The 2019 ‘AACS State of the Industry Report’ was launched on Wednesday morning.
It reveals that the Australian convenience industry achieved “solid growth” of 2.1% in sales (excluding petrol) in 2019. This has boosted the value of convenience to $8.8 billion.
Food was a clear standout, finds the new report, with food sales up nearly 6% to $4.038 billion.
On the flipside, non-food categories delivered sales of $4.738 billion. This was down by more than 1% on the 2018 result. The decline, according to AACS, is in part due to the tobacco category delivering growth of 0.83% in 2019 compared to 6.4% the previous year.
AACS CEO Jeff Rogut says the continued strong performance of the convenience channel – as highlighted by the ‘AACS State of the Industry Report’ – is an “ideal accompaniment” to the major milestones the industry is celebrating. This includes AACS’ 30th birthday.
“The value proposition we provide consumers has never been clearer than right now as the coronavirus pandemic plays out,” says Mr Rogut.
“Government has deemed our industry an essential service and we take our responsibility to provide the items people need in these distressing times very seriously.
“The strong 2019 result, and the way we are still serving our customers today in bright, modern, clean and safe stores, is a testament to the many great operators and staff who make our industry tick.”
A refreshing result for beverages
During 2019, on average more than 70% of convenience shopping baskets included a beverage, the ‘AACS State of the Industry Report’ reveals.
Packaged beverages grew 4.4% over the year, says AACS, to deliver the greatest dollar value contribution of any convenience category at $79 million.
“Convenience customers are increasingly including a beverage among their purchases, in many instances combined with a food-on-the-go purchase, with the trend to healthier alternatives continuing to play out and new market entrants in 2019 having a positive impact on the category,” says Mr Rogut.
Energy drinks, soft drinks and flavoured milk led the way in terms of dollar share in the packaged beverages category. Tea drinks and protein drinks delivered the best performance in terms of dollar growth.
Sales heat up for hot beverages
Hot dispensed beverages, according to the report, was the fastest growing category in convenience for the third year running. It grew 18% to contribute another $46 million in sales, taking the category value to more than $300 million.
“Convenience stores are now legitimate coffee destinations as premium quality offerings are being rewarded with more frequent visits from customers,” says Mr Rogut.
“Those who typically get their caffeine fix from the convenience store now do so more than once every two days.”
Food on the go keeps going
The food on the go category grew at 11.5% generating $68 million in additional sales to the channel.
This result made it the second fastest growing category in convenience in 2019, accounting for 38% of total channel growth and total sales of $659 million for the year.
“Food has been one of the key innovation focus areas for our industry in recent times and the efforts of leading operators are being rewarded,” says Mr Rogut.
“Convenience stores are now an established destination for fresh sandwiches, wraps and hot food, with customers responding positively to the quality and freshness of the convenience food offer.”
The importance of tobacco
Though growth in tobacco sales was only 0.8% for the year, AACS says it is still a “very important” legal category for convenience stores.
The contribution of legal tobacco sales to the overall channel sales was almost 39% in 2019.
Fighting fuel theft
The ‘AACS State of the Industry Report’ shows that fuel theft cost the average store $166.91 in losses each week in 2019,
While this is a 1.8% decrease over the prior year, AACS says it is still a “significant” sum for any small business.