Amidst a world in deepening crisis, a c-store cooler stocked with ice-cold beverages is nothing less than a holy oasis of peace amidst the storm. Sorry if that’s too poetic: convenience store retailers are an upbeat bunch at the moment, per the latest Beverage Bytes survey of around 30,000 retail locations (~20% of the channel) by Goldman Sachs Equity Research, and we’ll gladly let some of that optimism rub off. Here’s what you need to know:
😎 Sunny Skies Above
You’re only as good as you feel, they say; in that case, c-store retailers are doing well overall: sentiment has improved along with the weather, as 43% of survey respondents (vs. 30% in Q1) saying their view of the total beverage category is positive. Beverage sales in the channel were stable sequentially in Q2 at +2.6% year-over-year; though not hitting the highs of last summer (+5.9% year-over-year), respondents still expect solid +4.5% total beverage sales growth this summer, thanks in part to a better-than-expected Fourth of July holiday.
But summer doesn’t last forever: softening store traffic means retailers downgraded their annual beverage category growth projections to +2.6%, down from +4.6% in Q1 and further away from +6.2% growth in 2023.
⚡ Energy Gains
Energy is a critical c-store category year round, but it’s been particularly potent for the channel in recent months, per the survey. Despite some respondents citing a slowdown, the segment is driving non-alc beverage sales overall, and retailers expect more to come for the summer (+MSD%) and the full year (+6%). Stores were understandably enthusiastic during resets, adding space for Celsius (+9.2% on weighted avg store basis), C4 (+9.2%) and Monster (+1.7%) while cutting down on Red Bull (-2.2%). Monster’s acquisition of former blood rival Bang has provided a lift for the brand’s reputation as well, with 13% indicating Bang’s sales have improved since the transaction last year. That’s a lot better than zero percent in Q1.
Both retailers and consumers will be keeping an eye on price: Monster already confirmed its intention to raise prices around +5% on its core line (not Reign, Bang or Reign Storm) this November during an investor call last month, and retailers are expecting it will stick. Will Celsius follow suit? Just over half of respondents said no, a slight increase from Q1.
🤑 Promos, Please?
Brands like Monster may have earned the right to take fixed pricing in the eyes of retailers, but others have yet to convince. Around 80% of those surveyed in Q2 said manufacturers will need to kickstart promo activity to prevent volume slippage, a +5% jump from Q1.
Against the backdrop of tightening consumer spending at grocery, maintaining the same promotional levels as last year won’t have the same effect, as one retailer noted. Waning inflation may be swaying minds: survey respondents weren’t worried about a major pricing (>3%) increase, while fewer in Q2 (56%, compared to 64% in Q1) feel that further hikes are coming this year.
Dig Into More Data: Non-Alc Beverage Sales Decelerate in Late June