September 1, 2017
As traditional carbonated soft drink sales continue to lag, the convenience store channel is proving a hot bed for new beverage options sought by younger consumers, including healthier craft sodas and cold brew coffee.
By David Bennett, Senior Editor
Industry experts say Millennials are leading the escape from mass produced, over-processed and over-packaged foods with a demand for real, healthier ingredients. The same can be said for U.S. packaged beverages, according to Gary Hemphill, managing director of research for Beverage Marketing Corp. (BMC), who explains the marketplace is being reshaped by consumer demand for variety and healthier refreshment. Due to this, retailers are likely to continue to see more category and product innovation.
“It is fair to say that Millennials are leading the charge toward healthier refreshment beverages with products that are more natural and simple with a straight-forward list of ingredients,” said Hemphill.
If that push from younger U.S. beverage consumers is growing, it’s reflective in the mixed sets and product lines displayed in c-store cold vault spaces throughout the country.
The packaged beverage category is a perennial performer in terms of positive gross profit dollar growth. In 2016, packaged beverages (non-alcohol) accounted for 18.5% of gross profit dollars. Within the category, enhanced water (12.3% increase in sales), sports drinks (4.5%) and bottled water (3.9%) led sales growth from the cooler, according to data from the National Association of Convenience Stores (NACS).
For the first time in 2016, bottled waters surpassed carbonated soft drinks to become the No. 1 beverage by volume. The BMC projects sparkling water sales will increase more than 20% in 2017.
As U.S. consumers shun traditional carbonated soft drinks (CSD) in an effort to live healthier lives, Coca-Cola, PepsiCo and other drink manufacturers are pushing to pad their product portfolios with beverages with less sugar and what are considered “better-for-you” ingredients.
For instance, Monster Mutant ‘super soda’ is an extension of a strategic partnership between Monster and Coke. Coke in 2015 acquired a minority stake in Monster and became “preferred global distribution partner” for Monster energy drinks. However, Mutant isn’t marketed as an energy offering, but is being peddled as a CSD alternative.