The Convenience Channel’s Weight

Emerging beverage brands have long targeted a successful transition from natural grocers to mass retailers. However, the convenience channel has drawn plenty of recent buzz for its untapped promise. Compared to the familiar confines of the Costcos and Targets of the world, convenience stores represent a mostly new and opportunistic frontier.

A recent report by the National Association of Convenience Stores (NACS) says that the frontier keeps growing. According to the report, U.S. convenience stores increased in-store sales in 2013 to a record $204 billion. As of Dec. 31, 2013, the U.S. convenience store count had increased to 151,282 stores, a 1.4 percent increase from the previous year.

Nielsen data states that convenience stores comprise 34.3 percent of all U.S. retail accounts. For those keeping score at home, there are 41,378 drug stores, 37,459 supermarkets and 24,853 dollar stores, according to the report.

The report also offered a breakdown of the channel’s in-store sales. Tobacco products reign supreme, accounting for 37 percent. However, foodservice tallied 18 percent and packaged beverages accounted for 15.5 percent. When it came to profits, foodservice drove the bus, accounting for 29.1 percent of gross profit dollars. Packaged beverages accounted for 19.6 percent of gross profit dollars.

The convenience channel’s growth coincides with its evolution, which has been a key talking point at recent BevNET events. In December at BevNET Live, Julie Whittle, 7-Eleven’s category manager for soft drinks and energy/nutritional beverages, expressed her company’s interest in working with smaller brands and new concepts. That thinking has been buttressed by the company’s introduction of 7-Ventures, a venture capitalist arm with the patience to cradle the right brands for three to four years, if necessary.

Last week at FBU Boston, Joe Hamza, the VP of sales and marketing for Tedeschi’s Food Shops, spoke about the channel’s metamorphosis and its gradual push toward healthier products.

Check out Hamza’s speech below: