- The shift to hybrid and electronic vehicles could hurt sales of nonalcoholic beverages at convenience stores due to reduced fueling visits, according to Barron’s. “Despite lower exposure to gas stations, we see nonalcoholic ready to drink beverages (~11%) more at risk than beer (~33%) given impulse purchases and immediate consumption,” according to comments from Morgan Stanley cited in the story.
- Morgan Stanley said energy drink companies such as Monster Beverage, which gets more than half of its sales from gas stations and convenience stores, would be at the biggest risk.
- The brokerage firm also noted that PepsiCo and Dr Pepper Snapple could be impacted as well.
There’s a bumpy road ahead for convenience stores and many of the products they are synonymous with. The growth in the hybrid and electric car market means there is less of a need for drivers to stop for fuel, and therefore a lower likelihood that they will grab a drink from the cooler. Some of this business will go elsewhere, but much of it will disappear because of the impulsive nature of snacks, soft drinks and energy drinks.
While the Morgan Stanley note didn't touch on snack makers, they will likely be impacted by fewer fuel visits, too. With PepsiCo’s ownership of Frito-Lay, it could feel the squeeze from both snacks and drinks. Kraft Heinz, Campbell Soup, Hershey, Mars and Mondelez's Nabisco unit also could be at risk due to their high exposure to the snack and indulgence markets. Campbell Soup recently announced the acquisition of Snyder’s-Lance, which will dramatically increase its snack sales and boost its exposure to convenience store purchases.
Convenience stores have been broadening their offerings to include fresh produce, private label products and prepared foods in an effort to take sales away from traditional supermarkets. 7-Eleven and General Mills recently partnered to introduce an exclusive Pillsbury Stuffed Waffle for breakfast. 7-Eleven, like many convenience operators, has also increased the quality and sophistication of its prepared food offerings, and now stocks premium products like cold-pressed juices and cold brew coffee alongside its sodas and Slurpees.
With fast-food operators and dollar stores also pressuring convenience outlets, it's clear hybrid and electric car adoption is just one piece of a larger problem. Snack and drink manufacturers would be wise to look at exclusive partnerships like the Pillsbury waffle and special product discounts and promotions that could lure more people into the convenience store.
To be sure, the majority of cars today still use gasoline, and even if the trend toward hybrid and electric cars continues, it's likely going to be a gradual shift. This means that CPG companies and convenience store retailers have plenty of time to respond and cultivate a strategy for how best to move forward.