US retail sales of carbonated soft drinks are rebounding, with Coca-Cola leading the charge
Unit sales also moved into positive territory over the latest four-week period, growing 1.5% year-on-year, compared with a 1.5% decline over 12 weeks and a 2.7% decline over 52 weeks, said Wells Fargo analysts in a May 29 note on the category.
Some of the biggest gains were in the diet soda segment, with dollar sales in the latest four weeks up 5.3% year-on-year (vs a 1.2% decline over 52 weeks); while dollar sales of regular carbonated soft drinks rose a more modest 2.2% in the latest four weeks (vs a 1.3% decline in the latest 52 weeks).
Pepsi is the biggest loser
The gains have been primarily driven by Coca-Cola, which experienced a 6.1% increase in sales of carbonated soft drinks in the latest four-week period; and Dr Pepper Snapple Group, which experienced a 3.4% year on year rise in dollar sales of carbonated soft drinks over the same period.
PepsiCo, by contrast, experienced a 0.1% decline in CSD sales over the four-week-period (-3.3% for 12-weeks), driven by weak volumes (-1.9%) and an average price increase of +1.8%, as both Pepsi and Mtn Dew brands remained under pressure.
While sales growth in ready to drink tea and coffee have slowed, energy drinks (+7%), still flavored water (+10.9%), sparkling flavored water (+17.7%), and bottled water (+7.1%) all grew strongly in the four weeks to May 19 year on year, with particularly strong performances from Monster Java and Ultra.
Bottled water, flavored water, energy drinks surging ahead
Coca-Cola’s total beverage sales were strong, growing +5% year-on-year in the latest four weeks (+1.3% for 12-wks; +0.6% for 52-wks), driven by solid performances in carbonated soft drinks and bottled water, partly offset by weakness in shelf-stable and refrigerated juices and drinks, said Wells Fargo.
Despite a weak performance in regular and diet soda, PepsiCo’s share of the sparkling water category rose +4.7% during the recent four-week period, up from +0.6% in January, “due entirely to strong Bubly growth, which appears to be taking share from Talking Rain and Polar,” added Wells Fargo.
Dr Pepper Snapple Group’s beverage dollar sales were up +4.3% year-on-year in the latest four weeks (+2.1% for 12-wks; +1.5% for 52-wks), with +13.1% dollar sales growth in shelf-stable juices and drinks (including Bai, up 28.7%) and strong +3.4% growth in carbonated soft drinks offset by a -3.1% decline in teas.
* All channels including grocery, drug, mass, and c-stores
"Despite moderately increasing our media on trademark Pepsi over the past three years, our share of voice has fallen dramatically relative to our key competitor, which has substantially stepped up its media spending on colas over the past two years.....So we're going to step up our advertising behind trademark Pepsi, with a little bit of a focus on Zero Sugar and Diet Pepsi.
"But... we have to make sure that we never return to what happened in 2011, 2012 when there were $5 cubes. That's not going to happen. We want to make sure that, especially with inflation creeping into the business, we price to cover inflation."
Indra Nooyi, CEO, PepsiCo, Q1 2018 earnings call, April 26, 2018
"In North America, we've been working hard to reinvigorate the Diet Coke brand through an integrated approach. We introduced new packaging, a new marketing campaign and new flavors designed to appeal to the next generation consumers. We’ve got off to a strong start returning Diet Coke to growth in North America. Now, we recognized it's still very early in the process, but we are encouraged by the initial consumer response..."
James Quincey, CEO, Coca-Cola, Q1 2018 earnings call April 24, 2018
According to the International Bottled Water Association (IBWA) and the Beverage Marketing Corporation (BMC), bottled water is the No. 1 beverage product in the U.S., by volume, for a second year in a row, with volumes growing 7% in 2017 to 13.7 billion gallons.
Within the bottled water category, all segments grew in 2017:
- Domestic non-sparkling increased 5.5%.
- Domestic sparkling increased 27.5%.
- Imported water increased 9.2%.
- Home and office delivery (3 and 5-gallon size bottles) increased 1.3%.
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