Wells Fargo C-Store Survey: Monster Is Back On Track

wellsfargo200x200Monster Energy appears to be returning to form following a period of growing pains and “transition issues” that resulted from the energy drink giant’s transition into The Coca Cola Company’s distribution system last year. According to Wells Fargo Securities’ latest “Beverage Buzz” report, which surveys 15,000 convenience stores across the United States, Monster’s C-store sales were up by 10 percent for the fourth quarter of 2015, compared to 7 percent growth in the prior quarter. Survey respondents indicated that Monster’s “service issues have been addressed and we are now seeing great service levels” and that “out-of-stocks have gotten much better.”

“Monster appears to have reached an inflection point following initial issues associated with transitioning distribution to the Coca-Cola system,” wrote Wells Fargo analyst Bonnie Herzog who authored the report. “Therefore we believe Monster is well positioned to accelerate growth in the U.S. in 2016 and leverage the global Coca-Cola system to take advantage of the significant international opportunities that exist.”

On the whole, C-store non-alcoholic beverage sales were up an impressive 5.5 percent for the period, led by strong sales of energy drinks, bottled waters and sports drinks. Herzog projects this growth to continue, pointing to lower gas prices, more consumer disposable income and favorable weather, a connection that she’s made in prior reports.

The “Beverage Buzz” report estimated Coca-Cola’s C-store dollar sales increased by 2.9 percent for the quarter, which retailers indicated was driven by pricing initiatives and the continued success of the company’s “Share a Coke” campaign. The report pegged PepsiCo’s growth at 3.2 percent, credited to strong showings from Gatorade and Starbucks’ ready-to-drink coffees, as well as pricing increases. Retailers also reported that they expect Pepsi’s upcoming emoji-themed 20 oz. bottles to be “huge,” and possibly offset the cola brand’s dollar sales declines. Lastly Dr. Pepper Snapple Group’s C-store sales were estimated to be up 6.1 percent in Q4, driven largely by its Snapple brand.

Beyond C-stores, a separate Wells Fargo Securities report covering Nielsen xAOC (expanded all outlets combined) year-over-year data shows sales of carbonated soft drinks were down 0.6 percent in the four week period ending January 23. While CSD sales were down for Coca-Cola and PepsiCo by 0.8 percent and 1.8 percent respectively, both companies managed to post total beverage sales growth of 1.1 and 1.7 percent, offsetting the declines in soda sales with solid performances from bottled waters and teas.

The “All-Channel” data also showed the energy drink category increased dollar sales by 8.9 percent for the period, with Monster (up 9.1 percent) seeing its fifth consecutive month of accelerated growth. Meanwhile, Rockstar Energy sales were up 17.5 percent and Mountain Dew Kickstart saw a 36.2 percent bump. Red Bull saw softer sales growth of 6.5 percent.