C-store Retailers Buoyant About Beverages After Strong Summer

NEW YORK — Convenience store retailers saw the unofficial end of summer end on high note for beverage sales.

In Wells Fargo Securities LLC's latest Beverage Buzz survey, c-store retailers indicated beverage sales over the Labor Day weekend were up 4.1 percent year over year.

"In short, the collective mood from our retailer contacts was buoyant," said Bonnie Herzog, managing director of tobacco, beverage and convenience store research at Wells Fargo Securities.

Notably, she added, one retailer said with the "the more seasonal vacation areas thrived" and "it was one of the best vacation seasons in many years."

The end-of-summer strength reinforces Wells Fargo Securities confidence in the U.S. beverages — and increases its confidence in the convenience channel, Herzog said.

Beverage Buzz surveys beverage retailers representing nearly 20,000 c-stores. Key takeaways in the recent survey include:

• Non-alcoholic beverage sales increased by 3.5 percent year over year against a tough 5.4 percent comp last year, with several retailers calling out strong energy drink sales;
• Non-alcoholic beverage promotions were up 1.8 percent year over year although promos across energy were generally elevated;
• Coke Energy could have potential;
• Alcoholic beverage sales increased by 4.9 percent year over year, driven by strength across Constellation Brands' portfolio of import beers and continued momentum in flavored malt beverages/hard seltzers;
• Alcoholic beverage promotions were up 1.3 percent year over year with retailers calling out effective promos by both Molson Coors Brewing Co. and Constellation; and
• Retailers are increasingly upbeat about hard seltzers, with plans to boost shelf space across the category by nearly 20 percent in 2020.

Looking specifically at energy drinks, retailers estimate that the segment grew by 9.3 percent year over year this Labor Day weekend. Emerging energy brands such as Bang led the jump. In addition, Red Bull saw a 7.3-percent increases year over year.

However, the increase was offset by slower growth from Monster Beverage Corp. and Rockstar.

"Retailers remain bullish on the energy category overall, with growth expectations for 2019 now up 8.3 percent," Herzog said, noting that is up "from already strong expectations for 7.8 percent in our Q2 survey."

In addition, retailers were very upbeat on Bang's growth — although many are also increasingly mindful that Bang's distribution power continues to lag that of its peers. Retailers were also generally upbeat about Coke Energy's potential.