Energy Drinks, Tea Stir Up Q4 Beverage Sales

NEW YORK – The fourth quarter of 2013 saw strong improvement in non-alcoholic beverage trends, improving 5 percent year over year. This was driven almost entirely by energy drinks and relative strength in teas, according to Wells Fargo Securities LLC's latest Beverage Buzz survey of retailers. 

These segments helped offset estimated 6-percent declines in carbonated soft drinks (CSDs).

The future may continue to be grim for CSDs. Although many beverage companies have focused on bringing consumers back to the segment through an all-natural sweetener -- with some labeling it a “holy grail” -- few of the beverage retailers who represent more than 15,000 U.S. convenience stores are optimistic.

"Almost universally, our retailers do not believe that an all-natural sweetener will have a positive impact on the declining CSD category," said Bonnie Herzog, managing director of tobacco, beverage and consumer research at Wells Fargo Securities.

Monster Beverage Corp. finished 2013 with its strongest quarter of the year, growing 13 percent in Q4 following a 12-percent increase in Q3 and a 9-percent increase in Q2. This is likely the result of an increase in promotions combined with less negative media coverage of energy drinks. Innovative new energy drinks from Monster, such as Zero Ultra and Muscle Monster, also may have helped segment growth.

The Coca-Cola Co. saw flat c-store sales during Q4, with average retail price growth of 0.4 percent offset by a 0.4-percent decline in sales volumes. Surveyed retailers expect the company to raise prices this year.

PepsiCo Inc. CSDs also struggled, but its declines may have been offset by newer products such as Kickstart and Frappuccino, as sales volumes were up 1.1 percent year over year during Q4. Some retailers predicted that Pepsi may become more aggressive with promotions in order to "buy back share," Herzog noted.

Dr Pepper Snapple Group Inc. products saw 2.1-percent volume growth during the quarter, likely due to a 0.6-percent drop in retail prices. However, the company's TEN product platform continues to decelerate, prompting some retailers to make plans to drop the beverage line during spring resets.