C-Store Reports: Red Bull Back on Top, Cheaper Gas Pumps Up Beverage Sales

wells fargo logoFor the first time since August, C-store dollar sales of Red Bull topped that of Monster Energy, according to a new Wells Fargo Securities report detailing Nielsen sales data for the four-week period ending on Jan. 17. It appears that Red Bull’s recent price hike, an across-the-board premium of 5 percent beginning on Jan. 1, played a key role in the company’s dollar sales growth of 7.7 percent, as compared a similar timeframe from a year prior. Wells Fargo also pointed to new innovation from Red Bull as contributing to its performance.

Overall, energy remains the top growth category for C-store beverages. The segment saw a 9.3 percent surge in dollars sales over the four weeks, propelled by a 10.4 percent leap from Monster, which saw volume sales accelerate by 11.5 percent amid a 1 percent dip in prices. Coca-Cola’s energy brands, slated to come under the Monster umbrella later this year (per an announced brand swap and distribution partnership between the two companies), also performed well, up 33.1 percent in dollar sales. Wells Fargo noted that on a pro forma basis, dollar sales of Coke and Monster energy products grew by 13.1 percent in the period.

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Bonnie Herzog, the chief author of the report, wrote that Wells Fargo remains “broadly encouraged by [Coke-Monster] partnership and [Monster’s] overall trajectory particularly in international markets.” However, the investment bank remains “somewhat cautious on [Monster] in the near term given Red Bull’s new innovation and the possibility of minor distribution disruption in the U.S. during the transition to [Coke].”

Meanwhile, a sustained decline in C-store volumes sales of carbonated soft drinks — down 3.8 percent in the four-week timeframe — was partially offset by a 1.2 percent gain in dollar sales, which were driven by pricing growth of 5.2 percent in the category. Once again, Coke led the way with a 2.5 percent jump in dollar sales, thanks to a 6 percent spike in pricing. Dr Pepper Snapple (up 2.3 percent) and Pepsi Co (up 0.3 percent) also saw dollar sales rise as a result of pricing increases.

Wells Fargo Securities also released its latest “Beverage Buzz” survey, one that looks at C-stores sales and trends during the fourth quarter of 2014, based on information culled from retail executives representing 15,000 convenience stores across the U.S. In its report on the survey findings, Wells Fargo wrote that cheaper gas prices have led to greater foot traffic in C-stores and a positive effect on sales.

According to one survey respondent, “consumers have extra money in their pockets which is leading to more frequent visits as well as increased purchases.”

With energy and non-carbonated drinks leading the way, volume sales of non-alcoholic beverage in C-stores were up 5.9 percent in the quarter. Wells Fargo directed attention to an increase in promotional activity by Monster (up 9 percent in volume sales) and Coke (up 2 percent) along with strong sales of Gatorade, as playing key roles in the overall growth of the beverage category during the quarter.

Wells Fargo continues to have gloomy outlook for Dr Pepper Snapple, which based on the survey saw volume sales rise by 1.1 percent, placing it at the bottom amongst its competitors. The report noted that while C-store operators are “generally encouraged by DPS’s Allied brand performance–including Vita Coco and Bai5,” they are less optimistic about the future of the company’s core offerings, and less so with regard to its “TEN” platform.

A few other notable comments from the survey:

“Favorable weather in the Northeast played a major role in these increases.”

“Single drink performed well however, multi packs continue to be a drag on performance.”

“The ‘Share a Coke’ promo was successful, but did not overcome earlier in the year declines.”

“Typically the smaller packages do not represent a value to the consumer.”

“Rockstar & Gatorade leading the volume at Pepsi.”

“They’re doing nothing to change things at DPSG, I don’t get it myself.”

“Anything Monster does is successful.”

“Monster introductions were the stars of Q4. New Red Bull introductions will lead the way in Q1 2015.”

“I wish I had 15 cooler doors in all of my stores as the line of what brand is my favorite is blurring as folks are less loyal than they have been in the past to brand but are more aware what they are going to do right now to refresh their morning, afternoon, or evening.”

“Growth will continue however, margins will continue to come under pressure. Innovation will continue to drive new ideas to the market which will create consumer demand and increase purchases.”

“Premium waters and premium juices are showing tremendous growth however; in the tea category $.99 teas have the majority share and showing the most growth (mostly due to Fuze 1-liters holding $.99). Energy continues to grow; Q4 was strong with additional Monster funding.”