These days, volume declines of carbonated soft drinks (CSD) are par for the course. There’s no question, people are drinking less soda, and the biggest CSD companies have attempted to offset the reality of an irreversible descent in unit sales with gradual increases in the price of their products. Yet how much is too much to pay for a bottle of cola? It’s a question that has yet to be definitively answered, but it appears some companies have been more effective than others, particularly in C-stores.
According to a new Wells Fargo Securities report, which examined Nielsen C-Store sales data for the four-week period ending on Oct. 25, the Coca-Cola Co. saw a 4.9 percent leap in year-over-year dollar sales of its CSD products within the channel. Coke’s gains were driven by 4.9 percent increase in the average price of its sodas, which counterbalanced a paltry 0.6 percent growth in volume sales.
Despite a sustained slide in volume sales of its soda products, PepsiCo and Dr Pepper Snapple were up 1 and 1.7 percent in dollar sales, respectively, having increased prices by 3.3 and 4.7 percent. However, it was clear that Coke was behind an overall 2.5 percent jump for all CSD dollar sales in C-Stores, with the cola giant continuing to gain volume share at the expense of its chief competitors.
Meanwhile, the month-long period proved to be a powerful showcase for the resilience of Monster Energy, which has seen weaker than expected sales in recent months. Dollar sales of Monster products rose by 7.3 percent, while volume was up by 8.8 percent. Wells Fargo attributes the growth to a reacceleration of the company’s Ultra line, which benefited from the roll-out of new products.
Red Bull, Monster’s primary rival, also had a good month, with dollar sales up 6.8 percent, driven by a 6.9 percent leap in volume sales. Overall, the energy category saw a 7.1 percent spike in C-Store dollar sales, despite a poor period for Rockstar, which was down 13.3 percent, having seen a 13.7 plummet in volume sales of its drinks.
Wells Fargo also highlighted the growth of Coke’s energy portfolio which saw a 35 percent surge in dollar sales growth. Taking into consideration Coke’s recent acquisition of a 16.7 percent stake in Monster, the investment bank noted that, on a pro forma basis, combined dollar sales growth for the two companies was 10.3 percent for the period.
“We remain encouraged by the KO-MNST partnership, as well as the positive results from innovation that are being reflected in results and believe growth should continue to accelerate heading into FY2015 and beyond,” Wells Fargo said in the report.