Convenience store sales of non-alcoholic beverages were up 4.6 percent for the second quarter of 2016, according to Wells Fargo Securities’ latest “Beverage Buzz” report, which polls retailers representing 15,000 convenience stores across the country.
Compared to 6.6 percent growth in Q1, more than half of survey respondents attributed the softer sales to unfavorable weather conditions, with one calling May “the worst beverage month we’ve had in the last couple of years.”
Retailers had projected strong summer sales after impressive Q1 results but despite the “sequential slow-down” in the second quarter, Wells Fargo analyst Bonnie Herzog, who authored the report, said “overall sales in c-stores remain healthy as customer traffic remains solid.”
Herzog expressed concern with the performance of Monster, whose 4.3 percent growth in sales for the period was a notable drop from 8.2 percent in Q1, and 10 percent in the fourth quarter of 2015. Retailers pointed to weather, but also share losses to smaller competition, negative consumer response to price hikes, and the success of Red Bull’s Kiwi Editions as factors. With upcoming line extensions Monster Mutant and Hydro delayed until Q4 and 2017, respectively, Herzog indicated “potential near-term pressures outweigh long-term opportunities for Monster shareholders.”
Coca-Cola posted solid sales growth of 5.8 percent for the quarter, compared to 5.4 percent in Q1. In April’s “Beverage Buzz” report, retailers predicted the company’s “Share a Song” campaign would drive strong sales but Wells Fargo’s latest saw respondents say the impact of the initiative will be “negligible at best.” Some retailers also suggested that Coca-Cola’s refranchising efforts have been “executed poorly” in regards to changes in distribution and delivery model.
Pepsi beverage sales were up 3.5 percent, attributed to the company’s continued “aggressive” pricing initiatives, notably on Rockstar and Amp, while Dr Pepper Snapple Group saw strong 5.1 percent growth driven by performance from its Allied Brands portfolio.