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Thursday, March 1, 2012

Beverages: Nielsen Scanner Data - Period Ending 2/18/12 - CSD Price Competition Could Be Creeping Up - KO/PEP Price Gap Near 16-Month Wide

 Beverages: Nielsen Scanner Data - Period Ending 2/18/12 - CSD Price Competition Could Be Creeping Up - KO/PEP Price Gap Near 16-Month Wide

Hi,
· Nielsen Scanner Data for the period ending 2/18/12. For the recent 4wks Total Category (CSD ex. energy) dollar sales decreased 1.6% (vs. -0.3% last month), on a 3.6% increase in avg. eq. unit price and a 5.1% decrease in eq. unit sales (vol.). Interestingly, PEP CSD eq. unit prices for the recent 4 wks look incrementally competitive, which we hope is not the beginning of a trend.
· KO CSD Softness On Lower Promos. In the recent 4wks Total Company dollar sales decreased 2.6%, vs. +0.8% last month. CSD (ex. energy) dollar sales decreased 4.9% (vs. +2.9% last month) on a 9.4% decline in eq. unit sales (vol.) and a 4.9% increase in avg. eq. unit price. KO CSD eq. units sold on promo was up 30 bps m/m, but declined 220 bps y/y. Non-carb dollar sales trends were positive, led by Bottled Water (+13.4%) and Isotonics (+26.6%).
· Is PEP Getting More Aggressive In CSD Prices? In the recent 4wks Total Company dollar sales declined 2.0% vs. -4.3% last month. CSD (ex. energy) dollar sales decreased 0.5% on a 2.3% decline in eq. unit sales (vol.) and a 1.8% increase in avg. eq. unit price. We note that PEP CSD avg. eq. unit price declined 3.4% vs. last month, driven by increased promotion – eq. units sold on promo +340 bps m/m and +70 bps y/y. The discount to KO’s CSD avg. eq. unit price increased 550 bps m/m to 10.5% and is essentially at a 16-month high. Salty Snack dollar sales increased 3.2%, on a 6.2% increase in avg. eq. unit price and a 2.8% decline in eq. unit sales (vol.). Non-carb dollar sales trends remain soft, with declines in Isotonics (-7.3%), refrigerated OJ (-14.2%), and Bottled Water (-11.7%).
· DPS Non-Carb Softness No Surprise. Total Company dollar sales decreased 1.8% in the recent 4wks, as a 0.2% increase in CSD's (ex. energy) was more than offset by declines in Non-Carbs -shelf-stable Juices & Drinks -9.6%.
Please call or email me with any questions.
Thanks!
Bonnie
Bonnie Herzog
Managing Director
Beverage, Tobacco & Consumer Research
Wells Fargo Securities, LLC
375 Park Ave
New York, NY 10152
Phone: (212) 214-5051
Additional information available upon request. This information is for your use only and may not be forwarded or distributed. The person transmitting this e-mail is a licensed person of Wells Fargo Securities, LLC. I certify that: (1) All views expressed in this research report accurately reflect my personal views about any and all of the subject securities or issuers discussed, and (2) No part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by me in this research report.

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