Fourth of July Beverage Sales Boom at C-stores

NEW YORK -- Convenience store retailers are heading into the third quarter on an up note after recording booming beverage sales over the Fourth of July holiday.

Wells Fargo Securities recently conducted a survey of beverage retailers representing thousands of convenience stores and found that more than 75 percent of the respondents indicated their beverage sales for the holiday were better than last year. Forty percent indicated that increase was more than 5 percent, according to Bonnie Herzog, managing director, beverage, tobacco and consumer research at Wells Fargo Securities LLC.

In addition, she explained that the survey results suggest convenience store beverage sales grew approximately 7 percent year-over-year in the second quarter. "Almost 90 percent of our respondents indicated that beverage sales increased in Q2 2012 vs. Q2 2011, with over 40 percent of respondents indicating that beverage sales increased more than 10 percent [year-over-year]," Herzog said. She pointed to better weather, foot traffic, basket size and higher retail price points as key drivers behind the increase.

Herzog added that Coca-Cola and Monster led the c-store beverage sales growth. She also noted that the pricing environment remains healthy, with Coca-Cola leading the pack.

"A large majority of our respondents indicated that beverage manufacturers have maintained prices in Q2 2012 vs. Q2 2011, with a modest number of respondents indicating higher Q2 prices. Importantly, relatively few survey respondents indicated that beverage manufacturers have reduced prices in Q2 2012 vs. Q2 2011," Herzog said. "We view these trends as an encouraging sign that beverage manufacturers are sticking to their guns, despite easing input cost pressures. Further, about 22 percent of our respondents noted a 4 to 6 percent price increase on Coca-Cola's products, suggesting pricing remains rational in the c-store channel.

"Interestingly, a few respondents suggested beverage manufacturers may implement price increases over the next few months," she added

As for new products, Pepsi Next is experiencing good distribution, with 94 percent of those surveyed indicating they carry the beverage. However, 59 percent indicated that Pepsi Next is generating weak repeat sales and zero percent indicated Pepsi Next is generating strong repeat sales.

In addition, approximately 82 percent indicated they carry Starbucks Refreshers Energy Drink, with 47 percent indicating the product is generating at least modest repeat sales, she added.