Packaged Beverage Sales Decline

The significant slowdown seen in packaged beverage sales growth in 2008 turned into a sales loss in 2009, as the recession continued to hamper consumer spending. Per-store sales of packaged beverages declined 2.0 percent to $137,497 per store last year, compared to the 2.1-percent sales gain seen in 2008.

As a percentage of in-store sales, packaged beverages saw its share dip a few points from 11.98 percent in 2008 to 11.25 percent in 2009. Despite this, packaged beverages retained its third place rank in terms of in-store sales — behind cigarettes and foodservice in first and second, respectively.

Looking at margins, packaged beverages represented 13.72 percent of in-store gross margin contribution in 2009, falling slightly from its 15.12 percent contribution in 2008.

Last year saw declines in average sales per store across the top five packaged beverage segments — carbonated soft drinks; alternative beverages; bottled water; juice/ juice drinks; and sports drinks. Interestingly, the alternative beverage segment — of which the still-popular energy drinks is a part — is now the No. 2 seller in convenience stores and currently outsells the bottled water segment, which saw a 5.4-percent decline in average sales per store in 2009. Another packaged beverage segment experiencing a fallout is sports drinks, which saw a 10.0-percent drop in average sales last year.

Conversely, ready-to-drink iced tea and all other packaged beverages, which represent the two smallest segments of packaged beverages in convenience stores when ranked by sales, both saw modest sales increases in 2009 of 3.2 percent and 1.3 percent, respectively.

Outside of the bottled water and energy drink swap for second place, each segments' share of the packaged beverage category did not shift too dramatically in 2009. Carbonated soft drinks grew its No. 1 spot by 0.8 percentage points, now making up 45.8 percent of the category on a dollar basis. Alternative beverages was up a scant 0.2 percentage points, to 13.7 percent of the packaged beverage category, while both bottled water and sports drinks lost share, down 0.5 and 0.8 percentage points, respectively.

Fig. 24

Category Analysis — Packaged Beverages

(11.25 percent of in-store sales, 13.72 percent of in-store gross margin contribution)

Fig. 25

Percent of Packaged Beverage $ Sales and Unit Volume

On a unit volume basis, though, the share of the packaged beverages category stacks up differently. CSDs retained its top position, with 47.2 percent of the category, followed by bottled water (15.6 percent), juice/ juice drinks (11.0 percent), then alternative beverages (9.5 percent).

The decline in sales and units for alternative beverages — the first for this segment — illustrates the continued maturation of the energy drink segment, as well as the effect of the recession on the category — as the unemployment rate increased, fewer Americans needed the extra energy to get through their days at the office or work site.

Across competitive channels, the convenience store industry lost share on both a dollar and unit volume basis to drug stores and supermarket channels in 2009. Convenience stores now hold a 45.04-percent share of packaged beverages on a dollar share basis, while on a unit volume basis, convenience stores hold half (50.44 percent) of the category.

Fig. 25

Packaged Beverages Competitive Channel Market Share

BOTTOM LINE:

• Packaged beverage sales in 2009 were down when compared to 2008.
• Alternative beverages (includes energy drinks) is now the No. 2 seller, outpacing bottled water.
• On a unit basis, CSDs retained its top spot, with 47.2 percent of the category.

Across competitive channels, the convenience store industry lost share on both a dollar and unit volume basis to drug stores and supermarket channels in 2009.