The energy drink category has long repelled the political critics and a somewhat taboo reputation to provide steady growth. However, a recent Wall Street report indicates that the category’s progress in convenience stores has slowed to its lowest point in more than a year.
Citing recent Nielsen data, Wells Fargo Securities reported that the category’s dollar sales in convenience stores grew by 6.7 percent over the previous four weeks ending on May 10. Meanwhile, over the previous 52 weeks ending on May 10, the category’s dollar sales grew by 9.6 percent.
Red Bull recorded 2.8 percent growth in unit sales over the previous four weeks ending on May 10. This figure represents less than half of the company’s unit sales from the previous 52 weeks, which grew by 5.8 percent.
“The Easter shift could have had a negative effect on energy sales, as we believe a large portion of energy consumption in c-stores is by the working population,” wrote analyst Bonnie Herzog, “and therefore the holiday likely was a drag on this category.”
Dara Mohsenian, an analyst with Morgan Stanley, notes that the category also recorded underwhelming figures in all channels. According to recent data from IRI, a Chicago-based market research provider, the category’s sales grew by 2.4 percent in the previous four weeks ending on May 18, compared to 4.4 percent growth in the previous 12 weeks.
Monster Energy, however, seems to be serving as a category linchpin compared to its declining competition. Herzog attributes the company’s sturdiness in the convenience channel to its strong core, innovation and channel strategies. Over the previous four weeks ending on May 10, the company recorded 10.9 percent dollar sales growth after increasing unit volume by 10.2 percent and pricing by 0.6 percent. Monster has increased volume (1.1 percent) and value share (1.5 percent) in the convenience channel, Herzog writes, through encouraging performances from its foundation of Monster Green and Monster Zero Ultra, a more recent release.
Yet, even with Monster’s solid performance in the convenience channel, Mohsenian notes that Monster’s sales in all channels grew by 5.6 percent in the previous four weeks ending on May 18, compared to 9.5 percent growth in the previous 12 weeks.
Coca-Cola Paces Soft CSD Category
While Easter may discourage energy drink consumption, Herzog believes that the holiday has the opposite effect for the carbonated soft drink (CSD) category. But that didn’t budge sales figures in the convenience channel.
According to recent Nielsen data, the category’s dollar sales in the channel increased by 0.8 percent in the previous four weeks ending on May 10, compared to 1.2 percent in the previous 12 weeks. This kind of stasis was driven by price growth of 3 percent offset by volume declines of 2.2 percent.
Coca-Cola’s dollar sales in the convenience channel grew by 4.1 percent over that time frame through a 0.7 percent growth in unit volume and a 3.4 percent increase in average price. The company recorded a 4 percent increase in dollar sales over the previous 12 weeks, Wells Fargo reports.
“[Coke] continues to outperform its peers in this channel, with consistent [volume] and [value] share gains despite its above industry average pricing growth,” Herzog writes.
In all channels, according to Morgan Stanley, Coke’s sales decreased by 1.8 percent year-over-year, compared to a two-year average of a 0.8 percent decrease. The same report notes that Pepsi, snacks included, grew sales by 0.1 percent in the previous four weeks ending on May 18. This figure is right in line with the company’s two-year average.
In the convenience channel, Pepsi CSD dollar sales declined by 1.5 percent in the previous four weeks ending on May 10, compared to a decrease of 0.9 percent in the previous 12 weeks. CSD dollar sales from Dr Pepper Snapple Group were flat (an increase of 0.8 percent) during the time frame, Herzog writes, because price increases of 2.9 percent offset unit volume declines of 2.8 percent.