NEW YORK — Beverage sales trends were strong in the convenience-store channel during the third quarter of 2020, according to Goldman Sachs’ Beverage Bytes retailer survey.
The survey, which the New York-based investment firm’s Managing Director Bonnie Herzog summarized in a recent report, concluded that both the energy-drink and hard-seltzer categories showed strong momentum during the quarter. The survey represents about 45,000 retail locations or about 30% of the c-store channel.
Beverage sales for the third quarter were up 5% year-over-year, despite pressured traffic as consumers continue to prioritize fewer trips but larger baskets because of the pandemic, Herzog said.
There is some hope for improved c-store traffic, though, according to a recent report from GasBuddy. Gas station visits surpassed pre-COVID-19 levels in the third quarter, the Boston-based company said. Warmer weather, outdoor gatherings and a preference for car travel over air travel may have contributed.
Retailer sentiment overall remains broadly neutral to positive, according to the survey. Here are some highlights from the report ...
Energy drink sales accelerate
Energy-drink sales continue to rebound and were up 10% year-over-year in the third quarter, the survey showed. This suggests category fundamentals are returning to normal as people go back to work and become more mobile, a key driver of energy-drink sales, Herzog said.
Retailers’ early assessment of 2021 for the category is bullish, with an expected 9% growth.
Growth for Monster Energy, Corona, Calif., was up 5% compared to last year in the third quarter while Red Bull sales were up 12%, according to the report. While the Austria-based company’s momentum is big for the time being, some retailers said the expect out-of-stocks could become an issue. The company, with U.S. headquarters in Santa Monica, Calif., aims to offset such concerns with plans for a new Red Bull plant in the U.S.
Meanwhile, some retailers are wondering whether Purchase, N.Y.-based PepsiCo’s decision to take over Bang's distribution is helping the brand. Bang’s third-quarter sales declined by 6%, compared to the previous year.
Beer shows strong growth
Beer and flavored malt beverage (FMB) sales are growing, up 13% in the third quarter as consumers continue to shift consumption off premise as on-premise restrictions remain in place, the report said.
Retailers predict beer/FMB growth will be 5% for 2021.
Underlying consumer demand for Chicago-based Constellation Brands’ products, including Corona and Modelo beers, remains robust, and its halo approach continues to pay off as consumers show preference for known and trusted brands, like its Corona Hard Seltzer line extension, Herzog said. Constellation's beer/FMB sales were up 23% in the third quarter.
Hard seltzer sales were up 190% in the third quarter in the c-store channel, and retailers expect the strong momentum to last for the rest of the year.
“Overall, we think retailers increasingly view the hard-seltzer category as a long-term beneficiary of the at-home economy, and this is likely to be a meaningful driver behind strong category growth through the remainder of 2020 and beyond,” Herzog said.
Mark Anthony Brands' White Claw and The Boston Beer Co.’s Truly continue to lead the hard-seltzer category, while some retailers remain skeptical about the long-term viability of many of the smaller hard-seltzer brands that have entered the market, she said. However, retailers are still upbeat about Monster Energy’s potential new hard-seltzer offering.
Improvements in alcohol out-of-stocks
While there is still out-of-stock pressure across the alcohol category, most retailers are seeing improvements, Herzog said.
For the total alcohol beverage category, 70% of retailers said the out-of-stock situation improved over the last month, while 10% of retailers said it worsened.
For hard seltzers, about half of retailers saw improvements in out-of-stocks, a welcome change as segment sales continue to explode in c-stores.