Beverage sales over Memorial Day weekend “broadly met or exceeded expectations” of beer distributors and convenience channel retailers, according to the latest Beverage Bytes survey by Goldman Sachs Equity research.
According to the report, which drew from feedback provided by around 40 distributors and retailers representing about 47,000 c-store locations across the country, increased foot traffic over the holiday weekend drove 1.7% year-over-year sales growth for all beverages, both alcoholic and non-alcoholic. Sales momentum is now “expected to moderately accelerate through the summer.”
In particular, survey respondents were very positive on Celsius, Monster and Constellation Brands, as the two energy brands, alongside C4, appear to have been the strongest gainers in shelf and cooler space during spring resets.
Promos Pay Off
As foot traffic in convenience stores rose 1.1% in the period, promotional activity helped drive sales growth, with one retailer citing two-for-one deals as a motivating factor keeping traffic elevated. Another retailer said they are currently running 40 unique promos, up from 34 last year.
Retailers now project beverage sales to grow 2.1% over the summer, at a projected 1.4% traffic increase. Though that’s decelerated from last year’s 6.2% sales growth, traffic was only up 0.9% last summer. Promotional activity is expected to be up by 2.4% this year.
Most retailers (75%) have already finished spring resets. Of the remaining holdouts, 19% intend to implement resets in June and 6% will not complete theirs until July. About 19% of total retailers said their resets this year were delayed compared to prior years, by an average of four to six weeks. One retailer cited labor shortages as the reason for the delay.
Energy Continues to Perform
Shelf and cooler space for Celsius is expected to grow by 9.9% on a weighted average store basis this spring, with all retailer respondents saying they planned to give more space to the energy brand.
Expansion for Celsius, as well as Monster (+2.8%) and C4 (+7%), has come as Red Bull loses facings – down -2.8% on an average store basis. Meanwhile, Bang is expected to grow facings by 1%.
Outside of energy, Coca-Cola (+0.7%), PepsiCo (+1.7%), Keurig Dr Pepper (+0.1%) and Vita Coco (+0.1%) are poised to increase their space in store. However, tea brands like Brisk and Arizona are on the losing end, as is Starbucks.
Although there’s been some concerned buzz about a possible energy drink slowdown, 55% of retailers said there’s no signs yet that growth in the category is on the backside. Retailers anticipate 8.6% growth for the category this year, as some respondents noted more “morning caffeine conversion” by consumers from soda to energy drinks.
Still, decelerations from Monster and Red Bull were noted by some retailers, especially as lower income consumers continue to face financial challenges.
“Overall, we think the recent energy drink category slowdown (according to scanner data), is largely due to a normalization of category growth trends following a strong ’23, coupled with some pressures on the consumer,” the report stated. “Ultimately, we remain upbeat about category growth trends this year and longer term.”
Beer Sales Increased
Memorial Day beer sales had distributors and retailers happy, as 64% said sales trends were “as strong, if not stronger than last year.”
Constellation Brands has provided the most excitement for survey respondents, particularly Modelo Especial and Pacifico, while brands such as Twisted tea, Michelob Ultra, Coors Banquet and High Noon also did well over the holiday weekend.
While Bud Light sales remain soft, the report showed signs that Anheuser-Busch InBev (ABI) is rebounding from the sharp decline as 54% of distributors said they see signs of improvement (although, of these distributors 24% said it’s only a “slight” improvement). ABI is expected to regain around 2 points of market share this year, with some distributors suggesting it could bounce back by 5 points. About 18% still believe it will never fully recover.