ATLANTA — Specialty foods are fueling sales at convenience stores. The traditional “gas, Cokes and smokes” model has evolved to meet consumer demand for more premium items, said Frank Beard, trends analyst at GasBuddy, a Boston-based technology company.

“Healthier options are showing up,” Mr. Beard told Food Business News. “You’re seeing a lot more transparency around ingredients, nicer packaging and higher quality alternatives for people who are looking for that.”

Ready-to-drink oat milk lattes and grab-and-go charcuterie were among trending products at the 2019 NACS Show, presented by the National Association of Convenience Stores. Packaged snacks on display included crunchy beans and lentils, puffs made with cauliflower, and mushroom jerky. Kombucha and wellness shots also were featured by several brands.

At this year’s event, held Oct. 2-4 in Atlanta, more than 1,200 exhibitors presented the latest innovations for the convenience and fuel retailing industry, including packaged foods and beverages and food service offerings.

“Today’s convenience stores are blurring the lines between gas stations and restaurants.”
— Frank Beard, GasBuddy

“Today’s convenience stores are blurring the lines between gas stations and restaurants,” Mr. Beard said. “Over the past 10 years, the largest jump in in-store sales contribution has been from food service.”

Tight fuel margins and declining tobacco sales have prompted retailers to make over their menus. Food service accounts for nearly 23% of in-store sales at convenience stores, up 3% in the past five years, and 56% of consumers said they purchase meals at least monthly at gas stations or convenience stores, according to GasBuddy research.

Top convenience store chains are “basically quick-service restaurants,” serving made-to-order meals and single-origin, bean-to-cup coffee, Mr. Beard said.

“All of these top retailers are not drawing people in with fuel and then trying to sell them on higher-margin products inside the store,” Mr. Beard said. “They are drawing them in with food, and they just happen to buy gas while they are there. It’s a complete identity shift from where the industry used to be.”

Califia Farms nitro oat milk lattes

Driving momentum

Convenience retailers are well-positioned to capture market share from quick-service restaurants. Ninety-three per cent of Americans live within 10 minutes of a fuel or convenience store, Mr. Beard said.

“When you look at convenience retailing, you have an industry that has 154,000 stores,” he said. “Basically on every best corner in every community across the United States, they have for decades secured the most convenient locations.”

Consumers are eating on the go more, too, he added. The majority of total food expenditures occur away from home, according to U.S. Department of Agriculture data.

“A lot of people work multiple jobs, may work nontraditional hours, or just quite simply don’t have time to prepare anything,” he said.

Millennial and Generation Z shoppers helped push in-store sales at convenience stores to $242 billion in 2018. Twenty per cent of 18- to 29-year-olds purchase food at convenience stores three to four times a month, and 25% of 30- to 44-year-olds purchase food at convenienceV8 +Hydrate coconut stores five times or more per month. Additionally, 56% of 18- to 29-year-olds and 53% of 30- to 44-year-olds prefer to buy beverages at a convenience store versus a drug or grocery store, according to GasBuddy research.

"C-store chains are trying to offer more diverse food options and emphasizing quality, hoping to reduce the stigma of 'gas station food,'" said Julia Taylor, C-store segment leader for Cargill Foodservice. "Our research showed that portability is essential. C-stores should explore ways to facilitate on-the-go eating through bite-sized offerings and packaging that supports dashboard dining."

At the NACS Show, Cargill Foodservice featured egg bites scrambled with cheddar cheese, ham, bacon, spinach and red bell pepper, and handheld snacking items that pair roasted turkey breast with vegetable-based dips.

Packaged beverages represent the third largest in-store category in convenience stores, accounting for just over 15% of sales. More than half of consumers surveyed by GasBuddy said they buy a beverage at a gas station at least once a week, and 20% do so daily. Water is the top beverage product purchased at convenience stores by 18- to 29-year-olds. Carbonated soft drinks topped the list for older consumers.

“Bottled water is the most successful packaged beverage out there, and there surprisingly continue to be different ways to do it,” Mr. Beard said.

Alkaline water, which has a higher pH level than regular drinking water, is gaining steam in convenience stores. Bottled water infused with electrolytes, vitamins and minerals were offered by several exhibitors. New from the Campbell Soup Co., Camden, N.J., is V8 +Hydrate, which is described as a “plant-based hydrating beverage” with electrolytes and a full serving of vegetables.

Sparkling water and hard seltzers are “exploding in popularity,” too, Mr. Beard said.

Another top beverage trend is nitrogen-infused coffee, famous for its foamy, frothy texture. Examples at the show include High Brew Coffee canned nitro-infused cold brew and Califia Farms’ nitro latte with oat milk in flavors including salted caramel and mocha. PepsiCo, Inc., Purchase, N.Y., also showcased a new bottled Starbucks nitro cold brew.

Oberto Specialty Meats imported Italian charcuterie

Keep it fresh

Refrigerated snacks are on the rise. Shoppers perceive such products as fresher — and therefore, healthier — than shelf-stable options, according to market research firm Mintel, which identified six packaged product segments that define fresh snacking: refrigerated protein bars, protein snack packs, drinkable soups, bottled smoothies, yogurt and other products such as hummus and guacamole.

“Convenient protein-packed snacks in the refrigerated section are on fire,” said Stephen Oberto, vice-president of marketing at Oberto Snacks, Inc., Seattle, which is debuting refrigerated snacks under the Cattleman’s Cut and Oberto Specialty Meats brands.

New Cattleman’s Cut refrigerated snack packs combine smoked sausage with smoked cheddar, mozzarella or pepper jack cheese and represents the brand’s foray into the fresh snacking segment. Oberto Specialty Meats imported Italian charcuterie include antipasto, prosciutto and salami paired with an assortment of Italian cheeses.

Tyson Foods, Springdale, Ark., is introducing Hillshire Snacking Bistro Boards, which combine genoa salame and prosciutto with cheese, toasts and dried fruit.

New to the NACS Show, Peckish from Sonoma Brands, Sonoma, Calif., offers a line of refrigerated Peck Pack snacks pairing two boiled eggs with crispy, crunchy, seasoned dips. Varieties include rancheros, maple waffles, fried rice, salt and pepitas, everything seasoning, and a new flavor —­ranch.

Refrigerated nutrition bars were on display from Perfect Bar and Best Bar Ever.

Odwalla Zero-Sugar smoothies and Jack Link’s low sugar jerky

Low-sugar snacking

A number of meat snack brands in the past year have introduced low- or no-sugar varieties to appeal to carb-conscious consumers. Several exhibiting companies, including Jack Link’s, Werner Gourmet Meat Snacks and Tillamook Country Smoker, unveiled zero-sugar beef jerky at the NACS Show.

Oberto Snacks is launching a low-sugar beef jerky that has 27% less sugar and 20% more protein than the original recipe. New from Cattleman’s Cut is a low-sugar Frontier Style beef jerky that is thinly sliced with 50% more protein and 75% less sugar than the leading jerky, according to the company.

“More and more, consumers are searching for savory, low-sugar snacking satisfaction,” Mr. Oberto said. “We’ve seen these trends play out across categories and have invested in our processes to address this growing consumer need.”

Product developers are focused on reducing sugar in protein bars and shakes, too. At the NACS Show, Coca-Cola Co., Atlanta, debuted Odwalla Zero-Sugar smoothies in dark chocolate berry and strawberry and cream flavors.

Snickers and Twixx chocolate milk and Fanta Snack Pack jello

Collaboration innovation

Leading packaged food players are teaming up to roll out co-branded snacks and beverages. Several examples were seen on the show floor.

Conagra Brands, Inc., Chicago, collaborated with the Coca-Cola Co. to launch Snack Pack gelatin in Fanta soft drink-inspired flavors, including orange, grape and pineapple. Mondelez International, Inc., Deerfield, Ill., has partnered with Keurig Dr Pepper, Plano, Texas, to roll out Swedish Fish and Sour Patch Kids candies featuring Crush soda flavors.

The Sour Patch Kids brand inspired a frozen novelty offered by Nestle USA, Arlington, Va. Nestle also is introducing two varieties of flavored chocolate milk inspired by Twix and Snickers, two chocolate brands offered by Mars, Inc., McLean, Va.

Flowers Foods, Inc., Thomasville, Ga., partnered with the Hershey Co., Hershey, Pa., to create Hershey’s triple chocolate cakes and Reese’s peanut butter flavored cupcakes.

Kellogg Co., Battle Creek, Mich., offered a sneak peek at a marriage between two of its own brands: Froot Loops flavored Pop-Tarts.

Mondelez International’s Oreo cookie brand lends its name and flavor to iced coffee, cake cups and caramel chews debuting at the show.