Despite a Healthy Q4, C-store Retailers Voice Concern for Beverage Sales

The energy drinks segment remains strong in the cooler, according to Goldman Sachs' latest Beverage Bytes survey.
A c-store shopper

NEW YORK — Convenience store beverage sales are coming off a healthy end to 2022, but retailers are cautious as pressures continue to challenge consumers' wallets.

According to Bonnie Herzog, managing director at Goldman Sachs, c-store retailers expect beverage sales to increase mid-single digits in 2023 compared to the expectations of high-single digits previously. The takeaway was part of Goldman Sachs' fourth quarter Beverage Bytes survey, which represents roughly 30,000 retail locations, or approximately 20 percent of the convenience channel.

"Overall, retailers remain positive and upbeat around the opportunity in energy drinks, but are increasingly concerned about the impact of broader economic pressures, recession risk and manufacturer price increases on consumer discretionary spending," Herzog said.

Retailers said out-of-stocks remain a headwind in the alcohol and nonalcohol segments, though to a lesser degree than prior surveys, with the majority of retailers noting a sequential improvement, she noted.

Additionally, the pricing environment remains healthy and retailers expect incremental pricing by both nonalcoholic beverage manufacturers and brewers in 2023. As for promotions, activity still remains limited, with most retailers not seeing signs of a pickup in alcoholic and nonalcoholic beverages, although some voiced concerns about manufacturers' ability to push through incremental pricing, according to Herzog.

Other key takeaways from Beverage Bytes include:

  • The energy drink category remains very strong and the outlook is incrementally more positive, with expectations for sustained double-digit percent growth in 2023 — on top of double-digit percent growth in 2021 and 2022;
  • Shelf/cooler space allocation for nonalcoholic beverages is expected to remain unchanged this year, although retailers note plans to allocate incremental space to Celsius Holdings Inc. and incumbent energy drink brands Monster and Red Bull while cutting space for Bang;
  • Beer/flavored malt beverage sales growth in c-stores was up a modest 2 percent in the fourth quarter, and retailers expect modest future category growth of roughly 3 percent in 2023;
  • Hard seltzer sales growth in c-stores were down 4 percent year over year in the three-month period (a slight sequential decline) and retailers expect the category to remain flat in 2023; and
  • Shelf/cooler space allocation for alcoholic beverages will be higher in 2023, as indicated by approximately 43 percent of retailers.