The Zacks Analyst Blog Highlights: Anheuser-Busch InBev, Diageo, Molson Coors Beverage, The Boston Beer Co and Pernod Ricard

For Immediate Release

Chicago, IL – June 21, 2021 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Anheuser-Busch InBev SA/NV BUD, Diageo plc DEO, Molson Coors Beverage Company TAP, The Boston Beer Company, Inc. SAM and Pernod Ricard SA PDRDY.

Here are highlights from Friday’s Analyst Blog:

Ready-to-Drink Category to Accelerate Alcohol Sales: 4 Stocks to Watch

The global alcohol beverages industry has been witnessing recovery. The primary trends, which have emerged as a result of the extended at-home stay during the pandemic-led lockdowns, are strong demand drivers for e-commerce, ready-to-drink (RTD) cocktails and premiumized drinks.

Notably, RTDs have been the fastest-growing category, given the increased demand for low- or no-alcohol drinks due to health consciousness amid the pandemic. The desire for the consumption of refreshing, flavorful and premixed bar-like cocktails at home, as restaurants and bars remained closed, primarily drove growth of the RTD category. The need for convenience due to the increased demand for canned cocktails, which can be easily shelved off-premise, further led to this growth.

Apart from these, vibrant and creative packaging is an added incentive, particularly for millennials. This has led to the rise in popularity of bar-like ready-to-drink cocktails in canned packaging available in retail and liquor stores.

As a result, most beverage companies are now switching focus to innovate and develop products to take advantage of the ongoing RTD boom. The factors have led RTDs to become preferred alternatives for traditional alcoholic drinks, particularly pulling out a considerable market share from the beer category.

In 2020, growth for canned cocktails was particularly fueled by the rising popularity of Hard Seltzers. Additionally, ready-to-drink vodka sodas, gins and tonics gained prominence among consumers looking for a stronger taste with more alcoholic drinks. Like Hard Seltzers, canned cocktails appealed to consumers looking for alcoholic drinks based on convenience and taste.

Per experts, even as restaurants and bars reopen, the demand for canned cocktails is not likely to fade. In fact, experts believe that more RTD beverages will be included in menus along with continued availability in the off-premise channel.

According to the latest report of IWSR Drinks Market Analysis, total beverage alcohol consumption in the United States improved 2% in 2020, marking the largest volume gain since 2002. This growth was attributed to increased consumer demand for flavored and better-for-you options, convenience, and the increase in at-home drinking occasions.

Backed by the increasing consumer appeal for flavors, the RTD category in the United States recorded growth of 62.3% in 2020. This growth was also led by the Hard Seltzers sub-category, which surged 130%. Notably, the RTD category is expected to become the second-largest beverage alcohol category in the United States, in terms of volume consumption. The category has already outpaced the spirits volume and is likely to surpass wine by the end of 2021.

Additionally, IWSR forecast the global drinks industry to witness 2.9% growth in volume by the end of 2021. It predicts the global beverage alcohol consumption to return to pre-COVID levels by 2023, followed by steady growth through 2025. According to the IWSR projections, the two fastest-growing categories are no-alcohol spirits and RTDs, which are expected to witness a compound annual growth rate of 30.6% and 10.2%, respectively, between 2021 and 2025.

Stocks to Watch

Some players poised to gain from growth of RTDs and Hard Seltzers are Anheuser-Busch InBev, Diageo, Molson Coors Beverage and The Boston Beer Co.

Anheuser-Busch InBev, alias AB InBev, is steadfastly growing its Beyond Beer portfolio, including Ready to Drink Beverages like Canned Wine and Canned Cocktails, Hard Seltzers, Cider, and Flavored Malt Beverages. The company has significantly enhanced its Beyond Beer presence in the United States with the introduction of Hard Seltzers like Bud Light Seltzer, followed by the more recently launched Michelob ULTRA Organic Seltzer and Cacti.

Additionally, it is focused on expanding its hard seltzer presence in newer markets. This was demonstrated by the recent launch of Michelob ULTRA Hard Seltzer in Mexico, where it has already captured 45% of the market share of the developing seltzer segment.

Also, AB InBev is launching the Mike's Hard brand, including the Mike's Hard Lemonade and Mike's Hard Seltzer variance, in markets outside the United States as part of its efforts to build the Beyond Beer portfolio globally. The company expects the brand to be available in more than 20 countries by the end of 2021.

Diageo is positioned to capitalize on the shift in consumption trends to RTD bar-quality cocktails through the launch of its Crown Royal ready-to-drink canned cocktail line. This marks the Crown Royal Whiskey brand's debut in the ready-to-drink cocktail space. Some of Diageo's recent launches in the canned cocktail space are Ketel One Botanical vodka spritz, Tanqueray crafted gin drinks and Crown Royal cocktails, along with Smirnoff seltzers in the Hard Seltzer category. Additionally, in April 2021, it purchased Loyal 9, which mixes vodka and lemonade in a can.

Also, Diageo announced plans to expand its manufacturing capability by installing two can lines at a new facility in Plainfield, IL. The facility, which will be worth roughly $80 million, comes with the capacity to produce more than 25 million cans of RTDs and will be ready for commercial production by the summer of 2021.

Molson Coors remains committed to growing its market share through innovation and premiumization. The company has taken several steps toward its hard seltzer ambition. Notably, its share in the U.S. hard seltzer segment increased to more than 50%, which is higher than what it was at the beginning of 2021.

Its Topo Chico Hard Seltzer and Vizzy are gaining share in the United States, with Vizzy ranked in the top 10 U.S. industry growth brands in the first quarter per IRR. Moreover, the company has entered the fast-growing RTD cocktails space with an exclusive equity and distribution agreement with Superbird and above-premium tequila-based Paloma. The company expects to deliver significant growth through the entire line-up of the fast-growing RTD cocktails.

Boston Beer's innovation in the non-beer categories, including hard teas, ciders and seltzer, has been a hit among liquor drinkers, which should continue to drive growth. It is also one of the fastest-growing companies in the RTD category, with continued strong growth from its Twisted Tea brand. It also plans to launch the Dogfish Head cocktails to take advantage of the growing RTD market.

The company's Truly Hard Seltzer and Twisted Tea brands have been key growth drivers. Its Truly Iced Tea Hard Seltzer has led to accelerated growth for the Truly brand, which has witnessed more than double growth from the past year. The Truly brand has witnessed significant market share growth in the measured off-premise channel in the first quarter of 2021, outpacing the hard seltzer category by more than 2 times or 50 percentage points.

In the second quarter, the company expects to launch the Truly Punch Hard Seltzer. This combined with Truly Iced Tea Hard Seltzer demonstrates the company's innovation leadership in the Hard Seltzer category.

Conclusion

Apart from the aforementioned companies, other companies in the alcohol space, including Mark Anthony Brands Ltd. and Pernod Ricard, are gearing up to grab a share of the RTD cocktails market. Going forward, consumers continue to seek more premium canned cocktails, accelerating growth of this category. In the United States, the RTD category is anticipated to be larger by volume than the spirits category by the end of this year.

Zacks Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it's poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks' Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com                       

https://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Molson Coors Beverage Company (TAP) : Free Stock Analysis Report
 
Diageo plc (DEO) : Free Stock Analysis Report
 
AnheuserBusch InBev SANV (BUD) : Free Stock Analysis Report
 
The Boston Beer Company, Inc. (SAM) : Free Stock Analysis Report
 
Pernod Ricard SA (PDRDY) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research