Sales of Packaged Beverage Healthy in C-Stores, Goldman Sachs Reports

Retailers in 1st-quarter survey slightly more cautious in outlook, however
Illustration of tops of beverage cans
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Packaged beverage sales trends in convenience stores remain healthy and modestly improved sequentially in 2023’s first quarter, with retailers slightly more cautious in their outlook as they now expect beverage sales to increase about 4.6% this year versus about 5.9% previously.

This is the outlook from New York-based Goldman Sachs’ first-quarter Beverage Bytes survey, which represents about 50,000 retail locations or about 30% of the c-store channel.

While retailers overall remain very positive about the growth trajectory for Constellation Brands, Los Angeles, and the energy-drink category, they are concerned about inflationary pressures on wallets and strengthening elasticities, the unusually cooler weather and the broader geopolitical headwinds, Goldman Sachs said.

Other highlights from the first-quarter survey:

  • Shelf space: Just a few retailers plan to allocate more shelf or cooler space for both non-alcohol and alcohol beverages with their spring shelf resets. Monster Beverage Corp., Corona, California; Coca-Cola, Atlanta; Celsius Holdings, Boca Raton, Florida; and Constellation Brands, Victor, New York, are the big winners, while PepsiCo. appears to be losing space.
  • Out-of-stocks: These are still an issue in both alcohol and non-alcohol segments, with non-alcohol beverage out-of-stocks getting modestly better, whereas alcoholic beverage out-of-stocks appear to be slightly worse.
  • The pricing environment: This is still healthy, with retailers expecting incremental pricing by both non-alcohol beverage manufacturers and brewers this year but at more modest levels.
  • Promotional activity: This appears to be picking up a bit in non-alcohol beverages to try to stem volume declines, but retailers aren’t seeing promotional activity accelerating as much in alcoholic beverages, where retailers note concerns about manufacturers’ ability to continue to push incremental pricing.

Highlights for non-alcohol beverages:

  • The energy drink category remains very strong, including Monster, and the outlook is incrementally more positive with expectations for sustained double-digit percentage growth in 2023.
  • Retailers are incrementally more positive on Monster’s new Monster Energy Zero Sugar, with many respondents planning on or already giving it space this year—with an average of two new facings.
  • Retailer optimism for Monster’s new Reign Storm is a bit more guarded vs. Monster Energy Zero Sugar, though most retailers think the product will be successful but are broadly divided on whether the brand can take share from Celsius Holdings.
  • Only a few retailers have allocated or plan to allocate incremental shelf space for non-alcohol beverages in 2023
  • Retailers are positive about recent innovation in the non-alcohol space, specifically for limited-time offers in energy. Meanwhile, Prime (hydration and energy), Louisville, Kentucky, was also a standout and is expected to gain space.

Highlights for alcohol beverages:

  • Beer and flavored-malt beverage sales growth in c-stores accelerated moderately in the first quarter, up 4%, and retailers now expect faster category growth of about 6% this year, up from an approximately 3% growth expectation in Goldman Sachs’ fourth-quarter survey.
  • Hard seltzer category growth improved in the first quarter, but it remains pressured. In addition, retailers’ outlook for category growth in 2023 accelerated slightly compared with the fourth-quarter survey.
  • Truly’s momentum still is not improving despite the Boston-based Boston Beer Co.’s efforts to revitalize it, according to most of Goldman Sachs’ retailer contacts.
  • Shelf space allocation for alcoholic beverages in 2023 remains mostly unchanged versus last year, though Constellation Brands appears to be the big winner—at St. Louis-based Anheuser-Busch Inbev’s expense.
  • Growth for Modelo Especial, Mexico City, continues to be very solid, and retailers are widely upbeat about Oro and plan to give it incremental space.
  • Sentiment toward Miller Lite, Milwaukee, and Coors Light, Chicago, continues to be mixed, though the former seems to be performing better than the latter.
  • Retailers are generally positive about Monster’s Beast Unleased, which is expected to get more shelf space; however, retailer sentiment is more mixed on the new ready-to-drink offering from Jack Daniel’s, Lynchburg, Tennessee, and Coca-Cola.

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