Wells Fargo Securities LLC recently completed its Beverage Buzz survey for the first quarter of 2015, where it polls beverage retailers, representing over 15,000 convenience store (c-store) locations across the U.S.
“Based on our ‘Beverage Buzz’ survey results, it appears non-alcoholic beverage trends remain very strong with +6.4% sales growth in Q1 and alcoholic beverage sales up a solid +5.5%,” said Bonnie Herzog, managing director of beverage, tobacco and convenience research for Wells Fargo.
Lower gas prices appear to be driving robust results, allowing customers to trade up to premium brands as well as increase basket sizes. .
“We continue to believe the risk/reward for both beverage manufacturers and c-stores remains favorable given the benefit from lower gas prices/higher consumer disposable income and relatively benign weather. Looking out to the rest of the year, our retailers project mid-single-digit beverage sales to continue in 2015, with one retailer projecting ‘this will be a banner year for the beverage industry,’” Herzog said.
On the energy drink front, Monster’s c-store volume grew +9% in Q1 of 2015 with minimal net retail pricing growth, as Monster-funded promos kept net retail prices flat. “We continue to believe that Monster is well positioned to drive substantial growth through its innovation and international expansion, however believe with potential minor disruption issues as it transitions distribution in the U.S., current valuation fully reflects near-term upside potential,” Herzog said.
Coca-Cola has seen strong results driven by packaging innovation and smartwater. “Based on our survey results, we estimate that Coca-Cola’s average retail price growth was up a solid +2.5% and volumes were up a strong +4.1% in Q1, both above results posted for the past four quarters. Our retailers consistently called out smartwater as a leading contributor to growth along with new package innovation. We believe KO’s strong net pricing growth in CSDs (Carbonated Soft Drinks) and performance of non-carbs in this channel should support solid U.S. results in Q1,” Herzog said.
“Based on our survey, we estimate Pepsi volumes were up +4.1% with average retail prices for PEP beverage products up +2.2% in Q1. Similar to last quarter, Gatorade sales were very strong in the quarter,” Herzog said.