A Refreshing Rise in Revenues

2. A Refreshing Rise in Revenues • According to the latest data from the Beverage Marketing Corporation (BMC), total volume for the US liquid refreshment beverage market increased 2.2% during 2014 to 30.876 billion gallons, the best performance during the 6-year period from 2009. • Following ready-to-drink coffee, first of all BMC categories, bottled water (+7.3%) and energy drinks (+6.4%) exceeded their 2013 gains. Total volumes for value-added water, carbonated soft drinks and fruit beverages decreased – again. • The top 5 global beverage companies according to their 2014 revenues were Anheuser-Busch Inbev, $47.1 billion; The Coca-Cola Co., 46.0 billion; PepsiCo Inc., $31.3 billion; Nestlé SA, $27.0 billion; and Heineken, N.V., $23.3 billion.

3. Ready-to-Drink Coffee Fills the Coffers • Ready-to-drink (RTD) coffee has been the clear winner, with total volume increasing 10.7% during 2014, following a 6.3% increase during 2013. • RTD coffee continued its surging sales into 2015, with the refrigerated sub-category increasing 7.1% for the 52 weeks ending May 17, 2015. Total sales for single-cup coffees increased 19.7% during the same period. • RTD coffees’ gains came at the expense of ground and whole-bean coffee. Ground coffee sales decreased 3.5%, ground decaffeinated decreased 7.3% and whole-bean coffee decreased 3.7% for the same 52-week period.

4. Sports/Protein Drinks: Not Just for Workouts • In a February 2015 report, Packaged Facts revealed that the number of high-volume sports drinks users had decreased and 34% of the consumers it surveyed for the report were consuming sports drinks during other than workouts and other physical activities. • According to data from Mintel, total 2014 sales for sports and protein drinks were $11.5 billion. With the growing popularity of these beverages among a larger audience, Mintel expects sales to increase 26% through 2019. • An ethnically-diverse audience of sports and protein drink consumers is also driving this increase, with Latino American and African American adults accounting for a 45% share; European Americans, 34%; and Asian Americans, 31%.

5. Juices Too Sweet for Many Consumers • Although studies show that adults understand the health value of drinking fruit and vegetable juices, total volume decreased 1.8% during 2014 because many consumers don’t want the added sugar and artificial ingredients in drinks that are not 100% juice. • This has resulted in a 13.5% decrease in the consumption of fruit juice and juice drinks since 2010, from 61.4% for that year to 53.1% for 2015. During the same period, consumption of vegetable-blended and fruit-blended juices has increased. • The top 5 shelf-stable bottled tomato/vegetable juice/cocktail brands for the 52 weeks ending November 1, 2015 were V8, 59.6% market share; Mott’s Clamato, 20.0%; Private label, 9.4%; Campbell’s, 0.9%; and V8 Splash, 0.6%.

6. Beverages Bring Consumers into Convenience Stores • According to the 2016 Convenience Store News Industry Forecast Study, non-alcoholic packaged beverages are forecast to be #1 in dollar sales per store at 6.5% and third in unit volume at 5.0%. • Of the convenience store retailers surveyed, 67.6% expect an increase in non-alcoholic packaged beverage sales during 2016, with 27.0% saying sales will be the same as 2015 and only 5.4% predicting a decline in sales. • According to Information Resources Inc. (IRI) data, beverage sales at convenience stores represent 20% of all sales. The top categories are coffee, tea, bottled water, sports and energy drinks, with bottled water responsible for 50% of all beverage sales.

7. Consumers’ Preferences in Beverage Attributes, 2015 Beverage Industry (BNP Media New Product Development Outlook 2015 Study), January 2016

8. Advertising Strategies • Local beverage retailers can improve brand awareness, traffic and sales by implementing a loyalty program or “customer club” similar to Total Wine & More, and promoting this perk with flights during peak beverage purchasing seasons. • Local and regional convenience store chains can attract more consumers from the pump to the inside of the store by showing how quickly they can buy a beverage compared to a fast-food drive-thru and the stores’ increasing choices of healthy, organic, low-sugar beverages. • Beverage retailers and a local family entertainment park, waterpark or similar venue can co-advertise discounted tickets for families when bought at the beverage retailers and with a qualifying beverage purchase on their way to the park.

9. Social Media Strategies • During peak beverage consumption periods, ask customers to post photos and videos of them enjoying beverages bought at the retailer. They have access to an online coupon when they mention the retailer’s name in their posts. • Convenience stores want to use social media to announce and explain the benefits of the current organic, natural beverages they offer as well as new brands in this category as they are added to stores’ shelves. • Post and promote occasional polls on social media to generate consumer engagement, with questions about their beverage preferences, the health attributes that are important to them, how much do they manage their children’s beverage consumption, etc.