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 Fact Sheets

Beer Sales
Posted: May 29, 2009                          

Beer in Convenience Stores
Nearly 80 percent of convenience stores sell beer, accounting for nearly one-third of all beer purchased in the United States, about 93 percent of which is sold cold. In fact, the U.S. convenience store industry sells more than 2 billion gallons of beer a year – roughly one-third of all the beer purchased in the Unites States. (In 2007, U.S. consumption was 6.7 billion gallons.)

For the overall convenience store industry, beer sales in 2008 represented 10.2 percent of all in-store sales in convenience stores and 6.9 percent of gross margin dollars, ranking it fifth among all in-store categories. However, because less than 80 percent of stores sell beer (beer sales in convenience stores are not allowed in several states and/or municipalities), these per-store numbers increase when looking only at stores that sell beer.

Unlike grocery and drug stores, conveniences stores have an advantage with beer sales: open longer hours, stock top sellers and product is often kept cold.

Keeping It Cool
In recent year, sales of multipacks — 20-, 24- and 30-packs — have grown in popularity at convenience stores, leveraging sales beyond the cooler doors. To accommodate larger volumes, stores such as Parker’s and Flash Foods have “beer caves,” closed-door areas that are temperature-regulated to keep product cold for consumers. The beer caves also eliminate time spent on restocking cooler doors when product runs low. And how cold is cold? As low as 28 degree F, the freezing point for beer.

Beer Sales
Premium beers — including flagship brands like Budweiser, Miller and Coors —  hold the lion’s share of category sales, accounting for more than 55 percent of all beer sales in convenience stores. However, in recent years, sales of craft beers and imports have been growing. In fact, craft beers increased 16 percent in 2008, posting the best performance of all beer segments.

There are certain times of the year when beer sales boost, such as before big sporting events that people watch in their homes (like the Super Bowl), warm weather holidays (like the Fourth of July) and other holidays where families or friends gather (like the period around Christmas and, increasingly, Halloween). Retailers ensure that stores are stocked adequately and use these selling opportunities to cross promote beer with other in-store merchandise, such as salty snacks, packaged beverages and frozen foods.

Cooler out-of-stocks can be costly to retailers, making proper space allocation in the cooler is essential. According to Anheuser-Busch, about 64 percent of convenience store customers who are shopping for beer will go elsewhere if cold beer is not available. Half of those customers will go to another store if a particular brand is not available and 44 percent will shop elsewhere if the price is too high.

Government Regulation
Convenience stores in some states are at a disadvantage when it comes to beer sales. For example, Colorado’s decades-old 3.2 beer law places convenience stores at a disadvantage with liquor stores because liquor stores are open on Sundays and can sell full-strength beer. Convenience stores in New Jersey, Pennsylvania and Rhode Island cannot sell beer, convenience stores in Indiana cannot sell beer cold, and in Utah, convenience stores cannot sell flavored malt beverages.

Like cigarettes, the U.S. government also collects a federal excise tax on beer: $7 on first 60,000 barrels for a brewer who produces less than 2 million barrels (small brewers) and $18 per barrel after the first 60,000 barrels (Anheuser-Busch, MillerCoors). More than 40 percent of the cost of a bottle of beer goes to federal, state and local taxes, including excise taxes.

State legislatures frequently eye beer excise taxes as a means to generate revenue. In Oregon, a recent proposal sought to increase the state’s beer excise tax by a whopping 1,900 percent. At the federal level, legislation has been introduced (H.R. 836, the Brewers Excise and Economic Relief Act of 2009) that would rollback the federal beer tax to its pre-1991 level of $9 per barrel for large brewers and $3.50 for small brewers.

There are also hundreds of dry counties across the United States where no alcohol can be legally sold. What often happens, however, is that residents of dry towns go into neighboring towns that can sell alcohol to make a purchase. In recent years some dry counties have begun selling alcohol to help boost revenues, and keep residents from sending their tax dollars into other counties. Some states also uphold “blue laws,” meaning alcohol cannot be sold on Sundays.

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