Wells Fargo encouraged by “pockets of improvement.”
Wells Fargo Securities LLC released the results of its recent Beverage Buzz survey of beverage retailers representing over 15,000 convenience store (c-store) locations across the U.S.
Wells Fargo provided the following takeaways:
(1) Non-alcoholic beverage sales were up only 1.3% while alcoholic beverage sales were up 3.4%, led by strong 7.4% growth for Constellation Brands (STZ) beers;
(2) Coca-Cola’s (KO)’s outlook is improving with innovation, but near-term execution issues weighed on Q3;
(3) Dr Pepper Snapple (DPS’s) “good stable of brands that are on trend” contributed to its 2% growth in the c-store channel, outpacing its peers;
(4) Monster (MNST) sales remained soft in Q3, with retailers reporting just 2% sales growth and now only expect 3-4% growth for MNST this year (vs. 5% reported in the Q2 survey) and just 4% in 2018; and
(5) STZ “continues to significantly outperform” in the beer category with “encouraging results of very strong performance from new innovation.”
“Overall we have concerns about recent c-store traffic based on comments from our retailer contacts and PEPSI Co.’s management on its Q3 call. However, we are encouraged by pockets of improvement and strength in several key brands and categories,” said Bonnie Herzog, senior analyst for Well Fargo.
