. in 1964. He stayed on and ran the stores for 10 years until 1974 when he was forced out. His granddaughter explained that in the 1970s, “Pet was sold. There was the Arab oil embargo, and people weren’t driving; they began to fly more. The American road trip became a thing of yesteryear.” By 1985 Stuckey’s was in trouble. W.S. Stuckey Jr. bought the company back, but by 2012, Stuckey Jr. and his business partners were ready to retire and sold their main business, Interstate Dairy Queen, to Warren Buffet. “Dad and his business partners left a skeleton crew running Stuckey’s. All the principals were gone. Since 2014 it was on a downward slope CONVENIENCE.ORG


How often do you get the chance to buy back your family brand?

W.S. Stuckey Jr. (right) bought the company back in the 1980s and later sold it to his daughter. The remaining Stuckey’s stores are franchises. The company still sells pecan-based snacks and candies.

and started losing money in 2015,” Stuckey explained. “That’s when I came in. In 2020, my dad’s former business partners offered to sell me their shares of Stuckey’s. After six months of proving that I could run the company and restoring it to profitability, my dad sold me his shares. I became the sole owner but quickly found a co-partner, RG Lamar, who serves as president and helps me with operations,” she said. MODERN ERA All of the remaining Stuckey’s stores are franchises. Although the company no longer owns the stores, they still sell pecan-based snacks and candies that brought customers in for decades. “That’s the key to our revival: bringing back the road trip and selling our branded pecan snacks and candies that we now make ourselves in our newly acquired manufacturing plant. C-stores are a core business category for us, so we view other interstate retail operations as potential customers, not competition,” Stuckey said. “Eighty percent of our revenue comes from the sale of products, but we still qualify as a c-store company, although we’re unique in this space, as we also have manufacturing and distribution capacity,” she said. “How often do you get the chance to buy back your family brand? I consider CONVENIENCE.ORG

myself blessed to be given this opportunity,” Stuckey said, adding, “Stuckey’s was always a safe place to stop. ‘Every traveler is your friend’ was my grandfather’s motto, and I strive to honor his legacy every day.” BUILDING COMMUNITY It’s hard not to see Stephanie Stuckey on social media. She pops up everywhere, and she has a mission. “My goal is not to just revive Stuckey’s but revive the road trip. We can recapture that in a way that’s not stuck in the past but honors what’s special about it,” she explained. Her plan is to create a community passionate about road trips via storytelling. “We’re a scrappy comeback brand with limited resources. I’m trying to connect with others who want to be part of our comeback story. I have certain themes, hospitality, road trips, family and nostalgia that I try to always touch upon,” Stuckey said. Stuckey feels that selling pecan log rolls is a way to bring people together. “Look at In-N-Out Burger. Their customers are rabid devotees. They’re not just buying hamburgers; they’re buying into a culture. I want the same experience for Stuckey’s. That’s my long-term vision. To be part of a community of road trippers who share our love for the unique experience of exploring the back roads of America.”

Al Hebert is the Gas Station Gourmet and showcases America’s culinary treasure— gas station cuisine. He shares these stories and on occasion, a recipe or two at www. GasStationGourmet.com. He is a NACS Magazine contributor, bringing foodservice ideas to readers.

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GLOBAL TRENDS

Recognizing Achievement

Congratulations to the NACS European Convenience Retail Award Winners.

Sponsored by

Maxol Newbridge, developed to showcase Maxol’s transformative, customer-centric brand experience, has won the NACS European Convenience Retail Best of the Best Store Award for the redevelopment of its store in Newbridge, County Kildare, Ireland.

T

he NACS European Convenience Retail Awards recognize outstanding achievements in the European retail community. For 15 years, this program continues to be a pinnacle moment for retailers, industry experts and suppliers who gather at the NACS Convenience Summit Europe to celebrate industry achievements. This year, due to COVID19 restrictions, awards were presented during a virtual NACS Convenience Summit Europe, which took place June 1-3. Congratulations to these dynamic winners! NACS EUROPEAN CONVENIENCE RETAIL BEST OF THE BEST STORE AWARD: Maxol Newbridge Maxol Newbridge, developed to showcase Maxol’s transformative, customer-centric brand experience, won the NACS European Convenience Retail Best of the Best Store Award for the redevelopment of its store in Newbridge, County Kildare, Ireland. The

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award was sponsored by The Coca-Cola Company and selected by Convenience Summit Europe attendees from a crowded field of entrants. “We’re thrilled to see the Maxol team recognized for its relentless efforts to provide a best-in-class shopper experience in the convenience channel,” said Miles Karemacher, general manager, Ireland and Northern Ireland, CocaCola Hellenic Bottling Company. “Following its successful transformation in 2020, Maxol has continued to leverage trends and insights to provide exceptional services that meet the needs of its shoppers every day. Maxol has also been an outstanding and trusted partner for Coca-Cola, and we look forward to continuing to build on that partnership in the years ahead.” The project, a partnership between Maxol and Aramark, features freshly prepared meal solutions that include a new Maxol Deli, a chicken-focused meal concept called The Rotisserie, and a new ice cream brand, N’ice Cream, in CONVENIENCE.ORG


Sponsored by addition to established brands like Burger King and ROSA Coffee. At the forecourt, the store is one of Maxol’s first to offer the company’s new loyalty app and innovative customer-facing technology to ensure a seamless, omnichannel customer experience. In 2020, the company launched a carbon emissions offsetting program to support sustainability initiatives, including planting 10,000 trees across Ireland, as well as local community projects and global projects designed to offset carbon emissions, including fuel emissions. The company has introduced 100% recyclable deli packaging and 100% compostable single-use cups and lids, and it harvests rainwater for its car washes, has invested significantly in installing compostable and recyclable bins and encourages customers to reuse cups by offering a 25-cent discount on hot drinks. The offer has led to strong sales growth at the site in 2020—more than 43% compared to 2019, and at a time when the pandemic depressed driver traffic and general sales at many other retail locations. NACS EUROPEAN CONVENIENCE RETAIL TECHNOLOGY AWARD: Circle K Europe Circle K Europe won the NACS European Convenience Retail Technology Award, which celebrated the global retailer’s Pay by Plate payment technology used for fuel purchases. The award, sponsored by Gilbarco Veeder-Root, recognizes a convenience retailing company making farsighted, long-term investments in technology innovation. Circle K is the first fuel retailer to introduce Pay by Plate across Europe at scale, which allows customers to pay for fuel using their number (license) plate, offering a frictionless customer experience. “The launch of Circle K’s innovative and completely frictionless technology is not only a momentous occasion for the industry, particularly in light of the new CONVENIENCE.ORG

NACS GLOBAL CALENDAR AUGUST 17-19, 2021 NACS Convenience Summit Asia Live Virtual

OCTOBER 5-8, 2021 NACS Show Chicago, Illinois, United States www.nacsshow.com Pay by Plate enables Circle K customers to pay for fuel using number plate recognition and a mobile app, offering a completely frictionless customer experience, making Circle K the first fuel retailer to introduce this innovative technology across a full national network.

COVID-driven safety climate, but it’s also terrific news for Europe’s drivers who increasingly come to expect safe, seamless and connected mobility,” said Jason Lund, European managing director at Gilbarco Veeder-Root. Following a successful pilot in Norway, Pay by Plate was expanded to Sweden, and Circle K Europe parent company Alimentation Couche-Tard Inc. plans to expand the technology across its Circle K network. To use Pay by Plate, customers simply drive onto the forecourt, fill up with fuel and, through number plate recognition, pay for the fuel on the Circle K Easy Fuel app. The technology behind Pay by Plate aligns with established number plate recognition technology used at road tolls and parking garages/carparks across Europe, making it familiar to many European motorists. “We know our customers are becoming increasingly focused on ease, speed, consistency and quality of service. The expansion of Pay by Plate allows us to meet this demand, further simplify and enhance the customer experience as we differentiate our forecourt offering,” said Hans-Olav Høidahl, executive vice president operations Europe at Circle K.

The launch of Circle K’s frictionless technology is terrific news for Europe’s drivers who increasingly come to expect safe, seamless and connected mobility.

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GLOBAL TRENDS

Sponsored by

NorgesGruppen’s sustainability strategy focuses on a healthier, eco-friendly, diverse and thriving Norway and a sustainable value chain.

NorgesGruppen shares our passion for making a lasting, positive difference in the communities we serve. 84

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NACS EUROPEAN CONVENIENCE RETAIL SUSTAINABILITY AWARD: NorgesGruppen ASA NorgesGruppen ASA has won the NACS European Convenience Retail Sustainability Award for its SPAR Snarøya store in Norway. The award, sponsored by The Coca-Cola Company, recognizes a retail company that has pursued a significant and compelling sustainability initiative that creates positive social outcomes and produces lasting value. “NorgesGruppen shares our passion for making a lasting, positive difference in the communities we serve,” said Krista Schulte, vice president, industry affairs at The Coca-Cola Company. “Sustainability isn’t just essential for our planet, it is essential for our communities, and as we—and the world— look to renew ourselves, we must continue to work together and strive to make the world a better place for every person, everywhere.” NorgesGruppen operates the KIWI, MENY and Spar grocery chains in Norway. A Spar licensee, the company also owns and operates convenience retail concepts MIX, Jafs and Deli de Luca. NorgesGruppen’s sustainability strategy focuses on a healthier, eco-friendly, diverse and thriving Norway and a sustainable value chain. Its SPAR Snarøya store, located in an Oslo suburb, is an example of international best practices in innovative, eco-friendly retail solutions.

Since opening in August 2018, SPAR Snarøya has reduced its CO2 emissions by almost 60%. The modern store was built with solid timber, and the floors and foundations were poured with a low-carbon concrete. Inside the store, energy-efficient overhead lighting is complemented by shelving displays that are backlit by LED lights. Excess heat from the refrigerators and freezers warms the store, and windows are triple-glazed to reduce the CO2 footprint and to maintain an ambient in-store temperature. Outside, 90 square meters of solar panels power the LED lighting inside the store. The rooftop is a “living roof” covered in grass to capture CO2, and the environmentally friendly asphalt parking lot includes space for 55 vehicles and four charging points for both electric cars and electric bicycles. Since 2015, NorgesGruppen has made significant reductions in food waste (24%) and is more than halfway to achieving its goal of a 50% reduction in food waste by 2025. To further advance this goal, NorgesGruppen’s NGFLYT tool for automatic orders and operations support helps stores place the right orders and reduce food waste. The tool, in use at SPAR Snarøya, alerts stores when a product is approaching its expiration date, so retailers can reduce the price or take it off the shelves. NorgesGruppen is the first company in Norway to invest in Tesla electric trucks and is investing in hydrogen trucks for city-center deliveries. The company aims to have all its truck fleet either electric or hydrogen by 2026. NACS EUROPEAN COMMUNITY ENGAGEMENT & SUPPORT AWARD: BP Europe BP Europe has won the inaugural NACS European Community Engagement & Support Award recognizing its programs that support first responders, medical personnel and its employees during the COVID-19 pandemic. The award, sponsored by PepsiCo, recognizes a retail company that demonstrated leadership and had a positive CONVENIENCE.ORG


impact in the community during the COVID-19 pandemic. “Over the last year and through the COVID-19 pandemic, the increased need for corporate leadership in serving people and communities around the world has been evident,” said Kent Montgomery, vice president of industry relations, PepsiCo North America. “And the commitment and perseverance of BP Europe in responding to this call sets an impressive standard for the industry and serves as an inspiration for us all. We’ve seen firsthand the impact of this incredible work, and we are proud to honor a fellow advocate.” During the pandemic BP launched community-minded initiatives throughout Europe to support essential services and frontline workers. In the U.K., the company introduced a program to supply fuel free of charge to emergency services vehicles, including charging of electric vehicles through BP Chargemaster. In 2020, the program supplied more than 10 million liters of fuel free to emergency service vehicles across the United Kingdom. In Spain, BP supplied free fuel to emergency services vehicles through Routex fuel cards. Customers could also use their Mi BP loyalty cards to donate points to the Red Cross (Cruz Roja). In Germany, BP’s Aral network gave away 10,000 fuel cards to health workers; in Poland, hospitals received BP Supercards to fund fuel for their medical transport; and in Turkey, BP Turkey supported Istanbul’s state ambulance service by donating fuel. BP also teamed with Deliveroo for its “Lunch for Lifesavers” initiative. BP donated millions of BP/M&S-branded

BP launched initiatives throughout Europe to support essential services and frontline workers. In the U.K., BP supplied more than 10 million liters of fuel free to emergency service vehicles, plus provided EV charging. BP’s Wavendon Gate Connect store in Milton Keynes is shown here.

Sponsored by

meals to the program and will distribute the food free of charge to staff and volunteers at vaccination centers and to frontline workers. In April 2020, BP made one of its largest charitable donations ever to the mental health charity Mind. That same month, Chairman Helge Lund and CEO Bernard Looney each committed to give 20% of their salaries for the rest of the year to mental health charities. “Everyone is dealing with something in life and with the virus it is amplified. Not everyone will be infected, but everyone is affected. Stress, fear, anxiety, isolation. This is a mental health crisis as well,” said Looney. The BP Foundation also donated U.S.$2 million to the World Health Organization’s COVID-19 Solidarity Response Fund, which supports medical professionals and patients worldwide by providing critical aid and supplies.

NACS CONVENIENCE SUMMIT EUROPE 2022 The NACS Convenience Summit Europe took place virtually June 1-3. Next year, the event takes place live in Berlin, Germany, from May 31 to June 2, 2022. Visit www.convenience.org/cse for more information.

CONVENIENCE.ORG

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CATEGORY CLOSE-UP / FROZEN DISPENSED BEVERAGES

Freezing Out the Competition Sales of frozen dispensed beverages are climbing as summer heats up.

A

mericans continue to cool off in the hot summer months with frozen dispensed beverages (FDB), and by offering customization and noncarbonated options, convenience retailers are well positioned to meet customer demand in this category. “Frozen

JUST THE FACTS Frozen dispensed beverages represented 1.78% of in-store sales in 2020 and 5.0% of foodservice sales, according to the NACS State of the Industry Report of 2020 Data.

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beverages and treats continue to grow and be in demand,” said Natalie Peterson, vice president of marketing for The ICEE Company. “As one of the highest-growth segments in beverages, frozen carbonated beverages are poised for continued growth in the c-store channel.” Although 2020 sales dipped during the first quarter because of coronavirus shutdowns, those numbers recovered during June, July and August—usually the highest sales months for the category. “Depending on where your stores are located, FDB sales typically spike in the summer and dip in the winter,” said Jayme Gough, NACS research manager. “This year has seen improved technology driving increased sales of smoothies and frappés.” Frozen dispensed beverages are the smallest category within foodservice, representing 1.78% of in-store sales in 2020 and 5.0% of foodservice sales, according to the NACS State of the Industry Report of 2020 Data. “Margins for the category are typically very high, and in 2020 they were the second largest of the foodservice categories,” Gough said. “2020 gross margins increased 1.42 points year over year to reach 64.94%, which pushed the category’s gross profit up 6.5% to $22,382 per store annually.” CONVENIENCE.ORG

iStock.com/etorres69

BY SARAH HAMAKER


Industry Sales

% of In-Store Sales 2019

2020

1.69% 1.78%

% of Stores Selling

Avg. Sales/Store 2019

2019

2020

2020

89.3% 94.9%

$33,084 $34,464

iStock.com/tashka2000(3)

Source: NACS State of the Industry Report of 2020 Data

STAYING COMPETITIVE In the retail environment, frozen dispensed beverages used to be the domain of convenience stores, but lately quick-service restaurants have made inroads into the category. “Unfortunately for the channel, we compete directly with QSRs in FDB, which have also upped their offerings in the category,” Gough said. To stave off QSR competition, convenience retailers should consider using technology to offer more personalization in FDB. For example, ICEE recently launched its new touchscreen customizable “mix it up” equipment that lets each customer have a unique beverage with up to 32 flavor combinations. “This new technology allows operators to offer consumers a customizable experience by giving them the option to mix in one to four different flavor shots,” Peterson said. “Retailers can also create a beverage destination by offering fun, seasonal flavor names and expanding their line not only with frozen carbonated beverages but also with noncarbonated frozen dispensed beverages.” Coca-Cola sees seasonal limited-time offers (LTOs) as key to bringing millennials and Gen Z customers into convenience stores for FDB. “Thirtyfour percent of convenience shoppers CONVENIENCE.ORG

have purchased a seasonal LTO from a c-store in the past month, and another 32% say they are interested in doing so, according to recent Mintel data,” said Erin O’Malley, senior manager of dispensed beverage innovation for the North American operating unit of The Coca-Cola Company. “This represents an opportunity for c-stores to cater to these customers. In addition, convenience retailers can lean into the successful approaches we’re seeing in the QSR space, such as serving chilled or frozen variations of the same beverage side by side to drive efficiency.” GPM Investments, headquartered in Richmond, Virginia, is one retailer taking advantage of the buzz LTOs can build. This summer, GPM Investments rolled out Tangerango Frazil frozen

The frozen dispensed beverage category is an inherently adventurous space within nonalcoholic beverages.

THE POWER OF CSX DATA 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.

JULY 2021 |

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CATEGORY CLOSE-UP / FROZEN DISPENSED BEVERAGES

PER STORE, PER MONTH SALES

2018

2019

2020

2021

$900 $800 $700 $600 $465

$500 $400 $300 $200 $100 $0 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

Source: CSX; www.csxllc.com

SUMMER SALES There is also a built-in opportunity for convenience retailers to promote and highlight FDBs. “Tying in frozen beverage promotions to summer holidays like the Fourth of July or outdoor activities like going to the beach can create excitement in the category,” Gough said. Some retailers offer summer discounts or loyalty rewards tied to FDB.

NEW CATEGORY DEFINITIONS RELEASED NACS Category Definitions & Number Guide Version 8.0 was released in early 2021. Developed by the NACS Research & Technology Committee, this new version reflects significant updates to the last broad iteration (version 7.0 released in 2010). To view the latest updates, visit www.convenience.org/categorydefinitions.

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For example, retailers could create a “Happiest” Hour in the afternoon that highlights frozen dispensed beverages. “Frozen can be much more than a beverage—it can be a treat that is perfect for the afternoon snack daypart between lunch and dinner,” said Peterson. “Others have experimented with a variety of different flavors or pairing a frozen beverage with another discounted item to drive excitement and sales,” Gough said. For example, Peterson recommended pairing snacks, especially savory ones like pretzels and popcorn, with frozen beverages. FROZEN TRENDS With more consumers interested in drinking their treats, FDB has met that need with innovative flavors and an expanded line of noncarbonated frozen beverages. “Some of the flavor trends ICEE has seen include a desire for whimsical and experiential flavors like ‘Llamacorn’ and ‘Mermaid’—pop culture, apparel and toy trends that have translated well into CONVENIENCE.ORG

iStock.com/viennetta

slush as an LTO. The company also plans to have multiple, unique frozen dispensed beverage LTOs throughout its “100 Days of Summer” promotion.


Subcategory Performance Percent of Sales

Avg. Sales/Store

2019

2020

2019

2020

2019

2020

2019

2020

Frozen - Noncarbonated

80.2%

84.8%

$26,520

$29,230

$17,222

$19,423

64.94%

66.45%

Other Frozen Dispensed Beveragess

9.0%

7.9%

$2,974

$2,717

$1,527

$1,375

51.36%

50.61%

Frozen - Carbonated

10.9%

7.3%

$3,590

$2,517

$2,266

$1,583

63.12%

62.91%

100.0%

100.0%

$33,084

$34,464

$21,015

$22,382

63.52%

64.94%

FROZEN DISPENSED BEVERAGES

TOTAL

Avg. GP$/Store

Gross Margin %

For more information on NACS category definitions, visit www.convenience.org/categorydefinitions. Source: NACS State of the Industry Report of 2020 Data

iStock.com/viennetta

flavors in the frozen space,” Peterson said. The pandemic also spurred consumers to seek out familiar or nostalgic foods and beverages. “Classic brands and flavors that remind consumers of their childhood, such as Frozen Coke and our new LTO Fanta Birthday Cake, are performing well in this category,” O’Malley said. “That said, worldwide travel restrictions have created an opportunity for beverage innovation to give consumers small moments of escapism they would usually experience on getaways.” She pointed to globally inspired flavors and tropical profiles such as dragon fruit and mango as examples that have popped up in frozen beverages. Even healthy trends have spilled over into frozen dispensed beverages with the growth of frozen uncarbonated beverages. For example, Coke put Barrilitos Aguas Frescas and Hubert’s Craft Lemonades in its frozen dispensed lineup, while ICEE’s Peterson added that “consumers are also looking to frozen coffees and teas, smoothies, energy drinks and frozen lemonades as healthy options in the frozen space.” AN ICY FUTURE The overall outlook for FDB in the convenience channel remains positive. “The frozen dispensed beverage category is an inherently adventurous space within nonalcoholic beverages, so we expect to see continued premiumization, experimentation, unique flavor profiles and playfulness in the category,” said O’Malley. “Consumers can’t replicate these frozen carbonated beverage treats at home, so they look to retailers for that experience,” CONVENIENCE.ORG

Peterson said. “When a retailer creates a frozen destination in-store, they start to drive frequency, loyalty and growth. Everybody wins.”

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

SMOOTH SALES Smoothies have become more popular, especially as a healthy alternative to FDB, and now technology allows for self-serve options, too. The Coca-Cola Company’s Minute Maid Premium Smoothies “meet the consumer need as a meal replacement option and as an indulgent snack,” said Erin O’Malley, senior manager of dispensed beverage innovation for the North American operating unit of Coca-Cola. Kwik Trip is one retailer that has jumped onto the smoothie bandwagon with a self-serve program in 770 locations. One machine has the capability of making 47 drinks, including blended coffee drinks and all-natural fruit smoothies. “It’s really clear that frozen beverages are growing, and this is an easy way to get into it in a small, c-store footprint,” said Paul Servais, retail foodservice director for the chain.

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CATEGORY CLOSE-UP / PACKAGED BEVERAGES

Profitable Pours C-stores bank on packaged beverages.

T

here’s a reason they call it the cold vault,” remarked Mike Jackson, category manager at High’s convenience stores, with 55 locations in Pennsylvania and Maryland. “Just like the bank vault, that’s where the money is.”

JUST THE FACTS Packaged beverages increased 3.9% in average sales per store last year over 2019, according to the NACS State of the Industry Report of 2020 Data.

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Indeed, High’s and other c-store operators around the country are grateful for the steady stream of revenue and profits that are derived from packaged beverages, particularly in a year like the last one, when the pandemic wreaked havoc on other in-store categories and the forecourt. Despite adverse conditions impacting store traffic for much of 2020, the packaged beverages category demonstrated its value by turning in a 3.9% gain in average sales per store, according to the NACS State of the Industry (SOI) Report of 2020 Data. “A lot of that can be attributed to retailers executing well and for c-stores retaining their reputation for being the go-to store for packaged beverages,” said Jayme Gough, NACS research manager. “Packaged beverages have always been a great profit center for convenience.” Packaged beverages represented 15.6% of in-store sales last year, according to SOI data, and contributed 19.0% to in-store gross margin. The category’s gross margins of 42.46% demonstrate its importance to store profitability. While packaged beverages suffered in the spring of 2020 because of lockdowns and slowed store traffic, both NACS CSX monthly retail sales and NielsenIQ data point to recovery in the summer months. NielsenIQ data indicated a 3.7% year-over-year sales increase and a 0.9% decline in packaged beverage units sold in c-stores last year. Among subcategories, performances were a mixed bag in 2020. Sales of energy CONVENIENCE.ORG

iStock.com/THEERADECH SANIN

BY TERRI ALLAN


Industry Sales

% of In-Store Sales 2019

15.19%

2020

15.57%

% of Stores Selling

Avg. Sales/Store 2019

2020

$388,326 $403,568

2019

99.8%

2020

99.8%

iStock.com/powerofforever, scanrail, Rouzes

Source: NACS State of the Industry Report of 2020 Data

drinks—the largest subsegment with a 28.5% share of the category—declined an average of 1.5% year over year. “Packaged beverages were impacted by commuters and travelers,” Gough noted, and last year’s shutdowns likely impacted energy drinks. Laura Lynn Freck, senior director, shopper and category insights, at Red Bull North America, reported that c-store sales of energy drinks lagged the overall market “as many shoppers made shifts to other channels like grocery and mass with changes in work and travel routines.” But at High’s, energy drinks performed well. Jackson noted that even before the pandemic he saw some coffee drinkers shift to energy drinks as their morning beverage of choice. RETURN TO INDULGENCE, FAVORITES Carbonated soft drinks, meanwhile, posted one of the best performances of the category as consumers reached into the cold box for indulgences and old favorites. According to the SOI report, average store sales of CSDs jumped 8.8% in 2020, accounting for 23.0% of CONVENIENCE.ORG

category sales. While in recent years the subcategory has struggled amid consumer health concerns, 2020 was “more about people going back to what they know and indulging more in comfort foods and habits,” Gough remarked. Other subcategories that posted average sales gains included sports drinks, juice and other packaged beverages. Average sales of bottled water, meanwhile, dropped 5.9%. “Bottled waters are big travel beverages,” noted Gough. “There was a lot less of that last year.” Packaged beverage marketers pointed to the revival of traditional brands in

We continue to see a demand for multipack cans in c-stores today.

THE POWER OF CSX DATA 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.

JULY 2021 |

91


CATEGORY CLOSE-UP / PACKAGED BEVERAGES

PER STORE, PER MONTH SALES

2018

2019

2020

2021

$30,000 $24,591

$25,000

$20,000

$15,000

$10,000

$5,000

$0 JAN

FEB

MAR

APR

MAY

JUN

JUL

AUG

SEP

OCT

NOV

DEC

2020. “Consumers sought out their favorite beverages for comfort during an uncertain time,” said Carlton Austin, director, convenience retail strategy and commercialization at The Coca-Cola Company’s North America operating unit. “Although trips decreased, basket size increased as consumers stocked up for more future-consumption occasions.” Freck agreed. “Shoppers migrated to trusted brands in energy drinks in 2020,” she said. Still, innovation continues. “Packaged beverage is a category that has exploded with innovation,” said Gough, pointing to CSDs, energy and sports drinks in particular. Kevin Martello, vice president, convenience retail at Keurig Dr Pepper, advised that new brands can help drive sales and profitability.

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CONVENIENCE.ORG

iStock.com/mariusFM77

Source: CSX; www.csxllc.com


Subcategory Performance PACKAGED BEVERAGES

% of Sales 2019

Avg. Sales/Store

2020

2019

2020

Avg. GP$/Store 2019

Gross Margin %

2020

2019

2020

Energy Drinks

30.1%

28.5%

$116,895

$115,197

$52,420

$48,181

44.84%

41.82%

Carbonated Soft Drinks

22.0%

23.0%

$85,356

$92,874

$30,929

$32,397

36.23%

34.88%

Bottled Water

14.8%

13.4%

$57,382

$54,001

$32,618

$29,298

56.84%

54.26%

Iced Tea, Ready-to-Drink

10.4%

9.3%

$40,292

$37,339

$19,944

$18,386

49.50%

49.24%

Sports Drinks

9.0%

9.3%

$34,986

$37,701

$16,809

$17,951

48.05%

47.62%

Juice/Juice Drinks

8.0%

8.0%

$31,059

$32,158

$15,690

$15,475

50.52%

48.12%

Other Packaged Beverages

4.4%

7.2%

$17,175

$29,149

$6,894

$12,208

40.14%

41.88%

Enhanced Water

1.3%

1.3%

$5,181

$5,150

$2,314

$2,345

44.66%

45.54%

100.0%

100.0%

$388,326

$403,568

$168,648

$171,370

43.43%

42.46%

TOTAL

iStock.com/ddukang

For more information on NACS category definitions, visit www.convenience.org/categorydefinitions. Source: NACS State of the Industry Report of 2020 Data

He pointed to Dr Pepper Zero Sugar, launched earlier this year. “We partnered with our c-store operators to provide shopper marketing and points of inspiration,” he said of the unveiling. Martello and others noted that one of the biggest developments for the category in the past year has been growth in take-home packs. “This drove basket size for convenience stores, and we continue to see a demand for multipack cans in c-stores today,” the marketer said. Steve Morris, director of merchandising and marketing at Oklahoma’s Jiffy Trip, reported, “We saw pantry loading at the start of the pandemic,” and as a result, sales of 24-packs of the chain’s proprietary bottled water were strong, along with 12-packs of Gatorade. But Morris lamented the constraints that the pandemic placed on category growth. “Our packaged beverage sales increased 20% in 2020, but it could have been stronger if it wasn’t for supply issues that reduced stock,” the retailer said. Morris and Jackson noted that shortages continue today. “It can CONVENIENCE.ORG

be hard to keep the cold vault filled due to the supplier shortages,” the High’s executive said. OPPORTUNITIES ABOUND Packaged beverage marketers said that while the category recorded a solid performance last year, there’s still plenty of opportunity to grow sales. Freck, Martello and Austin all pointed to the lift bundling drinks with other in-store categories—whether it’s foodservice or snacks—can bring. “We recommend retailers provide easy, convenient meal and snack solutions paired with complementary drinks,” remarked the CocaCola executive, to drive in-store traffic and grow basket size. Pump-to-store conversion is equally important. “C-store operators need to ensure that gas shoppers know packaged beverages are available inside the store,” Austin advised. “It’s crucial to reach them at the pump, whether through digital or printed signage.” He added that in-store vendor-provided cold equipment and ambient racks can

It can be hard to keep the cold vault filled due to the supplier shortages.

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CATEGORY CLOSE-UP / PACKAGED BEVERAGES

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.

be useful in promoting packaged beverages beyond the cold vault. As c-store operators look ahead to their post-pandemic operations, the packaged beverages category will no doubt play a key role. “There’s strong opportunity for continued growth in both single-serve and futureconsumption packages in convenience retail,” remarked Martello. “As mobility continues to increase, we expect to see a very strong summer of increased beverage sales and total in-store traffic.” Austin concurred and said that whether customers’ upcoming journeys are commutes or road trips, “it’s important for c-store operators to be ready with the right mix of beverages to meet their needs.”

ADVERTISER INDEX Contact Information

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Contact Information

Thank you to these advertisers who have demonstrated their support of the convenience and fuel retailing industry by investing in NACS Magazine.

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Contact Information

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ADD Systems ...........................................................................................28 www.addsys.com

The Hershey Company................................................................ 17. . www.hersheysolutions.com

NACS State of the Industry Report ........................................................27 www.convenience.org/SOIreport

Altria Group Distribution Company................ Inside Front Cover AGDCTradeRelations@Altria.com www.altria.com www.tobaccoissues.com

Hunt Brothers Pizza....................................................................53. . www.huntbrotherspizza.com

OPIS/AXXIS............................................................................................... 73 www.opisnet.com

Krispy Krunchy Chicken.............................................................. 57 www.krispykrunchy.com

Placon......................................................................................................29 (800) 541-1535 www.placon.com

Liggett Vector Brands Inc........................................................... 21 (877) 415-4100 www.liggettvectorbrands.com

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

Living Essentials LLC (5-hour ENERGY)........................................7. .. (866) 960-1700 www.5HErewards.com

Refrigeration Design Technologies Inc.................................................33 www.rdtonline.com

C ash Depot.................................................................................. 21 (800) 776-8834 sales@cdlatm.com www.cdlatm.com Chester’s International LLC............................... Inside Back Cover. . www.chesterschicken.com

Cool New Products Guide..................74-78 www.convenience.org/coolnewproducts

Diaego Beer Company USA (Lone River)................................................71 www.loneriverbevco.com

McLane Company Inc................................................... Back Cover www.mclaneco.com/edge

Swedish Match North America (Zyn)..........................................15 (800) 367-3677 www.smna.com

24/7 Day ..................................................................................................32 www.247day.org

Swisher International Inc. ...........................................................9 (800) 874-9720 www.kayak-outdoors.com

NACS Convenience Matters.......................................................................6. . www.conveniencematters.com

Electrolit USA............................................................................... 41 www.electrolit.com

NACS Convenience Voices.........................................................................4 www.convenience.org/voices

Freezing Point LLC................................................................................... 91 www.frazil.com/frazil

NACS Cool New Products........................................................................ 33 www.convenience.org/cnp

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Trion Industries Inc................................................................................. 19. . (800) 444-4665 www.triononline.com Vitamin Energy LLC.............................................................................10-11 www.vitaminenergy.com

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frazil.co m info@fre • 801-838-7147 ezingpo intllc.co m

*Source: Sales data from 1,100+ stores that switched to Frazil from other FUB programs during 1/1/2019 – 12/31/2020


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Absolutely, I Do

Leaping Lizards Even giant reptiles get thirsty. A six-footlong monitor lizard sneaked into a 7-Eleven in Nakhon Pathom, Thailand, and climbed onto shelves in search of food, tossing several cartons of milk onto the ground in the process. Customers and staff hid behind the counter until animal control could capture the animal and safely release it into the wild. Monitor lizards eat fish, snakes and frogs, but the area had been experiencing some dry weather, so its typical diet may have been harder to find, leaving the lizard no choice but to grab a snack at its local c-store. 96

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If you’re a fan of the popular TV show The Office, you know that Jim Halpert proposes to Pam Beasley at a gas station in the pouring rain. The Office stars Jenna Fischer and Angela Kinsey share on their Office Ladies podcast that although it wasn’t a real gas station, the set was modeled after a gas station that show creator Greg Daniels visited often when driving on the Merritt Parkway in Connecticut. The show crew simply used Google Street View to find a real gas station off the parkway and built the set to match. Another fact the hosts shared was that it cost the show $250,000 to shoot the scene, which was only 52 seconds long—the most expensive scene in the entire series.

To-Go Bag No can for gas, but you still need to stock up? Don’t take a page from one gas station customer’s book and just use a couple of plastic grocery bags. A video circulating on social media shows a woman filling a bag with gas and placing it in the trunk of her car. Although this method of gas handling is extremely dangerous, she did double bag it—you know, just in case.

CONVENIENCE.ORG



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