Wine And Spirits Distributors Target The C-Store Opportunity
June 4, 2024Major wine and spirits wholesalers in the U.S. are doubling down on convenience stores as the channel and its customers transform, ready-to-drink (RTD) beverages surge, and sales in other trade channels soften. “Since the beginning of 2023, we’ve seen growth of more than 1,700 new c-stores in our markets while other sales channels are showing declines in number of units,” says John Wittig, chief commercial officer at leading wholesaler Southern Glazer’s Wine & Spirits. As a result, the top wine and spirits house in the country has ramped up its efforts “to add value and service more effectively to these accounts and their customers, as categories like RTDs grow and as c-stores expand their wine and spirits footprint,” Wittig says.
C-stores registered a 5.5% increase in spirits sales in the 12 months through February, the best performance of any trade channel, accounting for about 7% of all off-premise spirits volume, according to SipSource, depletion data compiled by the Wine & Spirits Wholesalers of America (WSWA). Pre-packaged cocktails were the best performers, as volume skyrocketed 16%. While wine sales in c-stores dropped 3.9% during the period, they outperformed other outlets as total off-premise wine volume declined nearly 9%.
TJ Radzilowicz, senior director of commercial strategy at Breakthru Beverage Group, concurs that wine and spirits sales in c-stores are gaining momentum. He says that the trend came to a head during the pandemic as consumers sought out quick shopping experiences, with low foot traffic. It was during those visits that many consumers discovered that wine and spirits are sold in c-stores, where allowed.
With some 150,000 c-stores in the U.S. today, Radzilowicz says that the opportunity ahead is significant. Between 2020 and the end of this year, third-ranked distributor Breakthru expects to have expanded its c-store coverage more than 30%, he reveals, noting, “We’ve made a lot of progress in exploring voids and building relationships.”
The recent trends for wine and spirits in c-stores are all the more impressive given that it’s likely the most restrictive channel, especially for spirits, in the off-premise. In the 44 states that Southern Glazer’s services, for example, only 11 of 26 open markets allow for the sale of high-proof spirits in the outlets. “It’s in these particular markets where we have the biggest opportunities, as it allows us to sell our full portfolio of products and leverage our return on investment,” Wittig explains.
Radzilowicz points to the “concentration” of markets in the Midwest that permit the sale of full-strength spirits in c-stores—including states like Illinois, Missouri, and Wisconsin—as growth areas. In the Southeast, meanwhile, c-stores are generally limited to offering low-strength spirits, including RTDs, he notes.
The transformation of c-stores in the last decade or so, from often low-lit, sometimes unkempt stores, to larger, modern spaces with a growing reputation for foodservice, has contributed to their growth as a destination for wine and spirits. And as the stores have gone more upscale, so too has the consumer base, driving operators to stock higher-ticket items.
“We’ve observed a growing interest from c-stores in stocking wine and spirits, including RTDs,” remarks George Marsden, chief commercial officer at Johnson Brothers Liquor Co., “resulting in double-digit growth in distribution across our portfolio over the past 12 months.” Fourth-ranked wholesaler Johnson Brothers services about 10,000 c-stores today, Marsden says, which is “significantly more” than it served just five years ago.—Terri Allan
We’ll have more on what’s driving wine and spirits growth in c-stores in the second part of this feature.
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