The convenience channel on track to deliver close to $10bn in 2021

Speaking at the Australian Association of Convenience Stores (AACS) Mid Year State of the Industry webinar, Brett Barclay, Director, CMA, has highlighted an outstanding first half of the year for the convenience channel.

The channel has seen a 7.9 per cent growth* in the first half of the year, driven by a strong performance in four key categories: Beverages, Foodservice, Confectionery, and Snackfoods.

But before delving into what is driving the momentum within these categories, Barclay took a moment to touch on the challenges being felt within convenience, particularly in the locked down states of NSW and Victoria.

“The convenience community is a great community to be a part of, and certainly, we’re faced with many challenges today,” he said.

“But it’s about staying focused, staying positive, staying strong through these times. We know that retailers are doing it pretty tough in those two lockdown cities, especially in NSW. There are challenges with staff, there’s a whole raft of things, and people are certainly working hard to maintain the status quo as much as possible within business.

“So, just to know that we are there together. Certainly, feel free to reach out, make sure you’re communicating, and don’t isolate yourself.

“If everyone can stay in communication with each other, that’ll keep us strong, and we’ll get through it all. And hopefully, we’ll be able to get through this before the end of the year and be able to get back to some level of normality, and certainly progress on into a strong 2022.”

Barclay then presented a category overview, looking at the back half of 2020 and the first half of 2021 and highlighted the current growth rate, which puts the convenience channel on track for the 2021 calendar year to be close to $10bn in retail sales.

In the categories, Tobacco slowed to almost be flat with last year in the second quarter and growth is now at levels almost half that of 2020. Packaged Beverages added the most value in the half and grew at over +10 per cent the last quarter at over +15 per cent. Western Australia (+13 per cent) and Queensland (+12 per cent) continue to drive growth with both having strong double-digit improvement, although both slowed in the last quarter. Meanwhile, Victoria (+6.8 per cent) and New South Wales (+3.8 per cent) cycled strongly over the second quarter, while South Australia (+8.9 per cent) maintained strong momentum.

“When I look at the insights for Packaged Beverages, it’s been pretty consistent delivering incremental growth of around $70 million over the last couple of years each year. And then this year in the first half alone it has added almost over $135 million to the category.

“So, we’re talking about this category potentially achieving $2bn in turnover within the channel,” said Barclay.

All categories within Packaged Beverages were in growth except for Tea Drinks, which was slightly down.

“The key categories of energy, cola, flavoured milk, which includes iced coffee, have certainly been the biggest contributors to that growth. Energy in particular has had an amazing run, in terms of its growth rates, despite some supply challenges.

“We’ve seen some amazing performance out of the energy category, which is basically the biggest category within that beverage portfolio.”

The Foodservice category growth has continued to perform extremely strongly in the first half of 2021 and is on track to achieve full year sales of more than $1bn. Hot Dispensed Beverages has also rebounded from declines in 2020, recording double digit growth as consumer mobility and freedoms started to enable this.

Confectionery was another key growth category, with Barclay highlighting its double-digit growth. This was a significant improvement on its 3.5 per growth in 2020, with gum, mint and medicated all showing a resurgence in the first half of 2021.

Barclay also highlighted the particularly strong growth of Snackfoods in the second quarter.

“We’ve had a solid start,” said Barclay. “We saw some incredible growth rates, in particular these four categories of Beverages, Foodservice, Confectionery, and Snackfoods.”

This AACS State of Industry Mid Year Report prepared by CMA on behalf of AACS is exclusively available to AACS Members.

The AACS SOI is the most comprehensive data analysis of the total Petrol and Convenience channel, as it is supported by both the IRI scan measured and AACS sourced unmeasured retailer community, taking into account the strong contribution and performance delivered by the independent buying groups and large retailers who do not publicly share their scan data. 

*Source: AACS Retailer Submissions, IRI Market Edge, ASX Announcements

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