CSD Sales Volume Dips Another 1.6%

Coca-Cola, Monster lead the way as energy drinks, iced teas grow

By 
Steve Holtz, Editor in Chief, CSP Daily News

carbonated soft drink cans

NEW YORK -- The volume decline continued for carbonated soft drinks in December and January even as dollar sales continue to tick higher.

Total carbonated-soft-drink (CSD) dollar sales were up 0.8% in the latest all-channels data from Nielsen for the four-week period ending Jan. 17, 2015 (and up 0.7% for the latest 12 weeks), driven by equivalent unit pricing increases of 2.4% and equivalent unit volume declines of 1.6%, according to a Wells Fargo Securities report.

Coca-Cola continued to lead pricing growth in CSDs (+3.3%), albeit below its average for the prior four months (+5.8%), while Dr Pepper Snapple Group outpaced its peers in dollar sales growth given its below-industry pricing (+0.3%).

Coca-Cola's total dollar sales were up 1.9% for the recent four weeks (+1.9% for 12 weeks). Total CSD dollar sales were up 2.2% (+1.7% for 12 weeks) on improved 1.1% equivalent unit sales (volume) declines offset by +3.3% pricing. "While we continue to expect Coca-Cola will lead industry pricing and leverage its price/pack architecture to drive top-line growth, we note that its pricing growth has decelerated slightly," Wells Fargo analyst Bonnie Herzog said. "We remain encouraged by [Coca-Cola’s] CSD pricing strategy and its ability to continue to gain share in the category."

PepsiCo's total company dollar sales were up 2.0% for the recent four weeks (+2.2% for 12 weeks), as salty snacks returned to solid 4.8% growth this period following last period’s soft 1.6% growth and ahead of the +3.7% average for 12 weeks. Total CSD dollar sales were down 1.9% (-0.8% for last 12 weeks) on 4.6% equivalent unit volume declines, partially offset by 2.8% pricing growth. "Despite soft results in beverages, PepsiCo was able to deliver positive overall sales growth this period through strength in snacks," Herzog said.

Total company dollar sales for Dr Pepper Snapple Group (DPS) were up 2.4% in the recent four weeks (+1.1% for 12 weeks). CSD dollar sales were up 3.3% this period (+1.4% for 12 weeks) on meager +0.3% equivalent unit pricing and 3.0% equivalent unit sales growth. "DPS continues to achieve positive sales growth and unit share gains in CSDs, which we believe is driven by pricing growth well below that of its peers," Herzog said.

In other beverage categories:

  • Liquid teas softened slightly, with dollar sales growth of 7.5% (vs. +9.1% for 12 weeks). Coca-Cola's tea dollar-sales growth remains very strong, up 35.8%, while DPS tea dollar sales were down sharply (-9.5%) this period.
  • Sports-drink sales softened, up only 3.0% (vs. +5.4% for 12 weeks). After 3 months of double-digit growth, Gatorade softened to 6.6% dollar sales growth, which contributed to relatively weak 3.5% growth in sports drinks.
  • Bottled-water dollar sales were up 2.9%; however, Coca-Cola's bottled water weakened (+3.7% vs. +6.3% in 12 weeks).
  • Energy-drink dollar sales were up a solid 12.2%, led by sequential improvements by Monster, "which had strong 17.4% dollar-sales growth given negative pricing/higher promos." Monster's sales growth was "driven by 19.5% growth in equivalent units, and -1.8% in equivalent unit pricing, the largest price decline in over a year. Monster sold 37.2% of volume on promo this period, significantly above the 29.1% average sold on promo the prior 12 weeks.

"We are encouraged by Monster’s solid unit growth results but are cautious with our enthusiasm given the price declines/promos required to achieve it," Herzog said. " Both DPS and Monster leveraged pricing/promos to drive sales growth ahead of peers, but we question long-term sustainability of these strategies."

Steve Holtz, CSP/Winsight By Steve Holtz, Editor in Chief, CSP Daily News
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