Snacks & Candy

Volume Revival

Bloomberg: 7-Eleven's impulse shoppers driving recovery for snacks, beverages
DALLAS -- Impulse buyers are heading back to convenience stores for sodas and Hershey bars. PepsiCo Inc. and Coca-Cola Co. said the volume declines at c-stores slowed last quarter for the first time in at least a year, said Bloomberg. Hershey Co.'s first-quarter chocolate, mint and gum sales in those stores grew about 6%, it said.

"We're definitely seeing improving trends," Dennis Phelps, senior director of beverages for 7-Eleven Inc., told the news agency. "Maybe customers feel a little better about letting go of some money."

Consumers bought less candy and soda [image-nocss] last year at 7-Eleven and other "on-the-go" stores that typically generate higher profit margins for manufacturers, said the report. Dollar sales excluding cigarettes at U.S. c-stores rose 0.5% in March after a 1.3% decline during the previous 52 weeks, according to Bloomberg, citing Consumer Edge Research LLC.

"We saw a pickup in consumer discretionary spending, which resulted in improved sales for impulse purchases in convenience stores," Bill Pecoriello, CEO of Stamford, Conn.-based Consumer Edge, told the news agency. The research firm analyzes store scanner data from Information Resources Inc. (IRI) to determine sales.

"Encouraging" volume trends for beverages at U.S. convenience stores continued into the second quarter, Eric Foss, head of PepsiCo's bottling unit, said on an April 22 conference call, according to the report.

Coca-Cola also saw slight improvement at convenience stores, Dana Bolden, a spokesperson for the Atlanta-based company, told Bloomberg.

Snacks, too, showed signs of recovery in the first quarter, said John Compton, CEO of Americas Foods for Purchase, N.Y.- based PepsiCo, the world's biggest snack maker.

"I would characterize it as improving," he said during the call. "It has a ways to go as the unemployment numbers need to improve and the overall economy needs to improve."

The recession, record high gasoline prices and increased federal cigarette taxes imposed in March 2009 reduced U.S. c-store visits, Phelps added. In 2009, soft-drink volume industrywide at U.S. c-stores fell 0.6% to 1.74 billion liters, according to the report, citing Chicago-based researcher Euromonitor International.

That trend may be reversing, Bloomberg said. U.S. customer counts at 7- Eleven fell less in the first quarter and may grow in the current quarter, now that the tobacco-tax increase is a year old and gasoline prices are stable, Phelps said.

There are 38,000 7- Eleven stores worldwide. Dallas-based 7-Eleven, a unit of Seven & i Holdings Co., operates or franchises 6,000 in the United States.

Nonalcoholic beverage sales at 7-Eleven stemmed declines in the first quarter, compared with the fourth quarter of last year, Phelps said. He declined to provide dollar sales figures.

In April, packaged beverages "will probably have one of the best months we've had in over a year," Phelps added.

U.S. retail sales increased 1.6% in March, more than anticipated and the biggest gain in four months, according to Commerce Department figures cited by Bloomberg. The Conference Board's consumer confidence index jumped to 57.9 in April, the highest level since September 2008.

"We really saw volume in convenience return in a big way," Hershey CEO David West said on an April 22 conference call, according to the news agency.

Half of c-store purchases are on impulse, he said. C-stores accounted for 13%, or about $590 million, of the company's $4.5 billion in U.S. sales last year, according to Hershey, Pa.-based Hershey.

"There's no question about it, we're seeing better sales," said Mike Thornbrugh, a spokesperson for Quiktrip Corp., the Tulsa, Oklahoma-based operator of 548 c-stores. "It's not as much as we'd like, but they're still spending," he told Bloomberg.

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