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NEW YORK -- Summer is getting off to a slow start for beverage sales in the convenience channel.
According to the latest Beverage Buzz survey by Wells Fargo Securities LLC, growth of convenience store beverage sales decelerated this year, up only 2 percent for Memorial Day vs. an increase of 6 percent for Memorial Day 2012. The Beverage Buzz survey polls beverage retailers representing tens of thousands of convenience store retail locations across the country.
Sales were strong in some areas of the nation. However, the cold and wet weather in most of the United States during the holiday weekend put a damper on sales, according to Bonnie Herzog, managing director of tobacco, beverage and consumer research at Wells Fargo Securities. Overall, she said respondents believe second-quarter sales will be up only 1.3 percent from last year.
In addition, 60 percent of the survey respondents indicated that weather has had a "much worse" impact on beverage sales so far in the second quarter of 2013, relative to 2012.
"Over the holiday weekend, our analysis suggests that this trend continued," Herzog said. "In the 15 major U.S. cities that we analyzed, Memorial Day temperatures were down, on average, 10 percent from last year, with rain in 53 percent of cities vs. 40 percent last year."
As c-store beverage sales dipped, promotions ticked up. According to the survey, promotions increased 4.6 percent year over year during this year's Memorial Day holiday, which is higher than the 3.1-percent increase during last year's holiday weekend. In addition, 53 percent of respondents indicated that promotions from beverage manufacturers/distributors increased for Memorial Day 2013 year over year.
Specifically, PepsiCo Inc. appeared to promote the most during the holiday, with 73 percent of respondents indicating higher promos for Pepsi, compared to 55 percent for The Coca-Cola Co., 45 percent for Dr Pepper Snapple Group and 36 percent for both Monster Beverage Corp. and Red Bull.
Retailers noted, in particular, that multi-purchase promotions were up, with approximately 75 percent seeing higher multi-purchase deals, Herzog said.
"While this has been a key contributor to volume growth recently, our respondents indicated concern over the long-term health and viability of this strategy," she added.