Months of regulatory pounding have begun to take their toll on the energy drink category, as sales growth has begun to slow, although the category does remain one of the most vital in beverage overall.
A report on convenience store sales trends from Morgan Stanley analyst Dara Mohesian released yesterday indicated that sales were up 5.9 percent for the four-week period ending March 16 – the preceding four weeks had shown growth of 5.2 percent, with the 12-week period up 8.1 percent overall. Compared to the two-year average for the same time periods category, growth is way off – average growth for similar periods have been 13.1 percent, 11.9 percent and 14.1 percent, respectively.
Anecdotal information from distributors indicated a similar pattern – the products continue to grow, with Monster and Red Bull leading the way, but the growth curve is trending down, and at least in energy, new products are being looked at with even more scrutiny.
Analyst Bonnie Herzog of Wells Fargo Bank read the numbers as a slight improvement, according to a report today, but said things were “still well below average of +13.8 percent.” Herzog did salute Monster’s ongoing innovation, however, noting that Monster Zero Ultra is now more than 10 percent of the brand’s sales – after launching in late 2012.
“Despite the slower growth trends, we remain optimistic about the category’s ability to drive overall beverage category growth,” Herzog noted.
Still, there’s more pressure on the way – including a recent letter from the three legislators manning the point position of Congressional inquiry, Sens. Richard Blumenthal (D-Conn.) and Richard Durbin (D-Ill.) and Rep. Ed Markey (D-Mass.) to Monster over their complaints about a child-focused health newsletter.