June 2005
Take A Bite Out Of High Gas Costs

Rising gas prices have started taking their toll on transportation companies, alcoholic beverage distributors and others using fleets to transport product to their customers. For most of these types of companies, gas has become their No. 2 expense behind driver wages. This year, J.B. Hunt will spend more than $250 million for fuel, up 40% from 2003. "It costs us 33 cents per mile just in fuel," says Gary Wicker, senior VP of engineering services at J.B. Hunt, which has 10,000 truck cabs and 48,000 trailers. "It's up almost 61 cents per gallon from a year ago."

But there is an advantage for Fintech customers. Fintech's regulated invoice payment services give its customers a way to substantially offset costs for any specific route. A distributor delivering to 100 stops a month can save the equivalent of up to two trucks because Fintech saves a driver, on average, ten minutes per delivery stop. A driver with 13 stops in a day can use the time saved with Fintech to increase that truck to 17 stops a day. In total, distributors of this size can save close to $250,000 a year in wet truck costs.

For more information on how Fintech can help you offset the rising costs of fuel, contact Fintech Sales or Customer Relationship Management. They will help you create a strategy for enabling all of your customers to use EFT to pay their invoices and take a bite out of high gas costs.

Alcoholic Beverages Create Buzz for Convenience Stores

Reprinted with permission from National Association of Convenience Stores (NACS Magazine March 2005) Article written by Sarah Hamaker

"Adult consumers are looking for new taste experiences and are finding these options in beer, wine and spirits," says Zsoka McDonald, director of trade communications and media relations for Diageo North America in Stamford, Connecticut. "Convenience is also key to consumers; they are looking for easy ways to entertain and simplify their lives." Diageo and other wine, beer and liquor companies seek to capitalize on consumers' thirst for convenience by offering a wide variety of product in convenience stores. According to the NACS 2004 State of the Industry (SOI) report, approximately 70 percent of convenience stores sell beer, wine or liquor. At those stores, beer sales increased by 9.5 percent from 2002 to 2003 to reach 14.9 percent of inside store sales.

For in-store sales excluding cigarettes, beer ranks number two (16.69 percent), just behind non-alcoholic packaged beverages. Within the beer category, premium beers (68.12 percent of sales) far outsell other types, with popular/budget beers (18.22 percent) and imports (5.23 percent) rounding out the top three.

"Beer remains a growing consumer product," says Bob Littlefield, senior director-convenience stores for the Miller Brewing Company in Milwaukee, Wisconsin. Miller Brewing sells more than a dozen brands of beer in convenience stores, including Miller Lite, Miller Genuine Draft, Miller High Life, Icehouse, Milwaukee's Best and Foster's Lager. Littlefield says that the U.S. beer market is the best in the world. "One of the most notable developments of the recent past is the continuing consolidation and globalization of the industry.

Of course, there is also the continued trend toward low-calorie, low carbohydrate offerings, which have changed the terrain that brewers, distributors, retailers and beer drinkers must navigate. Joe Patti, vice president of retail planning and category management for the St. Louis, Missouri-based Anheuser-Busch Inc., agrees. "Light, low-carb and flavored malt beverages have all proven to be trends with staying power. For example, sales for our low-carb Michelob ULTRA have been on a record pace since its national rollout in September 2002," he says. "We continue to look at innovative ways to reach core beer drinkers, whether through new products, displays or promotions."

While Anheuser-Busch reports beer category growth at less than 1 percent per year, Patti projects a slight increase in growth during the coming years. Anheuser-Busch's top-selling beer brands in convenience stores include Bud Light, Budweiser, Natural Light, Busch, Busch Light, Natural Ice and Michelob ULTRA. In addition, Bill Laufer, the company's vice president of convenience channel and trade relations, says several new products - such as the malt-flavored beverage Bacardi Silver Low Carb Green Apple and the beers Be (pronounced "B-to-the-E") and Budweiser Select - are "bringing new growth to the category."

While historically Miller brands perform better in supermarkets than convenience stores, Littlefield says, "We're very encouraged by the improvement in our convenience store trends. Miller Lite has enjoyed 67 consecutive weeks of share growth in convenience stores, according to recent ACNielsen convenience store data. That is the longest sustained growth period for Miller Lite in more than five years. Also, Miller High Life Light rose 46.4 percent in convenience stores, according to ACNielsen." Littlefield adds that "the future of the beer industry depends on the ability of every member of the industry to consistently provide American consumers - and American retailers - with strong, vivid, compelling reasons to buy their beers."

Sales for Anheuser-Busch products also have increased, says Laufer. "We anticipate continued growth from this channel for the beer category."

"Imported beer continues to do well, as do flavored malt beverages, which provide growth to the beer category," says McDonald of Diageo, which offers an array of alcoholic beverages to the convenience store market, including Johnnie Walker, Tanqueray, Jose Cuervo, Baileys, Red Stripe, Smirnoff and Crown Royal.

"Wine business is also strong," she says, adding that in the last fiscal year, Beaulieu Vineyard and Sterling Vineyards reported growth of 35 percent and 22 percent, respectively, making Diageo Chateau & Estates one of the best-performing U.S. wine companies. According to the SOI report, wine and liquor in-store sales accounted for 0.46 percent and 0.47 percent, respectively.

E&J Gallo Wine Co. has seen double-digit growth in its table wine and spirit portfolios in the convenience store market, says Tony Gaines, the Modesto, California-based winery's national account manager for the convenience channel. "Our focus for 2004 and now 2005 has been to partner with the top convenience store chains in developing their wine category. By creating a proper mix by cluster, the results have been double-to triple-digit growth for our partners."

Within the last year, E&J Gallo has introduced several new products designed specifically for the convenience store shopper: Sola Vista, a line of 375 milliliter single-serve in Chardonnay, white zinfandel and cool red zinfandel. "In only six months of sales, Sola Vista has become one of our top items in the channel," says Gaines.

While the wine company's top-selling item is still E&J Gallo Twin Valley 187 milliliter singles of Chardonnay and white zinfandel, other top-selling brands include Turning Leaf, Bella Sera, Black Swan, E&J Gallo Twin Valley 1.5 liters, Wild Vines, Boones Farm and Bartles & Jaymes. "These have shown excellent growth in the channel," says Gaines, adding that its liquor brands - E&J Brandy, E&J VSOP and Cask & Cream - have also "shown double-digit growth because of the outstanding sales of smaller sizes."

Gaines sees several wine trends over the past several years. "We have noticed a drastic change from beverage wine items to more table wine," he says. "This has raised the average transaction by almost double during the past five years. By doubling the average revenue for wine, the category has become more viable in the vault for both independent and chain convenience stores."

"Consumers continue to demand variety, convenience and premium brands...in the beverages they drink," says McDonald. "We respond to consumers when it comes to developing new brands, packaging or brand extensions, so that the direction of the category will be driven by them." For example, in response to consumer trends, Diageo developed Guinness Draught in a Bottle, Baileys Minis and Smirnoff Signatures, which are off-the-shelf, portable and convenient versions of the originals.

McDonald adds that "the key to growth and expansion for our brands is to pay very close attention to our consumers. ...Our goal is to deliver innovation and variety to our consumers in a way that grows our business and the businesses of retailers and distributors."

"As we continue to become more of a convenience society, sales will continue to improve in the convenience channel," says Gaines of E&J Gallo. "Our biggest challenge in the wine industry is getting the message to the consumer that convenience stores have a great selection of wine at competitive retails."

Sarah Hamaker is a freelance writer based in Fairfax, Virginia. She can be reached at shamaker@earthlink.net.
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Harlans Supermarkets, Inc.
Eisenhower Fuel
SHI Corporation
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Whitehead Properties, Inc.
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Half Time Sports Bar
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Legends Sports Cafe'
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Cayenne's Restaurants
Cha Cha's Restaurant II, Inc.
Dirty Duck
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Buffalo Wild Wings
Lost Creek Country Club
Tacoma BBQ, Inc.
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Budweiser of Cookeville
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Cantina Italiana, LLC
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Supermarkets
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Arizona Country Club
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Linens and Things
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