An Innovation Evolution

The non-alcoholic side of the cold vault had a stronger performance in 2015 than the alcohol side, with no packaged beverage segments seeing sales declines. Beer and malt beverages, on the other hand, saw some significant ups and downs with multiple segments having sales declines, whereas other segments grew by more than 10 percentage points on a per-store basis.

Packaged beverages as a whole increased in average sales per store by 6.1 percent. Although carbonated soft drinks (CSDs) had another fairly flat year at only 0.9 percent in per-store sales growth, other segments such as energy drinks, bottled water, ready-to-drink iced tea and enhanced water increased their average sales per store each by 9 percent or more, indicating consumers’ continued interest in healthier and/or functional drinks.

Despite this, CSDs remain comfortably on top in terms of both dollar sales and unit volume.

“Carbonated soft drinks have been on the decline for many years now from both a volume and dollar perspective, yet don’t kid yourself that they are not important. Soft drinks still account for approximately 50 percent of overall beverage sales,” said Tim Powell, vice president of Q1 Consulting. “However, with innovation in sparkling waters, functional beverages and even ‘powder sticks’ and flavor additives, consumers have shifted tastes to different ‘for me’ beverages — much like craft beer is doing for [the malt beverages] segment.”

Indeed, microbrews/craft beer (up 19.3 percent) showed the strongest growth in per-store sales last year among all beer/malt beverages segments. Imports (up 15 percent) and super premium (up 10.8 percent) turned in strong performances, too. Not faring as well were premium, budget, popular, malt liquor and non-alcoholic beverages, which all saw per-store sales declines.

“The craft beer category is the new ‘energy drink’ category and the ‘Starbucks beverage’ category of the past few decades,” Powell noted. “The drivers of craft beer growth have been the millennial segment, the social media trend of ‘me first, my brand,’ and a combination of the mainstream brands just not tasting as good and getting tired. I think it’s a natural evolution.”

“Carbonated soft drinks have been on the decline for many years now from both a volume and dollar perspective, yet don’t kid yourself that they are not important.”
— Tim Powell, Q1 Productions