Convenience Store News

JAN 2017

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48 Convenience Store News | JANUARY 2017 | WWW.CSNEWS.COM Business Forecast (70.6 percent) expect their packaged beverage sales to increase in 2017, and only 2.9 percent expect sales to decrease. The projected net change is 3.3 percent. C-store operators are right to be optimistic. According to the CSNews Forecast Study numbers, dollar sales of packaged beverages — which includes carbonated soft drinks, bottled water, sports and ener- gy drinks — will increase 5.2 percent across the total industry. On a per-store basis, dollar sales are expected to increase 4.5 percent and unit volume is expected to increase 4.1 percent. All of these figures are above the estimated results for 2016. Although they still take up the most space inside convenience store cold vaults, carbonated soft drinks are likely to see another year of status-quo growth in 2017, with an expected rise of 0.9 percent in dollar sales per store and 1.3 percent in unit volume per store. Perhaps reflecting consumers' growing interest in healthy eating and drinking habits, or even concern over the safety of tap water following national cover- age of the water crisis in Flint, Mich., bottled water will see more growth in dollar sales per store (up 4.4 percent) and unit volume per store (up 2.3 percent), although this marks a slowing compared to 2016. As for alcoholic beverages, price increases are likely to boost beer dollar sales in 2017, which are expected to rise 1.4 percent per store and 2.1 percent for the total industry. Unit volume is forecasted to be flat. C-store operators believe the biggest impact on beer will come from states implementing new laws regard- ing beer sales, such as Pennsylvania did in 2016. The continued popularity of craft beer is a likely contributor to higher prices. Dollar sales of micro- brews are expected to increase 12.6 percent while unit volume increases 11.1 percent, both on a per-store basis. This marks another year of slowing growth for the segment, but retailers note it remains "hot," with some reducing their stock of domestic brews in favor of craft. One retailer stressed the importance of "stay[ing] relevant with evolving brands in craft." CANDY Following a year of lower expectations, retailers are more willing to count on candy. The percentage of c-store operators that expect their candy sales to increase in 2017 rose to 57.1 percent, a jump up from the 46.2 percent who said the same one year ago. Additionally, 42.9 percent expect sales to stay the same, and no respondents believe their candy sales will decrease. The net change they expect is 1.9 percent, percent who felt the same way heading into 2016. Another year-over-difference that suggests a category cool-off is that this time around, there is a small contin- gent of retailers (3 percent) who anticipate their foodser- vice sales will decrease in 2017. There were zero respon- dents the previous year who expected a sales decline. And even among those who hold a positive 2017 outlook on foodservice, the net change in per-store sales they project is lower in this year's study: 6.8 per- cent vs. 9.1 percent for 2016. When asked what trends will have the biggest impact on the category in the year ahead, c-store retailers repeated three words: fresh, healthy and quick. Several also said their focus for 2017 will be on offering a wider selection, and building loyalty among their customers. "People on the go still need their quick food fix," one retailer commented. COLD VAULT While convenience stores are evolving in terms of the products and services they offer consumers, they remain a primary destination for those who want to make a quick beverage purchase. Seven in 10 retailers Retailer Forecast: Beer/Malt Beverages 57.6% 36.4% 6.0% Source: Convenience Store News Market Research, 2017 Net change: 2.7% 2017 sales per store will: Increase Decrease Stay the same 2017 2016 2015 Industry Forecast: Beer/Malt Beverages (% change) Industry Dollar Sales Dollar Sales per Store Unit Volume per Store 2015 figures are actual; 2016 are estimated based on nine months; 2017 are forecasted Source: Convenience Store News Market Research, 2017 0.0% 1.4% 2.1% 2.6% 1.9% 2.5% 2.4% 2.8% 3.7%

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