Energy Drinks & Hard Seltzers Contribute to Strong C-store Beverage Sales

NEW YORK — Innovation in the cold vault is drumming up excitement for consumers and retailers, according to Wells Fargo Securities LLC's recent Beverage Buzz survey.

The third quarter survey found retailers are "very upbeat, as disruptive innovation across energy beverages and flavored malt beverages/hard seltzers continue to drive customers into the store and expand the broader beverage category," said Bonnie Herzog, managing director of tobacco, beverage and convenience store research at Wells Fargo Securities.

In addition, retailers are going into 2020 with a positive outlook, as more innovation from The Coca-Cola Co. (Coke Energy) and Constellation Brands (Corona Seltzer) are likely to keep the momentum going, she added.

Beverage Buzz surveys beverage retailers representing approximately 20,000 convenience stores. 

Among the key takeaways, according to Herzog, are:

• Overall total beverage sales were up a 5.2 percent in the third quarter (vs. a 4.8 percent increase in the previous quarter.
• The promotional environment is still generally rational, up 2.7 percent, although it appears that promos are a bit higher in energy beverages and sports drinks as competition in both categories increases.
• Retailers' outlook for the total energy category growth for 2020 is up 7 percent.
• Retailers' commentary for Coca-Cola was generally positive, with some exceptions. However, retailers were cautious on Keurig Dr Pepper and are still concerned that PepsiCo is struggling to gain traction despite stepped-up investment spend. 
• Retailers are expecting string gains in sales and shelf space for Constellation Brands.

Looking closer at the energy segment, retailers are "bullish," Herzog said, adding they expect the segment to grow by 8.4 percent in 2019. That is up from an expected 7.8 percent 2019 increase in the second quarter.

"Elsewhere, the buzz was particularly palpable around the burgeoning fitness/performance energy category — which is clearly going from niche to mainstream very rapidly," she said. "All the retailers we surveyed plan to allocate more space to the fitness sub-category."