C-Store Beverage Sales Up 2.8% in First Quarter

Category grows on back of energy drinks, enhanced waters: Herzog

Published in CSP Daily News

By  Steve Holtz, Online News Director & Beverage Editor

Source: Wells Fargo Securities

A year ago, beverage sales in c-stores dropped 2.7%. For Q1 2014, sales are up 2.8%.

NEW YORK -- Ongoing strength in energy drinks and bottled water buoyed beverage sales in convenience stores in the first quarter of 2014.

Non-alcoholic beverage sales grew 2.8% year over year, according to the latest Beverage Buzz survey of convenience retailers conducted by analyst Bonnie Herzog of Wells Fargo Securities. Herzog surveyed beverage retailers representing more than 15,000 c-store locations across the United States to get a sense of first-quarter trends.

"This strong result was driven by ongoing strength in energy and bottled water/enhanced waters, which offset declines expected in both CSDs and juices," Herzog wrote in a research note. "Given the relative weighting of CSDs for major manufacturers and lack of significant exposure to the faster-growing energy and enhanced-water categories, we remain concerned about their volumes and are cautious going into Q1 earnings for our beverage coverage universe."

One highlight for CSDs: "Several retailers called out the strength of the Mountain Dew franchise as one of the bright spots in beverages," Herzog wrote.

On the other side of the coin, Dr Pepper Snapple Group's "TEN platform performance continues to decelerate, and many retailers suggested they have plans to pull the TEN line from shelves/coolers."

A summary of beverage trends revealed by the survey:

  • Non-alcoholic beverage sales grew 2.8% year over year in Q1, led by energy and non-carbonated beverages.
  • Q1 promotions remained in line with Q4, and up slightly from the prior year.
  • Weather remains the largest negative contributor to c-store beverage sales, but continues to improve.
  • Overall pricing was up in Q1. Herzog sees "limited room for further increases in key 20-oz. PET."
  • Energy and enhanced waters are expected to continue to lead sales growth in 2014.
  • Double-digit growth in the energy-drink category continues.
  • Monster Energy growth outpacing the energy category driven by innovation and promotions.
  • The energy-drink category continues to take shelf space in c-stores, led by gains of Monster Energy.
  • The energy category represents a growing portion of beverage sales, and this trend is expected to continue.
  • Negative media coverage of energy drinks does not appear to have had a material impact on sales of the subcategory.
By Steve Holtz, Online News Director & Beverage Editor
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