Demand for Beverages Soars High Due to U.S. Heat Wave

In order to combat a deadly heat wave sending U.S. temperature indexes climbing toward 115 F (46 C), East Coast cities opened cooling centers, extended swimming pool hours and dimmed lights at landmarks.

07/08/06 Beverage companies are seeing unprecedented demand for their more expensive, specialty drinks due to the rocketing U.S. temperatures.

In order to combat a deadly heat wave sending U.S. temperature indexes climbing toward 115 F (46 C), East Coast cities opened cooling centers, extended swimming pool hours and dimmed lights at landmarks. For the record, this makes July one of the hottest months.

"Bottled water and sports drinks will disproportionately benefit from this protracted heat spell," said John Sicher, editor of newsletter Beverage Digest. "Last year there were capacity problems for some water and sports drinks ... and this summer given the heat even though there's greater capacity, it could still be an issue."

Sicher said PepsiCo Inc.'s Gatorade and Coca-Cola Co.'s PowerAde had capacity issues last year. Beverage companies, however, said they have sufficient supplies to meet the surge in demand.

"We had some near misses in 2005," said Cookie Rice, president of Coke bottler Ozarks Coca-Cola. "But this year the company began building inventory in the cold weather and so we haven't experienced any difficulty in obtaining PowerAde. Out-of-stock (items) are costly to both us and our customers."

According to Ken Sadowsky, president of Atlas Distributing, a Massachusetts-based distributor for Miller and Corona beer, Snapple drinks and Glaceau vitaminwater, the heat wave has been a boon for business.

"The hot weather is making up for the bad, rainy spring that we had and it is having a positive impact on certain categories," he said.

"Vitaminwater has been the company's biggest seller, while iced tea did not experience a big surge in terms of demand due to the awareness that it may hasten water loss," said Sadowsky.

"The water brands are on fire," Sadowsky notes.

Chief Executive Darius Bikoff said Energy Brands Inc., manufacturer of Glaceau vitaminwater, has seen a 150-to-200 percent increase in sales in particular U.S. territories, nearly double expectations of about 100 percent growth for this summer.

The company added 250 merchandising staff to make frequent trips to restock store shelves and to cope with brisk summer sales.

Starbucks Corp., the world's largest coffee chain, experienced a downfall in July as temperatures soared. Starbucks had its weakest monthly same-store sales rise in four-and-a-half years, saying heavy demand for cold drinks, such as the new Banana Coconut Frappuccino, had slowed service.

Sales of imported beers that enjoy strong growth in the United States recently are also on the rise.

"Corona, in particular, is selling as fast as it is coming in," said Mike Martin, a spokesman for Constellation Brands Inc., which imports Mexican beer Corona to the United States and distributes it largely to the West Coast. Martin also noted that Constellation has not seen any lost sales because of inadequate supply, Atlas Distributing's Sadowsky said he has had some trouble stocking up on Mexican brewer Modelo's Corona beer.