Poor Weather Dampens Q2 C-store Beverage Sales

NEW YORK — Convenience store beverage sales ticked up in the second quarter, but the weather led to slower sales growth.

According to the Wells Fargo Securities LLC Beverage Buzz survey, non-alcoholic beverage sales were up 4.6 percent in the past quarter, while alcoholic beverage sales were slightly better, up 5 percent.

Beverage Buzz survey beverage retailers represent more than 15,000 convenience store locations across the United States.

In addition, bottled waters, sports drinks, energy drinks, and craft/import beers continued to outpace other segments.

"Broadly it appears poor weather is to blame for the overall sequential softness in beverage sales in the second quarter with over 50 percent of respondents suggesting weather had a negative impact on second quarter sales," said Bonnie Herzog, managing director of tobacco, beverage and convenience store research at Wells Fargo Securities.

She added one retailer described May "the worst beverage month we've had in the last couple of years."

Brand Breakout

Breaking out the quarter by brands, Monster Beverage Corp. saw "sales decelerate significantly," Herzog said, and "were up a very modest 4.3 percent."

"Broadly, retailers blamed poor weather in April/May and share losses to smaller competitors as consumers reacted to higher Monster prices — due to last year's price increase and lower promotional support — and increased promos from smaller energy brands," she said.

In addition, Red Bull's Kiwi Editions has been "a significant success" which likely took share in the energy category, she added.

However, retailers continue to have relatively high expectations for Monster's new innovation, with sales expected be $500 million/$200 million for Mutant/Hydro, according to Herzog, but Mutant's rollout may be delayed until the fourth quarter and Hydro may not ship until 2017.

The Coca-Cola Co. turned in solid, but sequentially lower results, according Beverage Buzz. Survey results indicated the company's sales were up 5.8 percent during the second quarter with one-third of the retailer contacts reporting that promos were lower this year, particularly on take-home packages. 

"Retailers also reported the impact from 'Share a Song' will be 'negligible at best,'" Herzog explained. "Interestingly, several retailers also reported that 'distribution changes and delivery model changes [from refranchising] have been executed poorly' which may have a near-term negative impact on some regions."

PepsiCo Inc.'s second-quarter results were led by new innovation, increasing 3.5 percent, she added.

As for Dr Pepper Snapple Group, its sales in the convenience channel were up 5.1 percent driven by Allied Brands, and pricing and promotions, the survey found.

On the alcoholic beverage side, c-store retailers reported that Constellation Brands Inc. sales were up 8.8 percent, driven by promotions, increased shelf space and strong results across its beer portfolio — which includes the Corona and Modelo brands.