Beverages

Strong 3rd Quarter for Packaged Beverages

Goldman Sachs report notes ‘impressive’ 12% year-over-year growth
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NEW YORK — Packaged-beverage sales in convenience stores were strong in third-quarter 2022, up an “impressive” 12% year over year, according to a report from Goldman Sachs, citing Chicago-based NielsenIQ data.

Traffic remained resilient, up 3%, despite a broadly challenging economic environment, based on feedback from Goldman Sachs’ retailer contacts, New York-based Goldman Sachs Managing Director Bonnie Herzog said.

“Overall, retailers expect the strong momentum in beverage sales growth to continue, with expectations for beverage sales to increase 9% next year in the convenience-store channel,” Herzog said. “That said, retailer sentiment remains broadly cautious given concerns around inflation and high gas prices.”

Other key takeaways from the third-quarter survey include:

  • Alcohol and non-alcohol segments both suffer from out-of-stocks, though less than in previous surveys, with most retailers noting improvement.
  • Not surprisingly, retailers said pricing across both alcohol and non-alcohol beverages have increased significantly in 2022. Most expect more increases in 2023.
  • Retailers’ outlook for the energy drink category, including Monster, is very positive, with expectations for sustained double-digit growth in 2022 and 2023.
  • Retailers expect Monster and Red Bull’s recent price hikes to be successful and stick; however, “many see limited room for further price increases, especially given retail prices for energy drinks have crossed the $3-per-can psychological threshold for key brands,” Herzog said.
  • Retailers are broadly bullish on Monster’s new Monster Energy Zero Sugar innovation and expect it to be incremental.
  • Beer and flavored malt beverages in c-stores were up a “modest” 3% in the third quarter, with retailers expecting category growth to remain stable next year.
  • Retailers are more upbeat about Miller Lite versus Coors Light, but don’t see either brand benefiting from downtrading.
  • Hard seltzer declined 2% year over year in the third quarter, and retailers expect only a modest recovery in 2023.
  • Most retailers don’t see signs of improvement in Truly’s momentum despite efforts with a flavor reformulation.

“Overall, we are broadly optimistic heading into third-quarter earnings as we expect strong top-line growth, reflecting strong pricing and resilient underlying volume trends as we have yet to see any significant changes in consumer elasticities,” Herzog said. “That said, the challenging cost environment will likely continue to pressure gross margins, albeit to a lesser extent than second quarter, as commodity pricing has modestly improved lately.”

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