Bonnie Herzog was writing in an April 9 note detailing Wells Fargo Securities’ quarterly ‘Beverage Buzz’ survey – canvasing views of retailers representing 15,000+ convenience stores locations across the States.
Detailing key takeaways from the firm’s Q1 survey, senior analyst Herzog painted a bleak picture for Dr Pepper Snapple’s (DPS’s) 10-calorie platform led by flag brand Dr Pepper, which was launched with a fanfare in late 2011 and was initially incremental to DPS’s soda sales.
Consumer not so ‘thrilled to death’ with Dr Pepper TEN
This is Larry Young, DPS CEO, in October 2011: “Everything we’re seeing, everything we’re hearing, not only from bottling partners, but customers and consumers, they are thrilled to death with it.”
In Q1 2013, Herzog said C-store retailers reported to Wells Fargo that Dr Pepper TEN was in approximately 82% of stores, with around half suggesting that the product was generating ‘modest repeat’ sales.
“However, since that time many retailers have “removed most of [TEN] due to poor sales”, having “tried them all but they did not do well”,” she wrote.
“Currently DP10 is only carried in approximately 72% of stores, with the vast majority of retailers reporting that the product is generating ‘weak’ repeat sales,” she added.
“Further, trends suggest that the broader TEN platform is being pulled from shelves as well,” Herzog said.
“As we have stated previously, we are increasingly fearful that TEN may follow in the footsteps of countless other brand extensions that fail to become meaningful brands,” she warned.
“We can only hope at this point that DPS discontinues any further investment to promote the platform.”
But discussing DPS’s Q4 2013 results on February 14, Young said: “Our TEN products are an important and strategic priority for us and we will continue to invest behind them in 2014,” to win back lapsed soda drinkers.
Plus points for Pepsi, but struggles for Lipton, SoBe and Aquafina?
There was also bleak C-store news for PepsiCo in Wells Fargo’s survey – despite a more positive Q1 results announcement today revealing broadly flat sales volumes for its North American beverage business.
“Several retailers called out the strength of the Mountain Dew franchise as one of the bright spots in beverages. However, at least one retailer suggested that “product lines such as Aquafina, Lipton and SoBe suffered major sales declines,” Herzog wrote, despite painting a brighter picture for PepsiCo versus Q1 2013.
If Dr Pepper was the clear loser in this edition of Beverage Buzz, Monster was the runaway winner.
Herzog said Wells Fargo estimated Monster Energy’s C-Store volume growth at 11% in Q1 2014, and attributed this strength to promotions and innovations – including Zero Ultra and Muscle Monster as “important contributors to overall Monster sales growth”.