Drink sales at c-stores see an uptick this summer.
Wells Fargo’s ‘Beverage Buzz Labor Day Retailer Survey’ finds summer drink sales at convenience stores are ending on a strong note thanks in part to hot weather.
“We believe this end-of-summer strength bodes well for beverage manufacturers to take pricing later this year in an attempt to offset higher input costs,” said Bonnie Herzog, senior analyst for Wells Fargo.
(1) Robust beverage sales, up +4.4% year-over-year for Labor Day 2018 vs. -1.5% last year and a sequential improvement from +3.5% year-over-year for Memorial Day;
(2) Favorable weather (temps +6% year-over-year and precipitation -13% year-over-year) and strong consumer sentiment drove increased momentum and traffic; (3) Strong price increases around the corner with the vast majority of beverage manufacturers set to be announced later this year.
(4) Monster (MNST) is in a strong position to take pricing (“Monster fans are loyal. They will accept the increase and move on”), but Wells Fargo remains cautious because Red Bull does not appear to plan to follow, which could derail MNST’s strategy and force the company to step up promos;
(5) Constellation Brands Inc. (STZ)’s momentum continues with sequential acceleration in July & August vs June; and
(6) Challenges persist for c-stores with elevated promos (+2.8% year-over-year this Labor Day) and trucker shortages (“Driver shortages continue to cause issues for distributors”).
“Overall, beverage sales in c-stores are strong with strength in premium waters, healthy/functional non-alcoholic beverages and import beers, particularly STZ,” said Herzog.