Will electric vehicles prove a bane or a boon for c-stores and energy drinks?

Discussion
Photo: Getty Images
Apr 13, 2018
Matthew Stern

As electric cars have grown in technical sophistication and popularity, some ask if the convenience store segment — which depends on regular gas fill-ups — will be a casualty of a coming wave of electric transportation. A new study indicates that, not just retailers, but the beverage brands that depend on them for sales, might have something to worry about in the long term.

Beverages sold at c-stores tend to be impulse buys picked up by gas customers. According to a Morgan Stanley study reported on in The Washington Post, that could mean the segment taking a big hit if electric vehicles render gas stations a thing of the past. Perhaps most at risk from the shift would be Monster Beverages. The company makes 63 percent of its sales in the U.S. at gas stations and convenience stores.

However, some of the very CPG segments most threatened are expecting big benefits from electric vehicles on the other side of the supply chain.

A large number of the companies that have put in pre-orders for Tesla’s electric semi-trucks are food and beverage manufacturers and retailers, according to Popular Mechanics. Since the November unveiling of the prototype, Loblaw, PepsiCo, SysCo and Anheuser-Busch have all ordered dozens or more of the vehicles. Industry experts say the vehicles are perfect for the type of short-haul trucking that gets food and beverages from distribution plants to regional distributors. Tesla estimate that by using 40 electric semi-trucks, Anheuser-Busch could save $8 million on fuel a year. (The company spends about $120 million on fuel per year total.)

When Tesla CEO Elon Musk announced the specs of the new semi last year, Electrek reported that its features were “mind-blowing,” with an unprecedentedly-low drag coefficient and battery packs that promise up to a 500-mile range on a single charge.

While the Post article approximates any threat to c-stores from electric cars as being decades off, reports last year estimated that a quarter of all vehicles sales by 2025 will be electric.

DISCUSSION QUESTIONS: What will the coming wave of electric cars and trucks mean for convenience stores and consumer brands? Should CPGs rethink their long-term channel strategies based on a shift away from fossil fuels?

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"Opportunities abound for those that can leverage changing lifestyles and combine with new technologies to envision a different future."
"My guess is they’ll make up the loss of gas with sales of marijuana. See, everything changes."
"...the basis for the article is suspect. Electronic cars are not suddenly replacing gasoline and/or diesel powered vehicles."

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25 Comments on "Will electric vehicles prove a bane or a boon for c-stores and energy drinks?"


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Lyle Bunn (Ph.D. Hon)
Guest

Interesting if/then consideration that needs to be tempered by more realistic electric vehicle uptake data. C-stores and brands have enormous potential in unrealized sales in today’s paradigm, and this will continue to be the case. The emphasis should continue to be on conversion generation rather than factors that may decrease sales.

Sky Rota
Guest
2 years 9 months ago

Electric cars will not hurt convenience stores or gas stations in my lifetime. That’s like saying all the drivers out there are all of the sudden going to be able to afford to get rid of their old cars and buy/lease electric cars. Not happening. Convenience stores are exactly that. We don’t need to get gas every time we visit one. We pick up drinks before a baseball game or any time. We get food there and snacks. That’s our corner store. As a matter of fact my mom only gets gas there maybe every 10th visit.
Our Wawas are very safe!

Ralph Jacobson
BrainTrust

Although growing, the plug-in and pure electric vehicle market share is minuscule compared to the internal combustion-driven market, and I honestly don’t see any significant negative impact to fuel stations in the next decade. This is because the average age of cars in the U.S. is more than eleven years, so the 15 million+ new cars purchased this year will still be around for a while, along with the couple hundred million already on the roads.

However, all that said, it never hurts to plan ahead, and I’d say that retailers and CPG brands can look to the charging stations both on the road and even at home for opportunities to cross-sell and up-sell!

Richard Layman
Guest
2 years 9 months ago

Yep, it’s different in Europe because they take sustainability much more seriously. The likelihood of the US forcing changes towards electric cars — like significantly increasing gasoline excises taxes, which in Europe are between $4 and $5 per gallon — is unlikely here. Were that to change, then choices people make about fuel sources for their cars would change.

Ralph Jacobson
BrainTrust

You’r right, Richard. Only time will tell here in the U.S. And it does make sense for retailers & CPGers to develop strategies now.

Brandon Rael
BrainTrust

What a potential paradigm shift we have ahead of us! When you have an engaged audience who are charging their vehicles, there are significant opportunities for all services, retailers and even shared office spaces/economy-based companies, well beyond c-stores, to maximize the consumer wait time. As consumers migrate to a more electric car model, what a better time for experienced-based companies to capitalize on this new segment.

The old gas station concept could be remodeled to a more showroom-like experience, where folks could work, play and shop while their cars are charging. The potential here is real and, when it does scale, it will be a very interesting model.

Art Suriano
Guest
Long-term electric cars will be a bane and not a boon. It is true that eventually we will have battery packs capable of 500 miles. But that is not going to help the c-store business because drivers will not be pulling into c-stores for gas or to charge their car batteries. This is going to change the dynamics of the c-store. Today approximately 60 percent of customers who pull in for gas do not go into the c-store. Now take the gas station away and what happens to the company business? Will there be enough business to support the c-store? No. The other problem is c-store companies are continuing to open new stores at a rapid rate. In time, they will not be able to keep them open. Electric cars of the future will go greater distances and charge faster than they recharge today. Some companies are working on the self-charging technology with two batteries, one battery being charged from the other battery while that battery is also powering the car. This will change how… Read more »
Mohamed Amer
BrainTrust
Mohamed Amer
Independent Board Member, Investor and Startup Advisor
2 years 9 months ago

Why not reimagine how and where we make impulse buys?

Electric cars are an intermediate stop along the way to a completely different ownership and use experience for the automobile. With an aging population and a reduced desire to drive by Millennials, I envision a new model of impulse purchases made in fleets of autonomous cars operating as new age vending machines with limited but highly-desirable selections.

You don’t have to go too far into the future to see examples of stores on electric wheels in cities like the San Francisco Bay Area. Bottom line, opportunities abound for those that can leverage changing lifestyles and combine with new technologies to envision a different future rather than restricting themselves to incremental changes to existing models.

Tony Orlando
Guest

Electric cars are few and far between, and unless they can come up with a car that gets 500 miles between plug-ins, and lower the prices, it isn’t going to to make any difference in how things are right now. I’ll be 85 years old before any significant changes are made, and it will be a hydrogen-type of vehicle in my opinion, as hydrogen is plentiful and creates zero emissions. We’ll see what happens.

Neil Saunders
BrainTrust

I am not sure where the quarter of all car sales being electric comes from. However, the latest data I have seen shows that electric vehicles account for just 1.2 percent of total U.S. sales (source: ev-volumes.com).

As such, I think this is a fluff piece by Morgan Stanley that has identified a “problem” that is many years off and which, by then, may not even be an issue at all as CPG distribution strategies may have changed.

Evan Snively
BrainTrust
Evan Snively
Loyalty Strategist, Chapman & Co. Leadership Institute
2 years 9 months ago
Neil Saunders
BrainTrust

The Audi brand accounts for around 1.29% of all US auto sales. In 2017, electric vehicles accounted for 1.3% of Audi’s U.S. total sales. As of January and February of this year, sales of Audi’s electric vehicles are down around 68% year-over-year. Seems to be that there is some political over-egging in Audi’s statement!

Sterling Hawkins
BrainTrust

CPG distribution will be transformed long before the convenience store “problem” becomes a problem. And it is worth thinking ahead to see what might be possible. Electric vehicles still need to be charged. The opportunities that open up from that in terms of new formats and distribution points far outweighs the risk. Especially now.

Ryan Mathews
BrainTrust

Um … so what exactly is it that will stop convenience stores from adding charging stations along with the gas pumps? The conversion from gasoline to electric isn’t going to happen overnight, so presumably if electric cars grow in popularity c-stores can add charging stations and/or begin to pull gas pumps. Expensive? Yes, but not a show stopper. A better question probably is what happens to convenience stores and categories and/or brands that depend on them if people quit driving and there is a mass migration to an Uber, Lyft, autonomous vehicles, and/or mass transit system? Now that’s a more realistic problem, especially because it will be fueled by both ends of the demographic spectrum — Boomers and eventually Gen Xers who have fixed incomes, compromised vision, etc. on the one side and Millennials and Gen Zers who eschew ownership in favor of utility on the other. If I were running a c-store chain that’s what would be keeping me up at night, not electric cars.

Lee Kent
Guest

Yes, electric vehicles are on the rise, however c-stores are safe for a while. Even with the rise, electric car drivers will still need to break up their trips to plug in, get out of the car and pick up a drink and some snacks. I imagine c-stores will be right on top of this as time progresses. For my 2 cents.

Ricardo Belmar
BrainTrust
Ricardo Belmar
Retail Transformation Thought Leader
2 years 9 months ago

I don’t see an issue here. C-stores will evolve over time just as every other retail segment will evolve. Any retailer that doesn’t evolve, dies. There are plenty of examples to look at in recent years! Convenience stores could simply add charging stations instead of fuel pumps if electric cars really take over the market with the velocity the Morgan Stanley suggests. I have not seen sales numbers that give any indication this is anywhere within the next few decades so I doubt the risk is there for c-stores anytime soon. The desire for convenience foods at convenient locations will not go away in a car-based society such as the one we live in. CPGs will evolve as well and they have plenty of time to address this potential “threat.”

Camille P. Schuster, PhD.
BrainTrust

On the one hand, a group of consumers have developed a habit of stopping at c-stores and will continue to do so for awhile. Those who drive electric cars may not need to stop as often, but may find that they drove a little further than expected and find that they need to charge to make it home. If c-stores have quick charge technology for electric cars, consumers will keep their habit of going to c-stores. Then the c-stores will need strategies to promote frequent shopping to encourage consumers to stop more often.

Christopher P. Ramey
BrainTrust

The need for gas may diminish. But thirst isn’t going away either. C-stores, like every retailer, need to constantly be looking for new categories to sell and prospects to serve.

My guess is they’ll make up the loss of gas with sales of marijuana. See, everything changes.

Peter Luff
Guest

This will be evolution and not revolution but it will happen and it may surprise us all how quickly this may happen. That said the c-store will evolve, I am sure, to adapt to these changes. As a population we are increasingly time pressed, so the c-store will still have a place although maybe not as we know it today.

Steve Montgomery
BrainTrust
As others have noted the basis for the article is suspect. Electronic cars are not suddenly replacing gasoline and/or diesel powered vehicles. C-stores have and will continue to evolve to meet the changing needs of their consumers. One of the changes that will lessen any impact on their customers’ shopping habits due to the growth of e-vehicles is their evolution to a more restaurant-based format. The National Association of Convenience Stores (NACS) just released its 2017 metrics. In a press release they stated “Foodservice sales overall in 2017 were $53.3 billion, accounting for 22.5% of in-store sales in 2017 and 33.9% of gross profit dollars.” The category ranked number two as a percentage of overall merchandise sales. The c-store industry’s emergence as a place to buy ready-to-eat foods has forced the QSR industry to consider them a competitor for share of stomach. It offers not only food, but a very wide selection of beverage and snacks. My prediction is that the c-store industry will remain a relevant retail force for a long time to come.
Ken Goldberg
Guest

While the direct threat is years off, the need to evolve is upon the c-store operators today. Electric cars and carpooling will depress gasoline demand over time. So it is now time to create strategies that leverage location and convenience and start increasing the percentage of revenues that are driven inside, as opposed to outside. I collected some thoughts here.

Doug Garnett
BrainTrust
So far, adoption of all electric cards in the US is running well behind expectations. So this looks to be likely a theoretical question. But while changes like this can have a big impact on markets, “disruption” theorists have also cursed us with the idea that businesses should last forever by disrupting themselves enough. That’s not actually true. These theorists often point to the railroads & claim they lost their power because they saw themselves as rail roads not “movers of goods.” In other words, if they’d been smart enough they would have started truck lines and air lines. Except the story falls apart against reality. Rightly or wrongly, the railroads were regulated in ways that legally prevented those expansions. For my part, I’ve been part of two industries that either went away or dissipated to a fraction of their size — aerospace and the supercomputer business. In neither case would disruption have changed the end result. So … yes. Monster and others might have a problem. It’s a typical challenge for a business —… Read more »
Craig Sundstrom
Guest

I’d like to see some of these reports predicting 25% EV share within 7 years — it hardly seems to match the trends we see right now. But back to the main question: yes, obviously, impulse item sales will decline if the venues (where they are sold) are visited less often; and combined with more online shopping in general, but particularly with groceries, it might be a very worrisome problem. But the big question of course is how many of their (energy drink) sales are impulse-driven … difficult to say much meaningful without those numbers.

Adrian Weidmann
BrainTrust

Corporate parking structures (Coca-Cola) to fast-casual restaurants (Culver’s) are installing charging stations for electric vehicles already. CPGs could sponsor/install charging stations at grocery stores. Brand recognition, actively representing a meaningful cause AND providing an hour of time for a shopper to connect with you and your brand — seems like that’s a winning trifecta for the new retail paradigm.

Richard Layman
Guest
2 years 9 months ago

Because Norway is ahead of the curve in promoting electric vehicles, Couche Tard is testing various approaches to dealing with the impact of e-vehicles on convenience stores.

Couche-Tard looks to Norway for guidance to adapt to electric cars

Gas Stations Get Ready for the Electric Future

Couche-Tard Takes Major Step on EV Charging Front in Europe

wpDiscuz
Braintrust
"Opportunities abound for those that can leverage changing lifestyles and combine with new technologies to envision a different future."
"My guess is they’ll make up the loss of gas with sales of marijuana. See, everything changes."
"...the basis for the article is suspect. Electronic cars are not suddenly replacing gasoline and/or diesel powered vehicles."

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