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7 ways c-stores are catering to millennials

CTM-Inbound-Blog-April2019-CstoreMillennial-FFrom the beginning, convenience stores were ready-made to serve the youth market – with a large range of products and services specifically aimed at teens and young adults with spare change burning a hole in their pockets.

The thing is, the youth market is continually evolving. Fortunately, convenience stores have proven to be quite good at evolving alongside them.

Much has been made about millennials (who prefer to be known as ‘young adults’).

Who are millennials?

Born between 1981 and 1996, millennials represent 27.5% of Canadian population.

According to 2018 findings by international research firm Nielson, millennials are the fastest growing generation in Canada. Interestingly, since 35% live with their parents, they are under-represented in the Grocery category (scoring -23% on Nielson’s fast-moving consumer goods (FMCG) index compared to other Canadians. Yet they score ABOVE the rest of the nation in the Convenience category at +103%.

This may also be driven by a tendency to shop for what they need right now versus buying items such as milk as part of a trip to the grocery store. Nielson says this is driving frequency of visits to convenience stores.

Oh, and if you believe the myth that millennials don’t have driver’s licenses (and aren’t a primary target for your convenience store) think again. DesRosiers Automotive consultants found a rise in the number of millennials who are getting their licenses. It says financial reasons may be behind later car ownership. Yet, even those who don’t own cars are likely to use tech-based alternatives such as rideshare services.

These young adults are a valuable target demographic and here are seven ways modern convenience stores are catering to millennials.

  1. Healthier food options

To compete for today’s young customers who are more health-conscious than previous generations, the convenience industry has to think beyond junk food (pop, chips and chocolate bars) and start offering healthy alternatives. This includes fresh sandwiches, fruit and salads. Also, vegan options (once considered a fringe market) have now gone mainstream.

It is also important to consider options for those with dietary restrictions, such as dairy allergies and gluten intolerance. Research shows the global market for gluten-free products have steadily grown, and is projected to reach $4.6 billion by 2020.

The good news is that today there are a growing number of manufacturers with products that are a natural fit for convenience stores: including dairy-free, gluten-free and fat-free ice cream alternatives.

  1. Rethink your drinks

Millennials have largely driven the market for sports energy drinks, which are now a mainstay in coolers across Canada – and will continue to be in high demand. Pop and slushes continue to remain popular. Emerging drink categories to keep your eye on are kombucha and cold coffee beverages.

Surprisingly, research shows millennials are also big purchasers of milk and fruit juices.

  1. Convenience store delivery

In the age of Skip the Dishes and Uber Eats, even convenience store visits aren’t convenient enough for some. So, millennials are having the c-store brought to them. As one of the few options open 24/7, it makes sense. And those with a quick service restaurant or hot food offering are that much more attractive.

Many industry voices suggest there may be a demand for more diverse convenience stores to partner with delivery services for grocery items – something that large grocery chains are rapidly adopting.

  1. Think electronic accessories

Millennials live and breathe by their mobile devices. More and more stores are introducing an expanded selection of mobile device accessories: from chargers to cases to battery packs to headphones. Some stores are even opting to carry premium brands.

  1. Not your dad’s vending machine

Around the world, vending machines are offering a sophisticated array of food and beverage products: everything from sushi to fresh meat. Such options are making their way to Canada and c-store may be a logical location due to the security and 24/7 access.

  1. E-cigarettes and cannabis replacing traditional tobacco

Between health and restrictions concerning public smoking spaces, traditional tobacco products are on the decline with this group – but do remain popular with the older demographic (so you may not want to reassign all of that shelf space prematurely). E-cigarettes and accessories are replacing these products, but fall under many of the same rules for display and security.

The newly legalized Canadian cannabis market is worth keeping an eye on, to see if opportunities emerge for convenience stores. Couche-Tard is already exploring this opportunity.

  1. A green generation expects sustainable choices

Nielson found three in four millennials are willing to pay extra for products and services deemed to be sustainable. What does this mean for c-stores? It may involve a new way of thinking when it comes to finding products with more environmentally responsible packaging (avoiding overpacked products, minimizing plastic bags, and using biodegradable cups, plates and containers, for example).

“Brands that establish a reputation for environmental stewardship among today’s youngest consumers have an opportunity to not only grow market share but build loyalty among the power-spending millennials of tomorrow, too,” says Grace Farraj, SVP, public development and sustainability, Nielsen.

The definition of convenience is changing

C-store owners can’t simply stay the course to keep up with the changing demands, expectations and buying habits of this increasingly influential demographic. Fortunately, millennials put a premium on convenience – which just happens to be our wheelhouse! Always think of ways you can take convenience to the next level.

Come see us at Booth #512, Toronto CARWACS March 3 & 4, 2020

Click here to learn more from CTM Design Services Ltd. 

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Plant-based protein companies poised to expand products

Screen Shot 2019-12-29 at 2.45.10 PMWhen A&W started serving Beyond Meat veggie burgers at its restaurants, the fast-food chain offered many patrons their first bite of the much touted, celebrity backed plant-based patty.

In the year and a half since, Canadians continued searching for plant-based options at home and on the go. By the time A&W added a plant-based nugget in December, many fast-food chains – even long-time holdout McDonald’s Canada – boasted a trendy vegetarian menu item, too.

As restaurants jumped on the plant-based protein craze this past year, the products also proliferated on grocery store shelves.

Earlier this month, Beyond Meat announced grocers across the country would start stocking its Beyond Beef product, which mimics ground beef. It launched its burgers in the summer and they’re now sold at more than 4,000 stores in the country.

Lightlife, meanwhile, boasts seven plant-based protein products with national distribution in Canada, and Field Roast Grain Meat Co. makes about four that are sold in many parts of the country. Both brands belong to Chicago-based Greenleaf Foods SPC, a wholly-owned, independent subsidiary of Mississauga, Ont.-based Maple Leaf Foods.

Kicking off the trend, Health Canada revealed a new food guide in January recommending people “choose protein foods that come from plants more often.” It minimized meat’s dominant position in the previous iteration and put the meat industry on the defensive for their share of consumer plates.

As interest in alternative protein grew, backlash bubbled.

But the folks leading major plant-based manufacturers say consumers want their products and plan to add more varieties and sales points, create tastier options and lower their prices to beat out bargain meat.

A&W sparked a consumer frenzy when it debut the company’s veggie burger in July 2018. The chain temporarily sold out of the patties, having under-estimated people’s appetites.

That sales spike wasn’t a flash in the pan, either. Demand “stayed remarkably stable” since that temporary shortage, said chief executive Susan Senecal.

A&W added a new veggie option this month – Lightlife nuggets. Only its Ontario and B.C. restaurants stock the chicken-nugget imitation, and A&W expects to sell out by the new year. Still, in a sign of the industry’s strength, the company hopes eventually to offer the nuggets nationwide.

“I think there’s a huge opportunity for growth in Canada,” says Ethan Brown, the founder of California-based Beyond Meat.

“We’re just getting started.”

Beyond Meat wants to add more product types and sales points, so consumers can find every type of meat substitution conveniently.

After A&W introduced Beyond Meat burgers to Canadians, other eateries raced to offer something for vegans, vegetarians or – most frequently, it seems – flexitarians. The latter describes those who sometimes swap meat for other options for environmental, health or animal welfare reasons.

Today, many fast-food chains boast a veggie burger, some pizza places offer veggie ground “meat” or vegan cheese as toppings, and Kentucky Fried Chicken Canada dabbled with plant-based fried chicken sandwiches and popcorn chicken options at a single restaurant for one day.

McDonald’s Canada, which long resisted consumer calls to bring back a veggie burger, decided to pilot a PLT – a Beyond Meat sandwich – for 12 weeks, starting in late September, at 28 restaurants in southwestern Ontario.

The company is trying to understand what place plant-based proteins may have in its operations, said John Betts, McDonald’s Canada chief executive.

He believes it won’t canniabalize the company’s meat product sales, but will likely reflect what he calls “the salad effect.” When McDonald’s first introduced salads in the 1980s, it removed what executives dubbed “the veto vote” of someone preventing a group visit to McDonald’s because it didn’t suit their dietary needs or preferences, he said.

“Plant-based protein could be the new salad type of option,” he said, stressing the chain expects the addition to drive up meat sales, which remains the company’s focus.

With burgers, nuggets and other plant-based forms becoming ubiquitous, pushback started. In particular, meat producers are taking aim at claims that alternative proteins offer better health benefits.

The Quebec Cattle Producers Federation called on the country’s food inspection agency to intervene on what it called misleading advertising on Beyond Meat’s products, saying the company shouldn’t be permitted to use the word meat.

The Centre for Consumer Freedom, a Washington, D.C.-based non-profit organization funded by food industry and consumers, took on the issue of what it calls “fake meat.” It launched a website and created advertisements alleging some plant-based protein products use potentially harmful chemicals and can be worse for humans than their meat counterparts.

“It’s unfortunate,” said Beyond Meat’s Brown of the organization’s campaign he says is geared toward scaring consumers from eating food that will benefit them.

The burger, for example, contains no trans fat or cholesterol, and 20 grams of protein, according to the company. It does include 16 per cent of the daily recommended sodium content, which is comparable to a seasoned meat patty.

Beyond Meat will launch a substantial marketing initiative in Canada next year, said Brown, as it looks to grow its presence in the country.

“The products that we have are limited in scope. They need to be improved and we need to expand our market presence.”

He envisions a future where shoppers can select a Beyond Meat alternative for any animal protein cut they were shopping for at the grocery store, such as a boneless chicken breast or steak, and where diners can sample more of its product range at restaurants. Beyond Meat anticipates more partnerships next year.

For some consumers though, the price presents a roadblock. A pack of two Beyond Burgers costs $7.99 plus tax at one Canadian grocery chain, compared with $12.99 for an eight-pack of its house-brand burgers.

Brown aims to lower prices to undercut animal protein within five years, though it may happen sooner in certain segments.

Greenleaf, too, believes there’s room for growth in Canada.


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Chocolate satisfies with a balance of trend and tradition

 

Screen Shot 2019-08-13 at 2.47.08 PMCanadians’ love for chocolate is alive and well, as they visit convenience stores for old favourites, as well as new flavours and sizes to satisfy cravings for the “food of the gods.”

The latest figures from Nielsen Canada show that sales of chocolate in the convenience and gas channel in Canada for the year ended March 2, 2019 grew by 2% to $178 million. Sugarless chocolate led the growth (up 35%), followed by seasonal chocolate products (6%), and every day/sugared chocolate products (2%). Only every day seasonal chocolate showed a decline in sales (3%).

There are several new trends emerging in the chocolate category. Joel Gregoire, associate director of Mintel Canada Food and Drink Reports, says there’s been an evolution in chocolate confectionary with the introduction of larger-sized tablet chocolate bars, thins and more seasonal chocolates. 

“This can be interpreted as being a shift in the formats that Canadians are turning to for their chocolate fix and points to the importance of chocolate confections that are sold not just at the checkout line, but in other areas of the store,” he says, 

In addition, chocolate manufacturers can learn from the makers of alcohol beverages, who are infusing products with exotic new flavours and highlighting interesting twists, such as cask-aged bourbon and strawberry champagne. 

Ruby chocolate, for instance, is taking the industry’s colour palette beyond white, milk and dark. Barry Callebaut introduced ruby chocolate in September 2017, calling it “the biggest innovation in 80 years.” Artisan chocolate makers quickly embraced the flavour and now confectionery manufacturers are giving old favourites a new spin.

“The new ruby Kit Kat, made from the natural ruby cocoa bean, has a characteristic pink hue and unique flavour that consumers are raving about,” says Ryan Saunders, vice-president marketing, confectionary at Nestlé Canada.

Flavour infusion is also the secret to creating popular better-for-you products. “While white chocolate will always be an indulgence, there are ways to infuse elements of nutrition through superfood ingredients, such as chia seeds, matcha, honey lavender, turmeric, orange chunks and coconut into dark chocolate, which now has a well-established reputation for offering added antioxidants,” says Gregoire. 

In addition, convenience retailers have an opportunity to drive sales and satisfy customers’ desire for new experiences by mixing chocolate delights with other snacks, such as pretzels, popcorn and nuts.

“We know that indulgence is a key driver of food selection in the evening for a snack in front of the television, for example,” says Gregoire, adding the picture is more complex in the afternoon when people are looking for a boost. Convenience stores can answer all needs by offering snack kits with chocolate, as well as a solid mix of new format and entrenched brands “to satisfy conflicting wants of convenience, portability and energy.”

The chocolate category is abuzz with new tastes and trends, however old favourites still reign.Screen Shot 2019-08-13 at 2.46.52 PM

“While there are always fun and interesting new products in the category, nothing comes close to the old classics,” Saunders says. “While we sometimes get excited about what is new, if you don’t have the top pr
oducts within arms’ reach you’ll lose sales opportunities.  Retailers can maxmize sales and profit by continually understanding and responding to local and macro trends as they change and evolve.”


Tips for adjusting to changing tobacco trends

Cigarettes Generic Lg_100517The tobacco industry is changing at a rapid pace. Cigarette sales are declining year after year, while vape and smokeless products have been on the rise. Now, there are new products out there that fit into the growing “ANDS” (alternative nicotine delivery systems) category, such as nicotine toothpicks, pouches and dip (no tobacco leaf present in any of these).

Modernizing categories and planograms will be a necessity for convenience retail chains looking to hold onto revenue.

While consumers are quitting cigarettes in droves, most would agree they are not quitting nicotine. Many consumers switched from cigarettes to ENDS (electronic nicotine delivery systems) such as Logic, blu and Juul. Other consumers have moved into smokeless tobacco products such as dip and spitless snus.

The rise of smokeless tobacco options and ENDS products in the past 10 years is a clear indicator that consumers aren’t quitting their nicotine altogether, but instead they have become open to finding their nicotine in other products.

Some of these products I like to call “ANDS” products. These are non-combustible alternative nicotine delivery systems that would otherwise not be able to be categorized into current and obsolete product groupings. ANDS are a fairly new subcategory of other tobacco products (OTP) and are increasingly gaining customers. People are tending to move away from tobacco leaf products, both combustible and non-combustible, and move to products that deliver nicotine.

Nicotine toothpicks and pouches are very similar. Both are flavored oral nicotine products that did away with the tobacco leaf. The toothpicks are infused with nicotine and food-grade flavorings, while the pouches are tea bags that are filled with powdered nicotine and food-grade flavorings.

Another ANDS product is nicotine dip that is made using mint leaves instead of tobacco leaves.  Nicotine dips are made with nicotine applied to chopped mint leaves. They can be used just like traditional tobacco dips like Skoal, Copenhagen or Grizzly.

ARE ‘ANDS’ RIGHT FOR YOUR BUSINESS?

So, should your business sell ANDS? It all comes down to whether your convenience store or chain is positioned to make the investment to secure customers for the present and future.

In discussions with CEOs of many of these ANDS manufacturers, they say consumers are constantly asking them where they can buy the product. Store owners should embrace this and use it to their advantage. A retailer can acquire new customers just by carrying a product that is newer to distribution. This is especially true when the products being considered have already started to take sales away from cigarettes, moist snuff and ENDS products.

By adding new SKUs to their tobacco categories, retailers will need to eliminate others or increase the real estate space for their tobacco products section as a whole.

When choosing new product lines in the ANDS category, a category manager should evaluate a manufacturer or a brand based on such factors as sell-through, branding, customer experience, customer adoption, marketing, and point-of-sale (POS) merchandising support.

Behind-the-scenes items that are also crucial toward the long-term success of the store(s) and the brands they carry include Food and Drug Administration (FDA) compliance, quality control, shelf life, liability insurance and vendor/retailer support.

We already know that Juul has emerged as the leader in the ENDS category. Which ANDS products are in line to solidify a spot on your shelf? Which ANDS manufacturers and brands meet the qualifications stated in the previous paragraph?

With sell-through and compliance being the most important direct and indirect items of importance, there are certain brands and products leading the pack on this newly paved road. Here are three types of ANDS that hold promise for the convenience channel:

Nicotine Pouches

Nicotine pouches have created a nice following throughout the country — both online and in stores. Nicotine pouches function just like spitless snus.

Nicotine Toothpicks

While nicotine toothpicks might seem like a new idea, they have been around since 2013. When merchandised and branded properly, nicotine toothpicks see sell-through. They also function as an upsell that increases a store’s average order value.  Toothpicks are one of the few products being used by smokers, dippers and vapers alike.

Nicotine Dip

Nicotine dip is another product making its way into stores. I like the idea. Why have tobacco leaves pressed up against your gums when you can have mint leaves and nicotine instead? I can see these products leading to the abolishment of traditional tobacco leaf dips.

In the end, consumers want to feel empowered to make a choice. Nobody goes to the ice cream parlour that only carries three flavours when the parlour across the street has 15 flavours plus 10 different topping options.

With the guidelines and requirements mentioned earlier, choose one to three items from each of the three ANDS subcategories (pouches, toothpicks and dip). Find products that aren’t selling well on your shelves and remove them.

The way I see it, ANDS are the future of the category. The status quo has changed. Non-combustible ANDS products should be part of your offering in order to solidify your store’s ability to sustain long-term growth and success.

By: Evan Grossman is an entrepreneur and industry advocate. In 2013, he founded Pixotine Products, launching Pixotine Nicotine Toothpicks. Before founding Pixotine Products, Grossman co-founded Trans World Jets in 2011, a jet charter consulting and contracting business.

Originally published at Convenience Store News. 


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