Glossing Nielsen data for the crucial C-store channel in the four weeks ending May 10, Wells Fargo Securities analyst Bonnie Herzog said softness in the energy drinks category was exemplified by Red Bull, sales of which rose only 2.5%.
Solid performance by Monster (+10.9% dollar sales growth) offset this weakness to boost the category overall (6.7%), and Herzog said in a note that she and her colleagues believed the ‘Easter shift’ could have hit energy sales.
“We believe a large portion of energy consumption in C-stores is by the working population, and therefore the holiday likely was a drag on this category,” she said.
Monster Energy continues its relentless progress – the brand enjoyed 14.5% sales growth in the 12 weeks to May 10 – with the 10.9% figure underpinned by 10.2% volume gains and 0.6% pricing.
Red Bull lost volume and value share
“Monster continues to gain volume (+1.1%) and value (+1.5%) share in the C-store channel, as the core Monster Green and Monster Zero Ultra continued their strong performance,” Herzog said.
“Despite strong performance in its core Red Bull brand, Red Bull had modest +2.5% dollar sales growth in this period, and lost volume and value share in the category,” she added.
For the four weeks to May 10, Monster held a 38.7% dollar share of the energy category in the C-store channel, compared with Red Bull on 37.2% and Rockstar on 7.7%, followed by Coke's brands.
Beyond the ‘Big Two’ in energy drinks, Herzog also described Rockstar’s 2.5% growth as soft, but said Coke’s portfolio (NOS, which the company seems to put the bulk of its marketing and distribution dollars behind, and Full Throttle Energy) “remains very strong, with 19.8% dollar sales growth”.
But in January 2014, Steve Reitmeister, executive VP of Zacks Investment Research warned that Coke’s presence in energy drinks was “negligible”, and Neilsen C-store data shows a market share of 5.2% for these two brands in the four weeks to May 10.
Could Coke renew interest in Monster?
Noting Coke’s global distribution muscle, Monster’s strong sales trajectory and the fear of losing it to a rival Reitmeister said a takeover still made sense – Coke considered such a deal back in 2012.
“Although energy drinks entail large investments in marketing, advertising and packaging, their margins are still broader than those of CSDs. This is because energy drinks are almost four to five times more expensive than CSDs,” Reitmeister wrote in an opinion piece for Nasdaq.com.
Discussing CSDs Wells Fargo said that Coke trumped Pepsi in CSD by taking (raising) price with dollar sales up 4.1% in the month and gaining volume and value in the C-store channel.
Despite Coke’s above industry pricing growth, PepsiCo suffered a 1.5% sales decline over the same period and lost volume and value share; Dr Pepper Snapple dollar sales were flat.
The beer category as a whole performed well, with C-store dollar sales up 3.3% due to unit growth and pricing, with Constellation Brands continuing its “exceptional sales growth trend” with 21.3%.
Dollar sales for market leader AB InBev’s brands were flat (+0.7%) due to recent price increases while Miller Coors dollar sales grew 1.6%; The Boston Beer Company's dollar sales rose 20.9%.