Beverage Sales Slowing in Convenience Stores?

Retailer survey shows most growth is related to higher prices

Steve Holtz, Editor in Chief, CSP Daily News

NEW YORK -- Beverage sales trends for the Labor Day holiday weekend "were somewhat soft, up around 1.5%," with sales up 2.7% for the full third quarter of the year, according to a Beverage Buzz report from beverage analyst Bonnie Herzog of Wells Fargo Securities LLC, New York.

"Our survey indicates that convenience store beverage sales were soft during the Labor Day weekend, increasing just 1.5% year over year," Herzog wrote. "Overall the trend was positive, with 50% of our [survey] respondents indicating beverage sales were better than the prior year. However, 33% indicated sales were flat, and 17% indicated sales declined this Labor Day holiday."

The Wells Fargo survey reached representatives of "tens of thousands of c-store retail locations across the U.S.," according to Herzog, much like a similar survey conducted just after Independence Day.

"Interestingly, in our Fourth of July Beverage Buzz Survey, a similar percentage of respondents reported year-over-year declines (18%), but 76% of respondents indicated that beverage sales increased year over year, and only 6% indicated sales were unchanged. Our concern is that this trend could indicate some moderation in beverage sales trends over the past two months."

Other finding showed many retailers said higher prices were the underlying driver for Labor Day 2012 beverage sales growth, rather than higher sales volume, and beverage promotions declined a bit (about 0.5%) during the period compared to 2011.

For the third quarter overall, 73% of respondents indicated that beverage sales increased year over year, while only 6% of respondents indicated that beverage sales have declined.

"Sales growth is more modest than we expected, with 50% of respondents indicating beverage sales increasing 1% to 4% and 22% indicating beverage sales were flat," Herzog reported. "Based on these trends, we are somewhat more cautious about assuming that c-stores may offset any deceleration in take-home beverage sales in Q3."

Steve Holtz, CSP/Winsight By Steve Holtz, Editor in Chief, CSP Daily News
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