The summer heat isn’t letting up and consumers are responding by reaching for refreshing drinks to quench their thirst. But no matter the season, Beverages represent a key trip and sales driver for c-store retailers, as well as the second largest in-store gross margin contributor.
Today we’re taking a look at Beverage category trends over the previous four weeks, compared to the relevant period in 2019. Before we get started, it’s important to note that the Beverage category includes both Fountain Beverages and Bottled Drinks.
If you don’t have the time today to dive deeper, here’s a quick snapshot of the key takeaways:
- Beverage trips have improved from a low of -42% in early April to -14% versus the year-ago period. Bottled Drinks grew trips 1% while fountain drinks are at -25%
- Beverage sales are down 3% and units sold are down 9%
- Consumers are increasingly selecting multi-pack products over single-serve in Bottled Soda
Beverage Trips are Improving
We’re happy to report that Beverage trips are on the up-and-up. Overall Beverage trips have grown 53% from early April, marking an impressive improvement. On another positive note, on a year-over-year basis, Bottled Drink trips have fully recovered. However, Fountain Drink trips remain down at 11%. Below, we investigate the drivers behind these differences.
Beverage Sales and Units Growth
Beverage sales for the period are down 3% overall compared to the prior year. But in good news, the category is witnessing some sales growth, being led by Kombucha (15%), Bottled Juice (11%) and Bottled Coffee (3%).
On the other hand, Fountain Drinks declined 25% with Fountain Coffee being down a full 40%. Overall, Beverage units are down 9% with Bottled Drinks generally positive and Fountain Drinks negative.
The difference between Bottled Drinks and Fountain Drinks sales and trips can be explained by a combination of two different factors:
- Demand-based factor: Consumers are switching to bottled drinks due to hygiene concerns
- Supply-based factor: Due to lowered demand, c-store retailers are reducing fountain drink options
Additionally, consumers are continuing to choose multi-pack options of bottled drinks. We’ll explore that next!
Bottled Soda Multi-Pack Sales are Growing Dramatically
We recently noted growing consumer demand for multi-pack sizes in Beer (read more here!) and we continue to see consumers making similar choices in the Bottled Soda category. To explore this trend, we did a deeper dive into Bottled Soda which represents 54% of total Bottled Drinks sales in the period. Here’s a look at what we found during this period:
- Single-serve represented 85% of Bottled Soda volume, but multi-pack units have increased 42% versus 2019
- 12-pack products have experienced the greatest sales growth at a full 50% increase, while 6-pack products have grown 18%
- Single-serve Bottled Soda sales are down 9%
We attribute the increase in demand for multi-packs to fewer trips overall and we expect this trend to sustain through the pandemic.
Throughout the year, Beverages represent a key trip driver for consumers and an important category for c-store retailers. As we continue to monitor the category, we’re also keeping an eye on two other unique trends in the Beverage Category:
- Manufacturers have recently experienced distribution issues related to aluminum can shortages
- Functional beverages (which includes categories such as Sport and Energy drinks) represent a key innovation and sales trend
We expect continued growth in the Beverage category over the remainder of 2020. We will continue to monitor Beverage and broader in-store trends, share additional insights, and keep you informed.
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