Beverages: Hanging on Energy Drinks?

Growing category expected to "set the tone for 2013" as CSDs sag

Published in CSP Daily News

By  Steve Holtz, Online News Director & Beverage Editor

NEW YORK -- As they say in Hollywood, there's no such thing as bad publicity. Such may be the case for energy drinks, which, despite an onslaught of negative press regarding deaths allegedly caused by the high-caffeine drinks, are expected to continue to grow by double digits this year.

"Ninety-two percent of our retailer contact suggested that the recent heightened media coverage regarding the safety of energy drinks was a mere sensation and was unable to restrict the growth of energy drinks," wrote Wells Fargo analyst Bonnie Herzog in a summary of a recent "Beverage Buzz" retailer survey.

Herzog surveyed numerous retailers representing more than 10,000 convenience stores and found non-alcoholic beverage sales grew almost 5% in 2012. The note also suggests trends in the beverage industry favor increased sales in c-stores in 2013.

"We think c-store sales could provide a needed boost to drive beverage companies' top-line results," Herzog wrote.

Recent Nielsen trends for carbonated soft drinks have been weak in the take-home channel, according to the report, providing an opportunity for additional traffic to c-store retailers. Still, Herzog expects CSD sales will remain tepid in 2013, despite improved momentum of flavored CSDs.

"Total CSD category growth remained flat in Q4, compared to an estimated 1% growth in Q3," she wrote. "However, [the] CSD category is expected to [be] down about 1%."

That brings us back to energy drinks, which Herzog said "could set the tone for 2013."

"Energy Drinks remain the biggest excitement for 2013, as indicated by several of our trade survey respondents, due to the growth in the non-carb category and the continuous shift in consumer preferences," she wrote. "Most retailers continue to predict double-digit growth in the energy-drink category over the next few years. We continue to believe that the growth of energy drinks will surpass CSD growth in the near future."

Herzog also reported "some excitement" this year for iced tea, bottled water and isotonics.

See CSP's 2013 Beverage Report in the February issue of CSPmagazine for more on the key beverage categories.

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By Steve Holtz, Online News Director & Beverage Editor
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