Energy category seeing soft growth but Wells Fargo predicts numbers will rebound.
Carbonated soft drink sales (excluding energy) were soft in the U.S. c-store channel— up only +0.2% (+0.4% for prior 12-weeks) during the four-week period ended July 5, 2014, driven by average equal price growth of +3.8%, offset by equal unit volume declines of 3.5%.
Wells Fargo Securities noted it is encouraged by Coca-Cola’s pricing initiatives driven by its price/pack architecture focusing on smaller package sizes to increase trial and purchase frequency and its ability to gain value/volume share.
Both Coca-Cola and Pepsi continue to outperform in the category, while Doctor Pepper Snapple remains under pressure, according to Wells Fargo.
Meanwhile, the energy category had soft dollar sales gains of +5.6%, driven by relatively soft Monster performance, and weak results in Red Bull, which had only +3.5% growth.
“We are increasingly encouraged by Coca Colas’s energy offerings, and remain confident in Monster’s ability to return to double-digit growth despite recent softness in scanner data. Going into Q2 earnings, we believe Monster’s (Outperform, $65.45) results will remain solid and believe upside potential exists to current expectations,” noted Bonnie Herzog, managing director, beverage, tobacco & convenience store research, Wells Fargo Securities LLC.