NEW YORK -- Convenience-store retailers expect bottled water will be the fastest-growing packaged-beverage category in their stores in 2017, according to a survey conducted by Wells Fargo Securities, New York.
Analyst Bonnie Herzog's fourth-quarter Beverage Buzz survey of retailers representing more than 15,000 c-stores shows those surveyed expect total beverage sales to increase "a modest" 4.1% during 2017.
Here's a breakdown of how major beverage categories are expected to perform, according to the survey ...
The total carbonated-soft-drink (CSD) category is expected to grow 2.8% in 2017, led by flavored CSDs, which retailers expect to grow 6.3%.
Retailers said new Mountain Dew and Kickstart flavors from PepsiCo are leading the growth in the category.
"Pepsi appears to be focused on several new CSD flavors, along with some new water and coffee flavors," one retailer said. "The big surprise is the focus on growing CSDs."
Colas are expected to grow 1.3%, according to the survey.
Following a slower 2016—up just 3% in dollar sales in all channels, according to Nielsen data—c-store retailers expect energy drinks to grow 5.7% this year.
"[We] believe the recent slowdown in the energy category could be sustained for the near future given lack of strong innovation, limited future pricing opportunities and general macro headwinds," Herzog said.
One bright spot for the category is expected to be Red Bull's recent launch of its Editions flavors in sugar-free formulations.
The bottled-water category is expected to be the leader in beverages, growing 7.0% in 2017, according to retailers surveyed.
PepsiCo's new premium Life Wtr is a welcome addition for several retailers who said it brings competition to the leading premium bottled water, Coca-Cola's smartwater.
Convenience retailers are bullish on beer, especially high-end beer. Imported beers and crafts, both big movers in recent years, are expected to grow 5.8% and 5.9%, respectively, in 2017. Retailers expect domestic beer to generally be flat, with growth of 0.2%.
"Millennials will drive the demand," said one retailer. "[They're] seeking authenticity and quality, which will continue to drive the Mexican imports and crafts."
Wine: 5.3%
Sports drinks: 4.8%
Iced tea: 3.8%
Juices: 0.6%
"Retailers report the majority of manufacturers maintained prices in the fourth quarter of 2016, while a majority of retailers expect overall pricing to be up modestly in 2017, with Coca-Cola Co. expected to lead pricing growth," Herzog said.
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