Unseasonably Warm Weather Drives C-store Beverage Sales
NEW YORK -- Convenience store sales of both packaged and malt beverages ticked up in the fourth quarter of 2012, providing a boost to beverage companies' fourth-quarter results.
The uptick, according to Wells Fargo Securities LLC, can be traced to foot traffic, likely driven by unseasonably warm weather.
Wells Fargo Securities’ latest "Beverage Buzz" report -- a quarterly survey of beverage retailers representing more than 10,000 convenience store locations across the United States – shows that non-alcoholic beverage sales increased approximately 5 percent in Q4 vs. the same period a year ago. That figure is below the roughly 7-percent increase seen in the third quarter, but still strong, noted Bonnie Herzog, managing director of tobacco, beverage and consumer research.
The vast majority of the survey respondents -- 85 percent -- indicated that their sales of non-alcoholic beverages increased year over year during the fourth quarter. However, this is a slight pullback from third-quarter trends when 92 percent indicated non-alcoholic beverage growth, she said.
"Given the sluggish trends we have seen in the take-home channel scanner data for the past few quarters, we think c-store sales could provide a needed boost to drive beverage companies' top-line results," Herzog explained.
Higher retail prices had a favorable impact on beverage sales in the last few months of 2012, as Wells Fargo Securities estimates that beverage manufacturers took a 2-percent to 2.5-percent price increase during the fourth quarter, compared to a 2.5-percent to 3-percent increase in the third quarter.
The new Beverage Buzz report also revealed that beverage promotions remained flat in this latest quarter, compared to a 1.5-percent uptick in promotions during the third quarter of last year. And while energy drinks captured maximum shelf space growth in convenience stores, carbonated soft drinks (CSDs) are expected to remain weak in 2013 despite improved momentum of flavored CSDs, according to Herzog.
Broken out by beverage brand, the report showed:
- C-store sales of Coca-Cola products rose to 4.2 percent in the fourth quarter. Based on the survey results, Wells Fargo Securities estimates that the average retail price for Coca-Cola beverage products increased 1.4 percent year over year and volume increased 2.8 percent. Both figures were up slightly from the third quarter’s 1.1 percent and 1.3 percent, respectively.
- Dr Pepper Snapple Group sales increased 2 percent, driven by accelerated net retail price growth, Herzog explained. "While [Dr Pepper Snapple's] overall trends appear somewhat sluggish, we are encouraged by accelerating pricing trends, which should more than offset volume weakness in the future," she said.
- For PepsiCo, volume was the key driver behind its 3.3-percent convenience store sales growth. Based on the survey results, the volume of Pepsi beverage products increased an estimated 2.2 percent year over year in the fourth quarter as the average retail price for the products rose 1.3 percent.
- Monster Beverage Corp.’s c-store beverage sales decelerated in the fourth quarter despite flat pricing. More specifically, based on the survey results, Well Fargo Securities estimates that fourth-quarter convenience store sales of Monster drinks rose approximately 11 percent, down from 15 percent in the third quarter.