Bottled water, energy and iced tea are expected to win big in 2014 as C-store operators predict a ‘banner year’ in packaged beverages led by brands including Sparkling Ice, Monster and Lipton.
Wells Fargo Securities bases its Q2 2014 US C-Store Retailer Survey on a survey of beverage retailers representing 15,000+ C-store locations in the States.
The brokerage asked retailers to describe their expectations for each major soft drinks category in 2014, and said respondents expect growth from all categories, and anticipated overall sales 4% year-on-year sales growth in Q2, which covers the crucial July 4 summer holiday.
They predict that bottled water will lead the way with full-year sales up 10.6%, energy drinks up 9.9%, along with other large gainers – iced teas up 9.4% and sports drinks up 7%.
Juice (+3.2%), flavored CSDs (2.8%) and total CSDs (2.2%) are expected to lag behind in the full year, with colas bringing up the rear with only 0.7% predicted growth – interestingly the category is expected to be the big laggard in Q2 2014, with a 0.4% fall in overall sales predicted.
The fastest-growing brands are…
Asked which brands grew the fastest and gained most share over the quarter, C-store operators picked out brands including Sparkling Ice, Monster and Red Bull, Lipton teas and Mountain Dew Baja Blast.
Not surprisingly this correlates with the wider growth for waters, energy and teas, while long-time Taco Bell summer exclusive Mountain Dew Baja emerged in C-stores for the first time this summer and reportedly bucked the flatter trend in CSDs.
Other feedback of note in the Wells Fargo survey is a slowdown in growth for protein-based drinks such as Muscle Milk, to 6.4% in Q2 2014, versus +8.5% in Q2 2013.
Retailer comments included: ‘small increase on a small base’, ‘Core Power, Muscle Milk and Phase 111 have all done well’, ‘small but growing’, but the longest comment is the most interesting.
“Overall have added sales to protein drinks because we doubled our previous space, but not sure it was the best move. May have been better off to expand water or teas,” one retailer said.
Muscle Milk sales falling flaccid?
“All Core Power, Kellogg’s Breakfast to Go very weak. Muscle Milk and Muscle Monster down from adding extra SKUs of protein,” they added.
“Probably going back to one shelf in 2015 based on current results. I think…less disposable income is hurting the higher-priced protein beverages too.”
Wells Fargo said that Monster’s Rehab line had struggled recently, and survey respondents warned that despite steady growth for all SKUs, Rehab is being cannibalized by other line Monster extensions.
“We believe Monster’s recent commitment to be more thoughtful with its innovation and line extensions as well as plans to re-brand its Rehab line should ultimately serve the company well,” Wells Fargo’s analysts, led by senior analyst Bonnie Herzog, wrote.