Beverage Sales End Summer on a Sour Note
By Steve Holtz on Sep. 12, 2017NEW YORK -- A recent survey of convenience-store retailers shows beverage sales ended their peak season on a down note. Sales slid 1.5% during the recent Labor Day holiday weekend vs. a 4.1% increase in 2016, according to Wells Fargo Securities' Beverage Buzz survey of beverage retailers representing about 15,000 c-stores.
"C-store beverage sales growth was very soft this Labor Day weekend," said Bonnie Herzog, managing director of equity research for Wells Fargo, New York, citing "several headwinds" facing the c-store industry.
Here's a look at which categories won, which struggled and challenges to c-store industry sales growth ...
On the plus side
"RTD (ready-to-drink) coffee, premium waters and imported beer categories all performed very well," during the weekend despite industry headwinds, Herzog said.
Coca-Cola Co.'s release of Dunkin' Donuts' RTD iced coffees has been a boon to sales, when it's in stock, retailers said. "I would have rated Dunkin' exceptional, but we have been out of stock as much as in stock since introducing the line," one retailer said.
RTD coffee sales have grown by 8% so far in the third quarter, while imported beers are up 9%, craft beer up 8% and wine and other alcohol increased 13%, according to Wells Fargo data.
Energy crisis
Sales of energy drinks, at this point a c-store staple, continue to struggle, even as recent reports show some improvement, Herzog said.
"Retailers reported the energy category in c-stores remains pressured with sales expected to grow only about 4% for the category (as a whole) and Monster and Red Bull individually this year," she said. "Despite [energy drinks'] growing relevance [in] nontracked channels, c-stores remain Monster’s largest channel, and we continue to have concerns about near-term trends as a result of the light in-store traffic reported."
Also hurting
Other beverage categories challenged during the third quarter include:
- Sports drinks down 3.9%.
- Juice drinks down 3.4%.
- Colas down 1.5%.
- Total carbonated soft drinks down 1.0%.
"If it wasn't for the increase in sales in RTD coffees and enhanced water, the overall packaged-beverage category would be flat," said one retailer.
Outside factors
Weather was a primary factor affecting beverage sales during the recent holiday weekend.
"Labor Day 2017 weather [was] generally colder and wetter than historical averages, which may have weighed on holiday weekend sales," Herzog said.
Additionally, average retail gasoline prices were up nearly 20% vs. Labor Day weekend the previous year, largely based on Hurricane Harvey shutting down refineries and ports along the Gulf of Mexico.
The results of the hurricane, however, were split. In some cases, “the rush to fill tanks before the gas-price increase helped" in-store sales, said one retailer. And in others, "Tight fuel supply hurt business slightly."