C-Store Survey: Labor Day Heat Boosts Bev Sales

Consumers celebrated this Labor Day holiday by raising their glasses: Beverage sales were up 4.4 percent over last year, according to a retailer survey conducted by Wells Fargo Securities Equity Research.

In speaking with individuals representing almost 20,000 convenience store locations nationwide, the general theme of the survey results was consistent: hot (and dry) summer temperatures have been good for business. Overall non-alcoholic beverage sales jumped 5.4 percent, up sequentially 4.2 percent from the second quarter of this year.

Retailers also confirmed price increases across the board amongst the industry’s largest companies, including Coca-Cola (+4 percent), Keurig Dr Pepper (4 percent), Monster (4 percent), PepsiCo (3 percent) and Constellation (2 percent). Most of the increases have either already taken effect or are scheduled to change before the end of the year, though 88 percent of respondents stated that Red Bull has notably not indicated that any price increase is impending.

Respondents reacted positively to last month’s news regarding BodyArmor’s move into Coca-Cola’s distribution system. 90 percent of retailers stated that they expect BodyArmor sales to increase once it is integrated into the soda company’s bottling network.

Regarding Monster, retailers did not indicate that the brand’s scheduled price increase will have a negative impact on overall sales, with promos expected to offset higher prices. Some respondents said they are working with Monster to pilot a smaller size format that get pricing on par with its typical 2-for-$4 deal.

One respondent stated that it was an “exclusive test partner” for a new 10 oz size for the Monster’s core line. The respondent characterized it as a “trial balloon at Red Bull to see how much it can cannibalize its 16 oz [can].”

“Monster is in a strong position to take pricing…but we remain cautious since it appears that Red Bull will not follow which could derail Monster’s strategy and force the company to step up promos,” wrote Wells Fargo analysts Bonnie Herzog, Sam Reid and Patty Kanada.

The survey also seemed to suggest that certain Monster brands may be phased out in the near future. 90 percent of respondents indicated that the company is de-emphasizing or discontinuing some brands, with Mutant and the 16.9 oz format for Hydro reportedly set to exit the portfolio.