Good News in Beverage Sales Is Good News for C-Stores

By 
Steve Holtz, Editor in Chief, CSP Daily News

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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

Nonalcohol

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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

Promotions

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Sales promotions were generally elevated vs. last year (up 2.8% year over year), with increases in promos across all major nonalcohol beverage manufacturers.

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Weather and gasoline prices

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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.

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Price increases

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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%."

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