Memorial Day Beverage Sales Bode Well for Q2
NEW YORK — If the unofficial start to summer is any indication, beverage sales could be popping.
According to Wells Fargo Securities LLC's Beverage Buzz survey, convenience store beverage sales were up 5.5 percent during the Memorial Day holiday. By comparison, the 2015 holiday saw a 4.9-percent lift.
In addition, nearly 90 percent of retailers reported higher sales this holiday weekend vs. last year. Beverage Buzz surveys beverage retailers representing approximately 15,000 U.S. convenience stores.
Overall, the survey found foot-traffic growth was strong during the holiday weekend and retailers expect a 6-to-7-percent traffic increase this summer due to low gas prices and greater miles driven, said Bonnie Herzog, managing director of tobacco, beverage and convenience store research at Wells Fargo Securities.
Cola and energy drinks were the most heavily promoted categories for Memorial Day. Plus, weather continues to impact beverage sales in the convenience channel, she added.
Looking at segments, Wells Fargo Securities' contacts said energy drink sales are up 8 percent year over year so far for the second quarter. Retailers expect it to grow 9 percent for the full-year driven by share gains from Monster Energy Corp.
In addition, retailers seem excited about Monster's new innovation and expect the company to expand into water, soda, coffee and/or better for you isotonics/sports drinks with functional benefits, according to Herzog.
"We remain very bullish on this opportunity for Monster and think this could ultimately be a $1 billion opportunity," she added.
Specifically, Herzog noted Monster is expected to have its new "Mutant" in coolers by July 4. In all, the energy drink manufacturer is expected to launch four new products across three new platforms in fiscal year 2016-2017.
Alcoholic beverages also saw an uptick in sales, with a solid 3-to-4 percent increase to date in this quarter, according to Beverage Buzz.
"Overall, we are broadly encouraged heading into Q2 results for both beverage manufacturers and c-store retailers given strong beverage sales thus far in the second quarter and upbeat comments from our retailer contacts," Herzog said.