Scanner Data Review: Little Change From Recent Trends

May 26, 2011
Morgan Stanley

Investment conclusion: US beverages tracked channel sales trends for the 4-week period ended 5/14 were favorably impacted by the Easter shift, which was not included in the PY period. Using two-year average sales growth (to smooth for YoY comparison issues), the key takeaways were as follows: (1) CSD category sales growth remained sluggish, while non-carb trends remained generally strong; (2) salty snacks sales continue to trend in the LSD (%); (3) beer pricing remains strong while volume growth remains muted; and (4) wine sales continued to be the most robust in the alcohol category, gaining share from beer and spirits.

Key Trends:

CSDs - KO/PEP Gain Share: CSD category sales (ex-energy drinks) were up 12.1% (vs. a weak -11.3% YoY comp), but up a muted 0.4% on a two-year avg. basis. Category volume was up 14.7% (vs. a -12.3% YoY comp) with price/mix down 2.3%. KO's dollar share increased 170 bps to 37.8%, PEP's increased 10 bps to 31.0%, and DPS' decreased 90 bps to 20.9%.

Salty Snacks - Pricing Weighs on Volume Growth: Salty snacks sales were up 2.1% vs. +0.8% in the prior 12-weeks, withcategory volume down 0.3% and price/ mix up 2.4% as smaller co.'s, which we believe are not as well hedged as PEP, took pricing to cover input cost inflation. PEP ceded 20 bps of dollar share to 57.3%.

Beer - Stable Pricing Persists: Beer category sales were up 3.1% (vs. a soft -1.2% YoY comp), above flattish growth in the prior 12-week period.Category volume increased 1.0%, but was down 0.9% on a two-year average basis, continuing the trend of generally weak volume trends. Price/mix remained strong, up 2.1%. A-B's dollar share decreased 50 bps to 42.0%, TAP's dollar share was flat at 28.1%, and Crown's decreased 10 bps to 9.3%.

Wine - STZ Cedes Share. Wine category sales remained strong, up 10.5% (8.2% on a two-year avg. basis) vs. 3.3% in the prior 12-weeks.Category volume was up 8.4% with price mix up 1.9%. STZ's dollar share decreased 50 bps to 14.9%, but sales were up 5.1% on a two-year avg. basis.