While store traffic at Seattle’s Cone & Steiner General markets continues to be adversely affected by the pandemic-born, work-from-home trend, wine sales remain strong. “Wine has historically been one of our top categories and that has stayed true during the pandemic,” says Dani Cone, owner of the two-unit upscale convenience store concept. She attributes the performance to steady demand for the stores’ bottled, canned, and by-the-glass offerings, poured at their tasting bars during happy hour events.
Wine is also a key contributor to total sales at Foxtrot, the omni-channel c-store chain with 21 locations currently in Chicago, Dallas, and Washington, D.C., and more units planned. Beverage alcohol accounts for 30% of total sales at Foxtrot, an e-commerce reliant concept, with wine representing two-thirds of that, according to the company’s director of adult beverages Dylan Melvin. “Wine is a strong category for us,” says Melvin, noting that while 2020 saw significant growth, gains continued last year, with “positive year-over year comps.”
And at Kum & Go, the Iowa-based, multi-state c-store chain, “wine is performing very well,” says alcohol category manager Christian Rogers. “We’ve seen very strong growth over the last few years,” driven by super-premium wines, wine-based RTDs, and wine packaged in TetraPaks, he explains. Kum & Go sells wine in 275 stores in ten states, typically merchandised in a 3-to-6-foot space, as well as in a cold box dedicated to the category and RTD cocktails.
Indeed, “grab-and-go” packaging, an expanding millennial customer base, and increased focus on quality food service programs are all contributing to the emergence of c-stores as a growth channel for wine, helping to shatter its previous image as a destination for only low-budget and fortified offerings. According to NielsenIQ, wine sales in c-stores increased 2% to $1.5 billion last year, following a 22% surge in 2020 and a 6% gain in 2019. While table wine sales in the channel dropped 3% in 2021, flavored wine, sparkling wine, and wine-based cocktails posted either high single-digit or double-digit growth, NielsenIQ reported. Chad Fisher, vice president at The Wine Group, which owns more than 25 wine brands, including boxed star Franzia, says that with longer business hours and closer proximity to where consumers live, c-stores are gaining a competitive advantage. “Wine trends in the convenience channel outpaced grocery stores in 2021,” he says. “There’s a lot of optimism that this will continue through 2022.”
C-stores are increasingly investing in wine as a basket builder, Fisher and other marketers note. “Wine builds the total transaction size, while enhancing the shopping experience,” says Herb Smith, vice president of customer development at E. & J. Gallo Winery. “In most cases, the purchase is impulse driven and incremental,” Fisher adds, noting that many national and regional chains are highlighting wine with improved merchandising strategies over those of the past. At Kum & Go, for example, a typical store now offers between 30-50 wine SKUs, priced from $8 for a 750-ml. of Barefoot Pinot Grigio, according to Drizly, up to $18 for La Marca Prosecco. “This represents a higher variety than in the past, as our shopper has an expectation of a wider variety of price points,” Rogers says. The retailer was an early adopter of stocking wine among c-stores, he notes, and indeed, at Kum & Go’s newer Marketplace model, wine is one of the concept’s focal points, with merchandising near the checkouts. The chain’s commitment to wine comes from the top as the Krause family, the chain’s owners, have separately invested in wine, purchasing Italy’s Vietti winery in 2016.
As with other retailers, c-stores saw big growth in wine sales at the height of the pandemic and likely attracted new customers in the process. “The pandemic helped drive awareness of the ability to purchase wine in convenience,” Rogers remarks. “Even as consumers have become more comfortable returning to large format, they’re still purchasing from convenience.”
In addition to its improved image, the typical shopper in c-stores has changed in recent years. “According to our internal consumer insights, the millennial generation makes up 50% of the c-store consumer base,” Gallo’s Smith says. “They frequently shop for wine and typically shop two times a week. When shopping at c-stores, they’re motivated by three key things—location, ease of shopping, and hours of operation.” Melvin confirms that for Foxtrot, millennials are the chain’s prototypical consumer. “They’re very discerning and thoughtful with their selection,” he says. “They’re into premium wines but not luxury. They’re wine knowledgeable, confident, and know what they want.” Foxtrot offers 225 wine SKUs, priced from $5 for a 187-ml. of Jean Louis Cuvée Brut to $135 for a 750-ml. of the 2014 Mayacamas Cabernet Sauvignon, with the chain’s sweet spot settling at $21.
Premiumization And Convenience
With the shift to more premium wine, some c-stores are seeing growing demand for natural wine. One of the three Mendez Fuel locations in Miami, for example, boasts more than 150 natural wines, generally priced at $24-$29 a 750-ml. Co-owner Andrew Mendez points to the 2020 Gulp/Hablo blend ($20 a 1-liter) as a top seller. “I could go through a case of that a week if I had enough of it,” says the retailer, noting that his natural wine customers are very loyal. “I have one customer who I deliver about $100 worth of wine to every weekend.” At Mendez Fuel—which has built a repu- tation for stocking must-have craft brews—wine sales are now outperforming craft beer, the retailer notes. Similarly, Cone of Cone & Steiner General points to a “big push toward natural wines” at her Seattle shops. “As people learn more about these wines, demand is on the rise,” she notes. “The more we bring in, the more we sell.”
At Cone & Steiner, where wine is generally priced between $10-$22 a 750-ml., canned wine is also trending. “Customers like that they can sample a wine by buying it in a can rather than a whole bottle,” Cone says. As a result, she’s increased her offerings of canned wines, which are generally priced at $4-$9 for packages ranging in size from 250-ml. to 12-ounces. At Foxtrot, meanwhile, boxed wine, such as top-selling Bota Box ($22 a 3-liter), is seeing good growth within alternative wine packages. “We’ll be making a deeper investment in boxed wine this year,” Melvin says. Overall, according to Gallo’s Smith, cans, cartons, and boxes account for more than 30% of c-store wine volume. “C-stores meet the demands of fast-paced lifestyles well,” the Gallo executive says.
The investment by many c-stores into quality food service programs in recent years coincides with the uptick in wine sales and provides valuable merchandising opportunities. Pointing to expanded fresh food options and onsite kitchens, The Wine Group’s Fisher says promoting interaction with wine can create “incremental opportunities to convert consumers in store,” while also increasing the total basket value. Todd Anderson, president of Fun Wine, the marketer of flavored wines in colorful packages, suggests c-stores cross-merchandise the beverage with freshly prepared foods. “Wine is a premium product,” he says. “If c-stores are bringing in more premium food selections, shouldn’t wine have a place?”
C-store operators are already working to properly merchandise wine in stores and through marketing channels. Foxtrot takes a wine shop approach to the layout of its wine depart- ment. “At most of the stores, wine is merchandised in the front,” Melvin explains, via either a combination of shelving and stand-alone wine fixtures or an entire wine wall. Mendez Fuel and Cone & Steiner, meanwhile, have hosted in-store sampling events, and the Seattle c-stores even offer happy hour discounts on wine by the glass ($6) at their tasting bars and outdoor eating areas. Both concepts are heavy promoters of wine through social media channels, especially on Instagram. And Kum & Go has linked wine to snack food purchases and its loyalty program and has moved toward on-demand delivery of the product via its own app and partnership with Drizly, moves that have resulted in incremental sales growth, according to Rogers.
C-store operators and marketers see only continued growth for wine in the channel. Anderson points to premiumization and “grab-and-go” trends. “For wine in c-stores, the opportunity is endless,” he says. Fisher agrees, noting that small-format stores like convenience are outpacing big box stores in wine growth. He says c-store retailers shouldn’t “miss the opportunity to gain fair share,” and should consider investing more into wine as “consumer demand will continue to increase for years to come.”
Retailers like Kum & Go and Cone & Steiner are already onboard. With the emergence of alternative packaging, wine-based RTDs and the digital marketplace, Rogers says, “the wine category has a ton of runway in convenience.” Cone adds that with many of the challenges of the pandemic now gone, the category will likely explode. “There’s so much interest in wine today,” she says. “I see big potential.”