NEW YORK — Dollar sales of energy drinks are up in all channels, including convenience stores.
Energy drink sales across all channels were up 10.8% from last year for the four-week period ending Oct. 5, according to Nielsen data. And in c-stores, total beverage sales were up 5.2% in the third quarter, according to a new report from New York-based Wells Fargo Securities Senior Analyst Bonnie Herzog.
C-store retailers are bullish on the energy category, expecting it to grow 8.4% in 2019, according to a recent Beverage Buzz retailer survey that represented about 20,000 c-stores.
Retailers’ 2020 outlook for total energy category growth is strong (up 7%), led by Bang, Red Bull and new entrants such as Coke Energy, according to the survey.
“Coke Energy will be the Bang of 2020,” one retailer said in the survey.
Here’s a look at what Herzog said c-store operators are expecting to see in the energy category …
Change in shelf space
All retailers surveyed are planning to allocate more space to the fitness subcategory, and 94% plan to increase shelf space for the leader in that space, Bang. Less than 60% plan to increase shelf space for Monster Beverages' Reign, suggesting that while the fitness category is booming, Reign’s momentum may be waning, Herzog said.
To make room for fitness drinks, many retailers plan to take space from juices and teas, and some said they are likely to pull back from carbonated soft drinks and energy brands with less of a presence in the fitness category, such as Red Bull, Monster and Rockstar, Herzog said.
One retailer said Monster should be concerned about Coke taking some of its shelf space when Coke Energy is released in the first quarter of 2020.
Reign taking away from original Monster
Reign sales appear to be increasingly siphoning volume away from original Monster, Herzog said. Retailers estimate Monster sales were up 3.2% in the third quarter in c-stores as opposed to 4.3% in the second quarter. This was compared to last year’s “very tough” 9.8%, Herzog said.
“Monster has allowed Reign to cannibalize their own portfolio,” one retailer said.
About 70% of retailers, however, said Reign sales have plateaued or decelerated since a buy one, get one free deal ended.
Reign doesn’t seem to be hurting Bang’s momentum, Herzog said. More than 60% of retailers are still seeing an acceleration in Bang sales in their stores despite Reign gaining wider distribution, she said.
Excitement for new entrants
Overall, feedback from the Beverage Buzz survey was upbeat, according to Herzog, and retailers said innovation across energy and FMBs/hard seltzers continued to drive customers into the store and expand the broader beverage category.
One of those innovations is Coke Energy, which is set to launch in January nationwide. The brand’s first energy drink will have 114 milligrams of caffeine, guarana extracts and B vitamins. It will be available in Coca-Cola Energy, Coca-Cola Energy Zero Sugar, Coca-Cola Energy Cherry and Coca-Cola Energy Cherry Zero Sugar. The drink will be sold in 12-ounce sleek cans.
Retailers are uncertain how Monster and Red Bull will respond to the drink, according to the survey. There were mixed results on how retailers thought Coke Energy would be priced: Some said it would be priced more in-line with Monster, while others expect it to be priced competitively with Red Bull.
Similarly, Keurig Dr Pepper's (KDP's) entry into the performance energy segment, Adrenaline Shoc, or A-Shoc, launches nationally in January, Herzog said. The drink is marketed as “a modern smart energy drink designed for today’s active generation.”
Although third-quarter trends were muted for KDP, the buzz around A-Shoc is building, according to the survey. One retailer said the drink could help get KDP’s foot into the energy door.
Retailers were mixed about PepsiCo’s Bolt24, a drink designed to provide “all-day hydration for the 24/7 athlete off the field,” according to the company. Some said it was too early to make a judgment call, while others indicated it was moving slowly in their stores.
What retailers are saying
Here are some concerns retailers voiced in this quarter’s survey:
“Heard ... that a Bang executive was going to pull distribution of Bang from current non-Anheuser Busch suppliers and make AB exclusive distributor. ... From our perspective, this is not good news. AB distributors in our area have not shown a propensity to execute nonalcohol distribution well over the years.”
“Reign has done very well but it appears all they did was trade off their core Monster Green customer as that package has the biggest declines this year, however being offset by Reign.”
“Now that KDP seems to be done buying companies (for now), they need to make sure they can remain focused on all brands.”