By: Zhane Isom | July 1, 2024
With summer here, packaged beverages are in the spotlight, and retailers are taking stock of the hot segments as well as recurring and new trends as inflation still makes its mark.
The packaged beverage category is getting a lot more attention now that summer is here. Consumers are looking for beverages to cool them down and keep them hydrated in the heat, and they’re especially reaching for new flavors.
Meanwhile, c-store retailers are watching emerging and continuing trends and growth in dollar sales across the cold vault, even if unit sales are flatter overall.
Terry Messmer, category and sales manager for Tri Star Energy, which has 160 Twice Daily convenience stores across Tennessee, Alabama and Kentucky, mentioned that he has seen an uptick in beverage dollar growth.
“(However), we continue to monitor unit sales as retailers continue to increase the unit purchases. We are starting to see a decline, and we need to make sure that we keep a close eye to ensure that we don’t lose too much in unit sales,” he said.
In fact, carbonated beverages reached $10.7 billion in dollar sales, which is a 5% increase, while its unit sales held steady at 4.31 billion, a 0.3% increase for the 52 weeks ending April 21, according to Chicago-based market research firm Circana.
“I see the packaged beverage category continuing to rise if speaking of dollar sales. Inflation will cause an increase in dollar sales,” said Brian Young, vice president of Young Oil, which operates 11 Grub Mart stores in Alabama. “I see the category staying flat if speaking of volume. Having to choose between a Pepsi or Coke contract causes several products to be at a big price disadvantage versus the dollar, grocery or wholesale stores, which appear to have a different set of contract offerings.”
Bottled water, as well, has seen a rise in dollar sales. This segment rang in at $5.78 billion, a 4.5% increase for the 52 weeks ending April 21, per Circana. However, unit sales fell 2.5% to 2.35 billion.
“Even in uncertain economic times, bottled water remains consumers’ preferred option for a relatively inexpensive, convenient, portable beverage,” said Michael Bellas, chairman and CEO, Beverage Marketing Corp., in a recent statement. “Functional benefits that drove bottled water to the No. 1 position, such as calorie-free refreshment and healthy hydration, will drive its future performance.”
Summer Beverage Trends
Along with craving new beverage flavors and brands, consumers are prioritizing their health and searching for better-for-you and functional beverage options.
For the 52 weeks ending April 21, energy drinks totaled $14.3 billion in dollar sales, a 12.1% increase, while unit sales for the segment increased 2.3%, according to Circana.
Young noted that energy drinks are doing great in his stores, with Ghost Hydration standing out as a popular seller with customers.
“Health and wellness continue to be the greatest driver of beverage selection by today’s consumers,” said Gary Hemphill, managing director of research for Beverage Marketing Corp. “Drinks with health and wellness attributes and/or functional benefits are likely to be where the greatest growth and innovation is.”
Following energy drinks are sports drinks with $4.88 billion in dollar sales, a 6% increase for the 52 weeks ending April 21, noted Circana.
“2024 is the year of rapid hydration, and any item that contain electrolytes are what consumers are looking for,” said Messmer. “I am also seeing continued growth in the energy category, especially within the functional subcategory of energy with items with a little more caffeine and zero sugar.”
Navigating the Beverage Sector
The beverage category is one area that is constantly seeing new flavors, brands and innovative ideas. With the constant overflow of new beverages on the market, c-store retailers are left with the challenge of ensuring they have the right drinks in their coolers while keeping tabs on the next big thing.
“There is a continued influx of new items. There are a lot of new items, but many don’t seem to have a good strategy for how they are going to be the next big brand that consumers will be talking about,” said Messmer.
Hemphill agreed, noting that marketers must also continue developing meaningful innovation that can cut through the clutter.
“The beverage marketplace is very competitive with more products and categories than ever vying for the attention of today’s consumers,” explained Hemphill.
Nonetheless, packaged beverages will continue to see growth as long as brands keep introducing new beverages to consumers and giving retailers more options to add in their stores.
Source: Convenience Store News