A Fluid Staple

The milk category in convenience stores has been trending upward.

January 09, 2023

By Sarah Hamaker

ALEXANDRIA, Va.—Got milk? For a growing number of Americans, the answer is no. Total fluid dairy milk volume across all channels dipped 2.2% in 2022 (January through September), according to the U.S. Department of Agriculture. However, retail milk dollar sales rose 11%, receiving a boost from higher prices, according to IRI.

Milk has long been a staple in many convenience stores, especially during periods of disaster or uncertainty, when many families rely on these retailers for home essentials. “Despite a decline in overall fluid milk consumption in the U.S., milk sales in convenience stores have been trending upward for the past couple of years,” said Jayme Gough, research manager, NACS.

According to the NACS State of the Industry (SOI) Report of 2021 Data, per store, per month sales of milk increased over 2020, in part because many consumers limited trips to larger outlets like grocery stores and made short, targeted shopping runs. In 2021, monthly sales of the category mirrored those of 2020, promoting the idea that many consumers found convenience stores a great option for products like milk during the pandemic and carried over those shopping habits into the new normal. For 2022, monthly sales through the second quarter have been higher than both 2020 and 2021 for all but January.

The fluid milk category is one of the smaller ones in convenience retail, accounting for just 1.30% of in-store sales in 2021, a slight decrease from 2020. However, gross margins for milk increased in 2021 from 29.83% to 32.41%, which helped boost gross profit per store 14.4% to a total of $830 per store, per month. “From 2020 to 2021, category sales jumped 5.2% to a total of $2,562 per store, per month,” Gough said. “This indicates fluid milk continues to be an important part of a retailer’s merchandise mix, especially because people who come in to grab a gallon or half gallon of milk often pick up other items, too.”

“For dairy milk, we see a similar trend in c-stores as in the broader retail landscape—it’s a huge category but volume trends are sluggish,” said Stephen Dean, vice president of foodservice, small format for Oatly. “People are buying less dairy milk, though they are spending more as prices have gone up.”

Milk sales have been about the same at Piedmont Milk House in Duluth, Minnesota. “The category doesn’t fluctuate much at all at my store,” said owner Andy Verhel. “It’s a convenience to have gallons, half gallons and pints of milk for our customers, especially the ones with younger kids.”

Unit sales of milk have been strong at Crosby’s, a Lockport, New York-based chain with 86 locations in New York and Pennsylvania. “Gallons and half gallons have declined in units, but pints have been up, and the overall dollar amount for the category has increased, too,” said Lenny Smith, general manager and vice president for Crosby’s.

Boosting the category have been upticks in flavored and alternative milk sales. “The milk category has bright spots within it, such as rising sales of lactose-free milk,” said Scott Wallin, vice president of industry media relations and issues management for Dairy Management Inc.

This is an excerpt from the article “A Fluid Staple,” which first appeared in the January 2023 issue of NACS Magazine. Read the rest of the article to find out how flavored and alternative milks are impacting the fluid milk category, as well as the future of the category.

Sarah Hamaker is a freelance writer, NACS Magazine contributor and romantic suspense author based in Fairfax, Virginia. Visit her online at sarahhamakerfiction.com