Will c-store alcohol sales bring happy holidays in 2024?
While overall U.S. wine and spirits sales are expected to lag this holiday season, experts are predicting a slight sales lift in the non-beer alcohol segment for c-stores. Pre-mixed cocktails and ready-to-drink cocktails should perform especially well.
Overall wine and spirits sales fell 3.8% in all off-premise locations from September to December 2023, and retailers could see contraction again in 2024, said Michael Bilello, director of the Wine & Spirits Wholesalers of America’s monthly market report, SipSource.
“The market is challenged right now, and that trend will continue through the last third of 2024,” Bilello said. “Younger consumers are drinking less often, while the election adds a level of uncertainty for consumers and their spending.”
He also noted that the ongoing fight for alcohol shelf space “is likely to become more of a battle for wine and spirits.”
"Going into the holidays, I expect beer and liquor to continue climbing at a similar pace to current.”
Tim Good
Director of store operations, Wally’s
Circana expects overall retail sales of alcohol to rise 1% this holiday season compared to last holiday season, but c-stores should have a higher lift of 2%, according to Mike Wyatt, client insights consultant for beer, wine, spirits and tobacco, for Circana.
C-stores are expected to outpace most retailers because they have increased their focus on alcohol sales and are also less susceptible to economic concerns and pressures than other retail channels, Wyatt noted.
“While 2% may not seem very significant, c-store alcohol sales increased 4% last holiday season, so the compounded effect is actually quite strong,” he said.
Additionally, c-stores accounted for just over 5% of wine and spirits off-premise sales, while volume declined 2.1%, for the past year as of August, said Bilello. That is more than 3.5 points better than overall off-premise channels, which lost 5.8% in the same span.
In September, the convenience channel was the only segment to grow sales in spirits, according to Bilello. C-stores gained 3% while overall off-premise spirits sales fell 3.2%. And C-stores were the only channel to post a positive result for each of the last 12 months.
"This is thanks in large part to the success of spirits-based RTDs,” Bilello said.
However, in the wine segment, c-store sales dropped 4.9% year over year in September. During the fourth quarter last year, wine sales at all retailers fell 1.3%, with wine-centric seltzers plummeting 48.4%, according to Circana.
While alcohol sales are not reaching the growth levels of years past, Wyatt said, it remains a very important macro-category for consumers and retailers.
“We have just seen shifts within alcohol that make certain segments seem like they are on the decline, but they tend to bounce back as consumer tastes and preferences change and new consumers enter the category,” Wyatt explained.
Recent such shifts include sales of spirits outpacing wine across all types of retail outlets and the resurgence of craft beer.
RTD sales will be especially bright
RTD cocktails — including flavored malt beverages and hard teas are already performing well in c-stores, and will continue to stand out this holiday season. A positive harbinger: flavored malt beverage sales at c-stores rose 18.3% in the holiday quarter of 2023 year over year, according to Circana, while hard cider sales rose nearly 7%.
“We are anticipating our liquor and RTD cocktail sales to be higher this holiday season, with wine being flat or a small decline as has been the trend all year for us,” said Tim Good, director of store operations at Pontiac, Illinois-based Wally’s.
Wally’s wine sales are down around 5% so far this year compared to 2023, while beer sales have increased “double digits” and liquor sales rose 5% compared to last year.
Spirits and canned cocktails, in particular, have seen “huge increases” thanks to suppliers’ investments in marketing, Good added.
"It seems like every celebrity is endorsing a new drink every month,” he said. ”Going into the holidays, I expect beer and liquor to continue climbing at a similar pace to current.”
The RTD growth surge can be partly attributed to the fact that the overall wellness trend “now extends beyond historical short-lived new year’s resolutions and is embedded into many consumers routines and lifestyle,” Wyatt explained, adding,“This is why RTD products touting ‘real fruit juice’ as well as some ‘organic’ alcohol options have performed well in the market.”
Premixed cocktails, tequila, and imported beer have been outperforming the overall alcohol category, and Wyatt expects sales to grow this holiday season as well. “Craft beer has also experienced a resurgence over the past year, and we expect beer makers to capitalize on this resurgence in the holiday season,” he noted.
Holiday flavors and gift sets
Spiked eggnogs, champagne and sparkling wines are traditional favorites, according to Wyatt. However, in the fourth quarter of 2023, sparkling wine and champagne sales fell 2.9%, according to Circana.
C-stores should expect popular products to be those that include caramel, cinnamon, mocha and coconut flavor profiles — all of which over-index during the holiday season relative to the rest of the year and offer unusual twists, Wyatt added.
Other popular flavors that will likely do well as part of holiday beverages include: peach, blood orange, cranberry, pear and passion fruit, Wyatt said.
"These all lend themselves to nice holiday beverage options — whether in RTD format, with tequila, vodka and/or whiskey being the hottest RTD alcohol type — or as part of mixed drinks made at home before, during, and after holiday gatherings,” he said.
Instead of focusing solely on limited-edition holiday flavors, Wally’s has had much more success merchandising alcohol gift sets, which typically include shot glasses or another item along with the spirits, Good said. The c-store operator’s customers gravitate toward “familiar brands” such as Ole Smokey, Crown Royal, Jim Beam and Jack Daniels gift sets.
Merchandising tips
C-store operators should think outside the box for holiday alcohol merchandising, particularly since cold space for single-serve items is limited, Wyatt advised.
Operators can utilize warm shelf space and endcaps to merchandise multi-packs for future consumption. This is how Wally’s approaches it. Instead of utilizing its typical inline spirits shelving, Wally’s utilizes a high traffic endcap and a gift table in each store.
Retailers can also aim to surround the alcohol options with other products that are commonly purchased in the same basket, such as snacks and energy drinks, Wyatt said. “This will further enhance the convenient nature of the trip for consumers and help optimize overall sales.”
