NEW YORK -- Beverage sales volumes in convenience stores rose 4% in the first quarter of the year, according to a recent retail survey conducted by Wells Fargo Securities.
"Unseasonably mild weather drove increased foot traffic, bolstering volume during Q1," reported Wells Fargo senior analyst Bonnie Herzog in an equity research report released Monday. "Over 70% of retailers indicated beverage volume was up over 4% year over year during Q1."
Herzog concluded the positive momentum "could bolster beverage manufacturers' broader price realization efforts." Pricing trends in c-stores for the same period were up 2% to 3%.
The biggest winner in the cold vault was Coca-Cola Co., according to the report. "Coca-Cola had the strongest c-store Q1 volume trends among our beverage companies, with the vast majority of retailers indicating Coke-owned and -distributed volume was positive, and 40% of the retailers indicating volume increased more than 4% year over year during Q1."
While the survey showed there is still retailer resistance to Coca-Cola's new 12.5-ounce PET package, Herzog said, "Given the importance of the c-store channel in Coca-Cola's occasion-based beverage strategy, we are incrementally more confident that Coca-Colas can achieve its long-term goals in North America."
Meanwhile, the survey showed PepsiCo products are held their ground in Q1. "The majority of retailers indicated Pepsi-owned and –distributed volume trends were positive, with around 20% of the retailers indicating volume increased more than 4% year over year during Q1."
Herzog also noted that Gatorade's change to direct store delivery has proven to be a benefit to PepsiCo. "Our survey respondents generally had positive comments regarding the momentum they've seen with Gatorade since Pepsi transitioned it delivery from warehouse to DSD. However, we did sense concern on the part of some respondents regarding aspects of PepsiCo's Gatorade strategy, which is common when beverage manufacturers make adjustments to successful product offerings."
And Dr Pepper Snapple Group volumes lagged behind both Coca-Cola and PepsiCo, "With fewer than 50% of respondents indicating positive year over year volume trends, and 34% of the retailers indicating volume was flat.
Despite the growth or at least flat volumes from the three major beverages manufacturers, Herzog also noted that carbonated-soft-drink volumes continue to decline, as they have for several years now.
"The well-documents shift away from CSDs comes despite efforts by Coke and Pepsi to reverse the trend through promotional activity and new package sizes," she wrote. "Importantly, survey respondents noted the growth of energy, sports and even dairy-based beverages as the expense of eroding CSD volumes."
For more on shifting trends in the cooler, watch for "Balancing Beverages," a report from CSP's 2012 Cold Vault Summit, in the May issue of CSPmagazine.
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