CHICAGO -- The first half of 2017 has been challenging for beverage retailers as sales have languished and new taxes have cropped up adding significant cost to an everyday purchase.
Here’s a look at five stories that have kept the category interesting since Jan. 1 …
1. Beverage sales lag
You know it’s been a rough period for packaged-beverage sales in convenience stores when a 1.9% increase in volume sales of energy drinks is the good news, and such was the case for the 12-week period ending June 17, 2017, according to Nielsen data.
The news was worse in other prime categories, with carbonated-soft-drink sales down 5.4%, sports drinks down 4.2% and even beer down 0.9%.
2. Soda taxes
Those lagging sales numbers aren’t being helped at all by the growing number of cities adopting sugar-sweetened beverage taxes or, worse, taxes on all beverages.
Philadelphia’s 1.5-cent-per-ounce tax on sweetened and diet beverages, which began Jan. 1, reportedly led to a 40% decline in beverage sales. It’s currently the subject of a legal challenge before the Pennsylvania Supreme Court. Since then, additional taxes have been approved in Seattle (2 cents per ounce); put into effect July 1 in Boulder, Colo., (2 cents per ounce); rejected by voters in Santa Fe, N.M., (2 cents per ounce); and tied up in a legal challenge in Cook County, Ill., (1 cent per ounce).
3. Craft-beer struggles
Retailers have been expanding and regularly changing up their beer sets for the past couple of years as craft beers saw double-digit sales growth that couldn’t be ignored. Then, things slowed down. In convenience stores, craft-beer sales were up 8% during 2016, compared to 26% growth a year earlier, according to IRI data. The beer category in all channels was down 3%, per Nielsen data.
What’s the problem?
"There continues to be a flood of new entrants into the craft space," Jim Koch, founder and chairman of the Boston Beer Co., said in March. "I think the last quarter or two in craft has begun to change the attitudes of people in the industry; that slowdown has come faster than pretty much anybody expected.”
4. High demand for 'new'
Speaking of new entrants, consumers are anxious for innovation in the beverage category. So much so that beverages dominated a list of the largest c-store product launches in 2016. Eight of the top 10 most successful product launches in c-stores were beverages, according to IRI's 2016 c-store New Product Pacesetters list.
Five energy drinks from four different manufacturers made the top 10 ranking, "reinforcing the notion that Americans want energy-packed solutions that can be consumed on the go," the Chicago-based company said.
5. Monster’s issues
Of course, a new beverage doesn’t do anyone any good if you can’t get it in your store. After out-of-stocks plagued Monster Energy’s launch of its energy soda Mutant Monster, the Corona, Calif.-based drink maker chose to delay the launch of its much anticipated energy-water hybrid Monster Hydro rather than risk causing retailers similar frustrations.
Monster Energy said the product-launch delay was necessary because it needed more time to build its production pipeline to meet expected demand. The new drink started hitting shelves in late May.