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Bottoms up

08 October, 2007
as forecourt shoppers become more sophisticated in their taste in alcohol, Linda Harrison finds out what retailers can do to cash in
Page 42 
we Brits love our beer - but it seems an increasing number of us are swapping the grape for the grain.
The alcohol section in forecourt shops has traditionally been seen as a male-dominated area, where the top brands of lager take up most of the space. But it's been undergoing a quiet revolution.According to recent reports, motorists are increasingly picking up a bottle of wine - or two - when they stop off at the forecourt.Figures from AC Nielsen show that beer made up 40.8% of alcohol sales in forecourts in the year ending August 2007, just 0.5% ahead of wine.Stewart Blunt, a market analyst at AC Nielsen, says: "Beer, mostly lager, is the largest-selling drink in the market, but only by a narrowing margin. And it seems inevitable that wine will take the lead before long."As the nature of forecourt retailing lends itself to the impulse purchase, rather than the weekly shop, it's no surprise that the big sellers are beer and wine. Shoppers are likely to pick something up for a quiet night in or to drink at a friend's house.Beer and wine account for a whopping 81% of sales, while spirits add another 11%.Blunt puts the shift in the market, from beer to vino, down to store layouts and product ranges generally improving over the years, giving the forecourt the look and feel of a proper shop. He says: "Familiar brands give a safe choice, especially if we're off to visit friends and relatives and want to take a bottle."There is also current growth in rosé wines - about 30% per annum - and this seems to be partly driven by younger drinkers. So the beer purchase is often supplemented with wine, effectively expanding the market."== convenience trend ==Jonathan Banks, business insight director for Europe at AC Nielsen, adds that one of the big trends at the moment is convenience. For example, the new screwtop bottles of wine are very convenient.Banks adds that wine has also become more accessible to a younger audience.He explains: "The customer base for alcohol at forecourt shops is generally quite young, and they want their shopping experience simplified."They don't want to be confused by having to look for details like the year on the wine and needing to choose between vineyards."Many wines are now recognisable brands and these are selling well."Wine companies have their own theories on the subject. Carol Chan, brand manager at Blossom Hill, says: "Rising wine sales in forecourt shops are being driven by trends in other areas of the market, in the on-trade and in the multiple grocery sector."The convenience sector is getting increasingly competitive and the big brands have a strong presence, giving consumers more confidence to buy wine from impulse and convenience retailers."Chan says the weather has also had a big impact on this year's beer sales, particularly in comparison with last year's figures when the World Cup meant cans flew off the shelves.However, wine could be a challenge given the huge range of countries and brands operating in the market.But according to statistics from Harris International Marketing (HIM), forecourt shoppers know where they want their wine to be from.When customers were asked the first thing they looked for in a bottle of wine - apart from colour - the top answer was price (26%), closely followed by the country of origin (24%). After that came grape variety (15%), brand (14%) and promotions (6%).But AC Nielsen's Blunt believes this factor need not stand in the way of profits - and says people are still willing to spend a bit more and accept less selection at a forecourt."Sensibly, traders do focus on the popular and while some can offer the deals that are so commonplace in the supermarket, pricing is generally that bit higher, as one would expect, in the convenience arena," he says."Without the weight of big discounts and so many own labels to pull down the average price, forecourt traders sell 30% of their wine at over £5, which is rather impressive when compared to the market average of 15%."== licence to sell ==There's no doubt that booze is of growing importance to the forecourt sector. According to the latest figures from industry specialist Catalist, almost a quarter of all forecourts in the UK have a licence to sell alcohol - a total of 2,235 businesses.Researchers at AC Nielsen have found the average forecourt turns over about £175,000 per annum in alcohol sales, and this figure is growing well ahead of the rest of the market.Forecourt businesses currently only account for about 2% of the £4.3bn off-trade liquor market in the UK. But this is increasing at a rate of 6% per year, compared to 4% for the market as a whole.So although small, it's a sector which is definitely on the up.Spirits are still a substantial sector of the market, with vodka accounting for just under half of sales and whiskies just over a third. In general, spirit sales are growing by 15% per year.But retailers searching for the latest growth area need look no further than good old-fashioned cider. Sales are soaring and now account for 3% of forecourt turnover.No longer the domain of students, cider has become a very trendy tipple, with drinkers proudly taking home Bulmers and Magners by the box-load."The thing about cider is that its recent growth in popularity is due to the ice phenomenon," says AC Nielsen's Banks. "It's also a very accessible drink for youngsters. This is important because the same thing happened with lager - its sales grew because it was so accessible."Meanwhile, with Christmas approaching, InBev UK's advice for making the most out of the sector is by focusing on big brands.Steve McAllister, managing director for take home retail at InBev UK, says the festive season offers retailers the chance to boost profits by stocking up on major brands and having a selection of beer to suit different drinking occasions."The importance of stocking popular brands can't be emphasised enough. During the two month lead-up to Christmas last year, the top 10 beer brands accounted for over 70% of the total take home beer sales in Britain," he says."Major brands are the big performers over the pre-Christmas period because an increased number of occasional beer buyers come into the market looking for brand names they recognise, such as Stella Artois, Beck's and Tennent's Lager."Stella Artois is the number one take-home alcoholic drinks brand in forecourts and it accounts for 30% of total beer value sales in the sector. McAllister says its success is underpinning premium lager's 58% value share of beer sales.He adds that consumers tend to stock up with beer to entertain friends and relatives over the Christmas and New Year period and they want to be able to offer their guests recognised brands.Another recommendation involves making sure brands are prominently displayed."Retailers should 'de-clutter' the fixture and focus their range on the top sellers to maximise profits," he says."It is important that the beers are accessible in terms of display. If retailers focus on stocking big brands to accommodate a range of drinking occasions and ABVs, they need to display them in a creative and accessible manner."== fill the chiller ==Having plenty of chillers is also vital for driving sales. Researchers at HIM found that 17% of shoppers who buy lager plan to drink it 'immediately'. Another 20% say they consume it within two hours. Only 8% said they would leave it up to a week before opening the bottle.People are tending to drink more premium beers at home and want it properly chilled so they can consume it immediately."Retailers need to ensure they offer and prominently display the big brands such as Stella Artois, Beck's and Tennent's in the chiller because these are the brands that forecourt shoppers will be looking for," says InBev's McAllister."They also need to give the beer enough time to chill and make sure they have adequate supplies of these brands to cope with periods of heavy demand."Another brand that benefits from consumers trading up at Christmas is Guinness. Indeed total Guinness GB off-trade market share of beer increases from 3% to 4.6% at Christmas. Steven Hamilton, Guinness senior brand manager at Diageo GB, believes the Guinness Draught Christmas shopper is extremely valuable to retailers, driving value across the category."Guinness Draught shoppers spend a remarkable 71% more on alcohol than the average beer, wine and spirits shopper, and 34% more than the average beer shopper," he says."Guinness is a beacon brand for quality and this perception will be boosted even further with our new pack designs coming out across the entire range."When it is prominently displayed, with equal visibility in store, it helps retailers' beer category outperform the market."Retailers should give the black stuff good space on shelf and in chillers, making sure promotional packs are clearly displayed."== Whisky shoppers ==Christmas is also a key time in other alcohol categories. According to drinks company Diageo, the average whisky shopper buys three bottles over the 12 weeks of Christmas.Overall then, shoppers are upgrading their tastes and are willing to spend a bit more when it comes to choosing their booze at the forecourt.And wine is definitely a premium area where retailers can look to increase profits.AC Nielsen's Blunt advises forecourt operators to get to grips with the grape as best they can."Wines typify the approach that forecourt traders take to the market - limited space, focusing on the lead brands and less so on the cheaper low-margin lines," he says."The limited choice of familiar brands makes good sense when you understand the shoppers."After all this is not a shopping trip -these people are on the move - and they're off to somewhere far more interesting."----=== Legal eagles ===It's almost two years since the new Licensing Act came into force, changing the application process from the magistrates court system to the local authorities.One of the main complaints about the new system concerns the increase in costs for retailers.Robert Botkai, at London-based solicitors Winckworth Sherwood, says the new system has hiked up expenses for applicants as well as adding extra bureaucracy.Under the old system a licence was renewed every three years and cost £30.Today, the licence must be renewed annually and there's also an initial application fee - which combined, could set applicants back between £350 and £400.And then if a retailer wants to change things at the business after their application, they may need to pay a variation fee, which is based on the rateable value of the site. This can be up to £636 for a big site.Botkai points out there are other costs too, such as having to advertise the licence application in a local paper, which could add another £250-£300 to the total."It's a lot of paperwork and a lot of expense," says Botkai."And many of the details are very unclear and confusing."The appeal process is also cloudy and a bit of a mess. Basically, we would always advise retailers to seek legal advice before they apply."I believe some of the government guidance is incorrect and needs to be challenged."The main rule still stands with forecourts - that the site must not be used primarily as a garage.But it is up to the licensing authority to decide whether the premises are primarily being used for this purpose.One thing that worries Botkai is that the authority may decide not to grant a licence - and in some circumstances the retailer may not be able to appeal the decision.This is one of many areas where Botkai is calling for government clarification.He says: "There has been a failure on the part of the government to recognise that the sale of alcohol now takes place at many, many garage premises with little evidence to suggest that such licences impact on any of the licensing objectives."More information on how the new Licensing Act affects forecourt traders can be found at [http://www.winckworths.co.uk]----=== Country of Origin of wines sold in forecourts ===1. US 40%2. Australia 31%3. Italy 9%4. France 6%5. South Africa 5%6. Chile 4%7. Spain 3%8. New Zealand 1%9. Germany 1%Source: AC Nielsen