Constellation Brands and Molson Coors are expected to annex more shelf and cooler space in convenience stores following the upcoming spring 2024 resets, according to Goldman Sachs Equity Research’s recent Beverage Bytes survey.
Nearly nine-in-10 (88%) respondents told Goldman Sachs they plan to allocate more shelf and cooler space for Constellation’s portfolio of Mexican imports: Modelo, Corona and Pacifico.
“Space for STZ is expected to increase by +4.3% on a weighted average store basis,” Goldman Sachs equity research managing director Bonnie Herzog wrote. “Several retailers noted that they expect Modelo will be the largest shelf/cooler space gainer in spring resets.”
Almost two-thirds (65%) of retailers said they plan to increase space for Molson Coors’ portfolio. To capitalize on the c-store opportunity, Molson Coors has placed “a strategic focus on c-stores” and is “investing behind the channel differently with c-store focused media,” according to Goldman Sachs.
Constellation and Molson Coors, the No. 2 and 3 beer category vendors in c-stores year-to-date through December 3, are gobbling up shelf space mostly taken from Anheuser-Busch InBev (A-B) following monumentous declines in sales of its lead brand, Bud Light. Bud Light’s slide is due in part to conservative boycotts of the brand after the company partnered with Dylan Mulvaney, a transgender social media content creator.
“Retailers surveyed expect to decrease shelf/cooler space for ABI by -3.6% on a weighted average store basis,” Herzog wrote. “Several retailers mentioned Bud/Bud Light is expected to lose the most shelf/cooler space in the spring, which we think continues to reflect continued headwinds from the Bud Light controversy earlier this year.”
An equal amount (31%) of respondents said they plan to allocate the same amount, 1%-5% less and 6%-10% less space to A-B; 6% of respondents said they will give A-B 11%-15% less space.
A major factor in Constellation and Molson Coors’ momentum is distributor alignment. About 75% of both companies’ wholesalers are the same, according to Goldman Sachs.
“We believe these distributors have collective power to influence retailers as well as to influence space gains with independents,” Herzog wrote. “Ultimately, we believe this has been a key reason behind TAP’s success in gaining incremental shelf/cooler space in both the fall and upcoming spring resets.”
On a weighted average store basis, Constellation is expected to expand shelf space by +4.3%, followed by Molson Coors (+2.1%) and Monster’s bev-alc portfolio (+0.7%).
A majority (59%) of respondents said they will give Monster more space in 2024 for The Beast Unleashed flavored malt beverage (FMB) and Nasty Beast hard tea. Only 6% said they have no plans to include the products in the sets.
Nearly half (47%) of respondents said they plan to keep shelf space the same for Heineken’s portfolio (Heineken, Dos Equis, Tecate, Lagunitas) and Boston Beer’s portfolio (Twisted Tea, Truly Hard Seltzer, Angry Orchard, Dogfish Head, Samuel Adams). Nearly one-fifth (18%) said they plan to give those companies less space.
More than three-quarters (76%) said they will allocate the same amount of space to Mark Anthony Brands (White Claw, Mike’s Hard Lemonade, Cayman Jack), and 18% said they plan to give Mark Anthony +1%-5% more shelf and cooler space.
Total craft beer is expected to lose -3.5% of its space on a weighted average store basis, according to the survey. Nearly two-thirds of respondents said they plan to give it less space; 41% said craft will have -1%-5% less space in their stores, while 24% said they plan to give it -6%-10% less space.
The hard seltzer segment will also lose space in c-stores in 2024, based on one respondent’s answer.
“Within the hard seltzer category, one retailer in particular noted they expect to discontinue all brands but Truly, White Claw, Bud Light, Mich Ultra and two local brands,” Herzog wrote. “Additionally, the same retailer noted that they plan to reduce Truly/White Claw’s shelf/cooler space to accommodate new MNST entrants, while SAM [Boston Beer] will lose some facings to accommodate incremental space for Modelo.”
For more on the state of beer in c-stores, watch this panel discussion with Extra Mile Convenience Stores category manager for alcoholic beverages Michelle Abdollah and Bump Williams Consulting VP of analytics and insights Dave Williams during Brewbound Live earlier this month.