Remarkable price increases driven by inflation were the name of the game in beverages in 2022, helping categories that were soft in volume, such as carbonated soft drinks (CSDs), to grow in revenue, said Gary Hemphill.
The managing director and chief operating office of the Beverage Marketing Corp., Wintersville, Ohio, said another reason for higher prices is there are fewer price promotions, which in CSDs particularly have been used historically as an effective way to move volume. However, as the cost of ingredients and labor have increased, companies have cut back on price promotions, “which averages out to even higher prices still,” Hemphill said.
Entering 2022, inflationary pressures drove price increases to levels two times that of those in 2020 and 2021, said Sally Lyons Wyatt, executive vice president and practice leader for Chicago-based IRI.
“In ’20 and ’21, the average was around a 6% price increase,” she said. “In ’22, pricing for packaged beverages jumped to 13% per unit on average. That level of price increase slowed down our unit volume demand and we’re seeing unit sales turn more negative for the first time in three years.”
For example, energy drinks, aseptic juices and plant-based milk were among the few nonalcohol segments that showed unit growth in 2022 in convenience stores, according to IRI. In alcohol, spirits showed unit growth while beer, table wine and sparkling wine/champagne sunk. When it comes to dollar sales; however, most segments grew.
The mass market, tried-and-true categories—like CSDs, milk and juice —are struggling in the overall beverage market, Hemphill said. Those segments have taken a backseat to segments like bottled water, energy drinks, sports drinks and RTD coffee, he said.
“We’re continuing to see overall market improvement coming out of COVID,” Hemphill said. “It’s more limited with c-stores.”