Retailer Survey: Bullish on Rehab, Down on NEXT

It’s been warm, and that means consumers have been buying more drinks, at least in convenience.

That’s the topline takeaway from a note supplied by Bonnie Herzog, managing director of beverage, tobacco and consumer research for Wells Fargo Securities. Today Herzog released research derived from a poll of beverage retailers.The survey represents “tens of thousands of convenience store locations across the country” and offers some interesting insights into the overall performance of many individual beverage categories.

Here are some of the key macro-trends, according to Herzog’s report:

Energy volume is growing at the expense of CSD volume.

  • Pricing is up 2 to 3 percent in convenience (“it appears that retailers are generally succeeding in passing through price increases, as… over half of the retailers increased their prices anywhere from 1 to 3 percent and higher).
  • That noted, however, Herzog wrote that the 12.5 oz. Coca-Cola “hand-held” package isn’t pleasing retailers yet at a typical $0.89 price point – it creates lower penny profit – although that price may migrate upwards along with the rest of the Coke pricing architecture.
  • The Gatorade DSD experiment has thus far been a win for PepsiCo (“Many retailers reported positive momentum for the brand,” according to Herzog). Pepsi NEXT, however, has not (“While still early, the initial reaction to Pepsi Next from our survey respondents was uninspiring. The general view is that the product isn’t receiving additional cold vault space despite expectations for heavy promotional activity to generate solid sales velocity.”)
  • Monster Rehab continues to be a big opportunity for the company – it represents between 6 and 20 percent of the Monster energy volume for nearly 60 percent of the respondents — and Monster overall has been well-supported in its distribution relationship with Coca-Cola Refreshments.