Morgan Stanley: Energy Growth Slows in C-Stores

As energy drinks continue to take heat from politicians and federal agencies for their caffeine content and labeling, the sales growth of Monster Energy and Red Bull has slightly decelerated, according to a consumer price index (CPI) report released Friday by Morgan Stanley. But energy drinks remained the fastest growing product class in the categories looked at by the investment bank, which showed convenience store sales growth leveling off in beer, CSDs and salty snacks alike.

And both Monster and Red Bull continue to outpace the energy drink category overall. While competitive brands like Rockstar, Coke and PepsiCo remained far below the category’s 12.2 percent growth rate over the past four weeks, Monster and Red Bull were up 17.1 percent and 14.2 percent, respectively.

But the sales growth was tempered compared to previous periods. For Monster, the 17.1 percent growth rate was 6.3 percent lower than the significant growth of the previous four week period, and reflected an overall slowdown of about 1.9 percent compared to the previous 12 weeks. The company’s equivalent volume share fell to 18.3 percent, down 6.1 percent from its 52-week average of 24.4 percent. The company’s average pricing had a minor drop, while the category as a whole has increased average price by 0.5 percent from the past four weeks compared to the previous 52. The sales growth of Red Bull, Monster’s largest competitor, has also decelerated, down to 14.2 percent compared to the 19.7 percent growth over the previous 52 weeks. Red Bull’s equivalent volume has also dropped to 14.6 percent, compared to its 20.8 percent growth over the previous 52 weeks, and its average price has increased to -0.4 percent in the previous four weeks compared to -0.9 percent over the previous 52 weeks.

The report also tracked numbers in C-stores compared to the expanded all-outlet combined (XAOC) channel, which includes grocery, drug, mass, dollar, military, Walmart, Sam’s Club and other club stores. While the average price of beer in C-stores has remained steady for the past four weeks compared to a 52-week sample, C-store beer sales growth fell to 3.6 percent in the past four weeks, down 1.6 percent from its 5.2 percent average over the same 52 weeks. Carbonated soft drinks (CSDs), energy drinks and salty snacks also showed growth deceleration in sales and equivalent volume when comparing the past four weeks to the past 52 weeks.

As its average pricing remains close to constant, the CSD category continues to suffer amid the growing awareness of health and wellness. The Morgan Stanley report stated that total CSDs, excluding energy drinks, have fallen to 0.2 percent growth over the past four weeks, down 3.4 percent over the past 52 weeks.

For individual companies, PepsiCo’s growth has decelerated to 0.5 percent over the previous four weeks, compared to 2 percent over the previous 12 weeks and 3.2 percent over the previous 52 weeks. PepsiCo’s equivalent volume also dropped, off 2.4 percent over the previous four weeks compared to 1.1 percent over the previous 12 weeks and 0 percent over the previous 52 weeks.  Coca Cola’s sales dropped 0.5 percent over the previous four weeks, compared to 0.4 percent growth over the previous 12 weeks and 4.6 percent growth over the previous 52 weeks. The company’s equivalent volume dropped by 4.3 percent, compared to a drop of 3.2 percent over the previous 12 weeks and a far cry from the 1.1 percent volume increase it has shown over the previous 52 weeks.