NEW YORK – Sales of nonalcohol beverages grew a strong 4.8% in convenience stores during the third quarter of 2015, according to the latest Beverage Buzz survey of c-store retailers by Wells Fargo Securities analyst Bonnie Herzog.
The growth comes on the "strength of energy, bottled water and sports drinks," Herzog reported.
Alcohol beverage sales saw a 3.3% increase largely on growing sales of craft and imported beers, and growing consumer interest in "hard sodas," most notably Not Your Father's Root Beer, which gained national distribution through Pabst Brewing earlier this year.
"Lower gas prices 'put more discretionary dollars into consumers’ hands,' according to one retailer," Herzog said, "while another indicated that 'lower gas prices are having a positive impact on visits and gallons sold per transaction.' "
Of the major beverage makers, Monster Energy saw sales growth slow a little, Coca-Cola Co.'s brands growing, PepsiCo brands remaining consistent and Dr Pepper Snapple Group in a good place for the near future, Herzog reported.
Monster Energy
"We estimate Monster's c-store sales were up 7.1% in 3Q15, a sequential decline from 2Q15 (8% growth)," Herzog said. However, the brand remains in a good position, along with Red Bull, as a leader in the still-growing energy-drink category.
Coca-Cola Co.
"We estimate that Coca-Cola Co.'s retail sales were up 5.0% during Q3," Herzog said. Retailers reported “deep discounting” in 12-packs, as well as heavy promos in PowerAde, "which we suspect contributed to solid overall volume growth, while we believe Coke’s smaller packs drove strong overall net pricing growth."
PepsiCo
Herzog reported that PepsiCo's beverage sales in the c-store channel were up 3.9%. "This result is consistent with Pepsi’s already reported Q3 results, in which it reported 4.1% net revenue growth in North America Beverages. Pepsi recently switched its sweetener for Diet Pepsi from aspartame to sucralose, which retailers largely reported had a minimal impact on sales.”
Dr Pepper Snapple Group
The survey suggests DPSG’s retail sales grew 3.2% in Q3. "Although these results lagged its peers, we believe DPS remains well positioned heading into Q3 results, given macro tailwinds in the U.S. and strong performance from allied brands," Herzog said.
She summed up the survey report with generally good news for beverage sales. "The decline in gas prices appears to be driving consumers to visit c-stores more often and purchasing more items and more premium items per trip," she said. "We continue to believe the risk/reward for both beverage manufacturers and c-stores ahead of Q3 results remains favorable given the benefit from lower gas prices/higher consumer disposable income and relatively benign weather."Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.