NEW YORK -- Convenience-store retailers reported beverage sales growth of 6% during Labor Day weekend, signaling a strong summer overall at the cold vault.
“Given the strong Fourth of July (beverage sales up 5%) and Labor Day (+6%) holiday results, we are encouraged that beverage trends have accelerated through the key summer season, which should help drive solid third-quarter results for beverage manufacturers,” beverage analyst Bonnie Herzog of Wells Fargo Securities wrote in a research report.
Herzog, who surveyed c-store retailers shortly after Labor Day, credits lower gasoline prices, a decrease in promotional pricing and good weather for the boost in sales, which comes on top of a 4% increase in sales for the same holiday weekend in 2014.
Based on her survey, Herzog thinks Coca-Cola and Pepsi could see third-quarter sales up 5%, while Dr Pepper Snapple growth is closer to 3%.
"In the energy category," she wrote, "Red Bull remains the leader based on its innovation and has generally outperformed [Monster Energy] with 8% sales growth," she wrote. Monster grew about 7%, she added.
Alcohol beverages are projected to be up 4% in Q3, led by crafts and imports. "Anheuser-Busch InBev remains the strongest innovator and heaviest promoter," Herzog wrote.
Other key c-store beverage trends found in the survey:
- Lower retail fuel prices are generally driving increased foot traffic and larger basket sizes for in-store purchases.
- Coca-Cola's “Share a Coke” promo continues to support solid growth.
- A majority of retailers have placed Mountain Dew Kickstart with carbonated-soft-drinks vs. energy.
- Service issues are being resolved following Monster's transition in distribution from Anheuser-Busch to Coca-Cola distributors, with some isolated areas still being negatively affected.
- Retailers are not fully passing along Monster’s 6% price increase. Monster retail prices are up 4.3% on average.
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