C-store Operators Are Optimistic Beverage Sales Will Continue Upward Trend

NEW YORK — Beverage sales are picking up in the convenience channel, and retailers are optimistic that the trend will continue.

According to the Goldman Sachs second quarter "Beverage Bytes" survey, retailers expect beverage sales to increase approximately 6 percent this year, compared to approximately 5 percent previously. The survey represents roughly 36,000 retail locations or 24 percent of the convenience store channel.

[Read more: C-store Retailers Hold Cautious View of Beverage Sales]

Of particular note to retailers, according to Bonnie Herzog, Goldman Sachs senior financial analyst, is Constellation Brands Inc. — which is expected to see 11 percent year-over-year growth this year — and the energy drink category — which is expected to see double-digit growth this year.

However, retailers "remain concerned about broader economic pressures/fears of recession, impacts from cooler weather (in the second quarter) and negative impacts from the recent Bud Light controversy," she said.

Anheuser-Busch's Bud Light faced declining sales after a promotional post by Dylan Mulvaney, a transgender influencer, sparked controversy among consumers this spring.

The key takeaways from the second quarter "Beverage Bytes" survey include:

• The pricing environment remains healthy/rational with the majority of retailers expecting incremental pricing by both nonalcoholic beverage manufacturers and brewers this year;
• Beer promotional activity has increased in the last few months, particularly in the wake of the Bud Light controversy, as well as in nonalcoholic beverages. Goldman Sachs' retailer contacts highlighted that manufacturers/brewers have started to promote more in an effort to stem volume pressures;
• The big winners of incremental shelf/cooler space this year are energy drinks;
• The hard seltzer category growth declined again in the second quarter and retailers' are incrementally more negative with their outlook for the category; and
• Out-of-stocks remain an issue in both alcoholic and nonalcoholic segments. Nonalcoholic beverage out-of-stocks getting incrementally better, but alcoholic beverage out-of-stocks appear to be worse.