Ontario drinkers have been quenching their thirst in droves at convenience stores.
Just over two months after they got the right to sell beer, wine, cider and ready-to-drink beverages like hard seltzers, convenience stores say it’s been a big boost to business, despite logistical hiccups including slow deliveries.
“Everything across the board is selling really well. A lot of store owners are running out of stuff because the LCBO can’t handle all the orders that have been placed,” said Kenny Shim, president of the Ontario Convenience Stores Association and owner of Busy Bee King Mart.
Since the Sept. 5 launch of convenience store sales, more than 4,700 stores have gotten licences, according to the Alcohol and Gaming Commission of Ontario (AGCO).
Despite widespread predictions of a flood of alcohol sales to minors or stores selling outside the permitted 7 a.m. to 11 p.m. hours, there have been just 45 complaints lodged, said the AGCO.
Ten of them concerned staff checking shopper IDs, four were for selling outside the permitted hours, and three were for selling to intoxicated customers. Other complaints included advertising, pricing and whether stores had enough craft beer options.
At his own King Street West store, beer has been selling steadily, while ready-to-drink (RTD) beverages have been flying off the shelves, Shim said.
“Beer’s moving well, but RTD is actually doing phenomenally. There are some brands you just can’t keep on the shelf. White Claw, Twisted Tea, Clamato, Hard Lemonade,” said Shim, who admitted with a chuckle that he’s not exactly the target market for the booming category.
“I had to ask my daughter, ‘Sophia, what are you guys drinking?’ ” said Shim, whose association is made up mostly of independent convenience stores.
Shim said many stores are trying to keep prices as low as possible, so they don’t price themselves out of the market.
“We’re about five to 10 per cent higher than The Beer Store,” said Shim.
Between his own store and conversations with other shop owners, Shim estimates that alcohol sales have generated an extra 10 to 15 per cent bump in revenue on weekdays, and 25 per cent or more on weekends.
That bump, said Shim, isn’t just people buying booze. They’re also buying chips, chocolate and other snacks to go with their beer or seltzers.
“The other basket of goods — the things that we sell along with the alcohol — have been doing very well,” said Shim. “It’s definitely bumped up sales of other goods too.”
The strong sales of RTDs are no surprise to Anne Kothawala, president and CEO of the Convenience Industry Council of Canada, which represents large convenience chains and also several distributors. RTDs typically appeal to younger drinkers. And young consumers are big convenience customers.
“What we’re seeing is RTD is at the top and that doesn’t surprise us a lot … because they’re really popular among that 19-34 demographic,” said Kothawala.
Those younger consumers have also definitely been picking up snacks and other purchases along with their alcohol, Kothawala noted. “It’s definitely bumping up the basket size,” Kothawala said.
Despite the boost in sales, Kothawala said some stores have been struggling to get beer and RTDs restocked as quickly — or as smoothly — as needed.
Kothawala would like to see existing convenience store distributors added to the list of companies that can deliver alcohol to stores. Otherwise, an extra delivery is required, which takes extra staff more time to unload and put on the shelves.
“We want the fewest number of additional trucks coming to our store as possible. We want greater certainty around timing of deliveries. And we’ve said this from the beginning of time,” said Kothawala.
That extra time and cost, said Kothawala, is keeping some convenience chains from jumping in with both feet. Many, she added, are only putting alcohol into a handful of their stores.
“They want this to become more efficient and, frankly, more profitable,” said Kothawala.
Still, that’s not the only reason some stores are holding back. Bigger chains are dipping a toe in the water as a way to do some market research.
“Some of them have decided to go all-in, with every single store. And others have decided to start with half their sites or a quarter of the sites,” said Kothawala. “There’s a chance to do some real learning and seeing what moves, and where.”
Added the OCSA’s Shim, there’s another big reason some stores are staying away from alcohol sales: cost. Getting a new, refrigerated display case for beer and RTDs can cost $10,000, while a store probably needs about $20,000 in stock to make it worth their while.
”$30,000 is a lot of money for some people. But I think a lot of people are gonna get into it, because it’s doing pretty well,” said Shim.
