Memorial Day C-Store Beverage Sales Strong

But retail survey finds concern manufacturers can maintain current prices

NEW YORK-- Wells Fargo Securities LLC recently conducted a survey of beverage retailers representing tens of thousands of convenience store retail locations nationwide to get a sense of beverage trends in the convenience channel around the Memorial Day holiday, which is one of key events of the peak beverage selling season. Results suggest that Memorial Day 2012 beverage sales were strong.

It found that 90% of respondents indicated that they believe beverage sales for Memorial Day 2012 were better than the prior year, with more than 60% indicating an increase of 5% or more. In addition, 91% of respondents indicated that beverage sales so far in second-quarter 2012 are up vs. second-quarter 2011, with only 9% indicating flat sales and none indicating lower sales. "We think these results suggest our beverage companies should post solid Q2 results in North America," said New York City-based analyst Bonnie Herzog in a research note.

Increased promotions appeared to drive sales for Memorial Day--43% of respondents indicated that promotions from beverage manufacturers/distributors increased for Memorial Day 2012 compared to Memorial Day 2011. Only 14% of respondents indicated that promotions by manufacturers/distributors were down for Memorial Day 2012, and all of these respondents suggested the declines were somewhat modest, less than 10%.

Atlanta-based Coca-Cola Co. appeared to lead promotions at the overall level, while Purchase, N.Y.-based PepsiCo Inc. appeared to lead promotions in colas and sports drinks, said the report.

Most respondents indicated that beverage manufacturers have maintained prices in second-quarter 2012 vs. first-quarter 2012, with a modest number of respondents indicating higher second-quarter prices.

Few respondents indicated that beverage manufacturers have reduced prices in second-quarter 2012 vs. first-quarter 2012. "We view this as an encouraging sign that beverage manufacturers are sticking to their guns, despite easing input cost pressures," Herzog said. "Still, there appears to be some concern that beverage manufacturers will be able to maintain current prices through 2012, as 52% of our respondents are either 'uncertain' or do not believe manufacturers can maintain current price levels."

Other key takeaways:

  • Weather has been a positive factor for second-quarter beverage sales.
  • Foot traffic and basket size are having the biggest impact on beverage sales.
  • Pepsi beverage turnaround offers glimpses of improvement, but generally no change.
  • Pepsi Next seems unlikely to move the needle in immediate consumption.
  • Functional beverages continue gaining share in convenience, not just energy.