NEW YORK -- Summer beverage sales in convenience stores ended on a high note over Labor Day weekend, suggesting a welcome turnaround for the industry compared to last year. Sales were up 4.4% year over year for Labor Day 2018 compared to a 1.5% dip a year earlier, according to a Beverage Buzz survey of retailers conducted by Wells Fargo Securities, New York.
"Favorable weather (temperatures up 6% and precipitation down 13% year over year) and strong consumer sentiment drove increased momentum and traffic," Senior Analyst Bonnie Herzog wrote in a research note. "Overall, beverage sales in c-stores are strong with strength in premium waters, healthy/functional nonalcoholic beverages and import beers."
The report is good news for the industry, which earlier this year was lamenting a slowdown in traffic in 2017.
Some highlights of the report ...
Photograph by Adam Shane
Overall sales of nonalcohol beverages increased by 5.4%, up sequentially from a 4.2% increase in the second quarter of 2018. "Several retailers called out strong water demand over the Labor Day holiday as a key sales driver," Herzog said. "Retailers were also pleased with strong BodyArmor performance."
Photograph by Steve Holtz
Sales promotions were generally elevated vs. last year (up 2.8% year over year), with increases in promos across all major nonalcohol beverage manufacturers.
Photograph by Shutterstock
The good weather resonated strongly with retailers. "Without a doubt, many retailers were pleased with hot/muggy weather trends across much of the United States and cited this as a big driver behind positive year-over-year traffic growth," Herzog said. "Others, however, mentioned higher gas prices as an impediment to growth." According to AAA, as cited by Herzog, the national average retail price for gasoline was at its highest point over the past four Labor Day weekends. This year, prices averaged $2.84 per gallon.
Photograph by Shutterstock
The positive sales growth likely sets the stage for beverage price increases, according to Herzog. "Most of the major beverage manufacturers have announced plans to increase prices," she said. "Our retailers estimate the following (on average): Coca-Cola 4%, Keurig Dr. Pepper 4%, Monster 4%, PepsiCo 3% and Constellation 2%."
Photograph by Shutterstock
Get today’s need-to-know convenience industry intelligence. Sign up to receive texts from CSP on news and insights that matter to your brand.
CSP’s Top 202 details the largest chains in the convenience-store industry and the biggest M&A stories of the past year. Welcome to a deep dive into the c-store landscape.
Category sales performance in Beverages, Candy, General Merchandise, Packaged Food/Foodservice and Snacks.
The industry’s largest distributors by sales volume
Corporate retail news affecting the convenience-store industry
The latest information on products and trends in the convenience-store and foodservice industries.
Peek inside new convenience stores to uncover the best in retail store design across North America.