Truly and White Claw have about 80% of the hard-seltzer market.
Rob Kim/Getty Images for NYCWFFHard seltzer has been one of the hottest new categories of alcoholic beverages throughout the pandemic, with brands scrambling to launch their own versions. Yet that white-hot growth has cooled—however slightly—since the summer, leading investors to question the future of the product.
RBC Capital Markets took a look at the issues these Friday. He says there is still plenty of growth left in the hopper.
Analyst Nik Modi reiterated Outperform ratings on both Constellation Brands (ticker: STZ) and Boston Beer (SAM). The former is his favorite pick among all U.S. consumer-staple beverage companies.
Modi is more enthusiastic about Constellation Brands’ beer business than he is about its seltzer sales, he thinks seltzer could lead to sales-volume growth of as much as 7% for fiscal year 2022, above his 5% forecast. He reiterated his target of $262 for the stock price. As for Boston Beer, he raised his price target to $1,378 from $1,135, saying the company is in a strong position to capture growth in seltzer.
To that point, he said, the recent slowdown in the rate of increase in hard-seltzer sales doesn’t mean that the category has peaked. He attributes recent “weakness”—though growth rates are still above 100% in many channels—to three factors: the way that Covid-19 has curbed parties and gatherings; the season, as more people drink hard seltzer in the summer; and shortages of aluminum cans that have limited inventories. He is still estimating that the overall category will grow at least 70% this year, with greater gains if vaccinations happen more quickly than expected.
Ultimately, Modi believes, the hard-seltzer category cold be as big as alcoholic imports, which would reflect some 150% growth from estimated 2020 levels, as it grabs share from beer, wine, and spirits.
That kind of opportunity obviously has attracted a host of new entrants, but he isn’t concerned about the increased competition. Right now, first movers White Claw—owned by privately held Mark Anthony brands—and Boston Beer’s Truly have about 80% of the market. Constellation’s Corona and Anheuser-Busch InBev’s (BUD) command about 10% to 14%.
Other analysts are also upbeat about leading seltzer players’ ongoing strength—and new categories.
Modi likens the situation to energy drinks. Despite a slew of new products, Monster Energy (MNST) and privately held Red Bull still have about 70% to 80% of the market, thanks to their relationship with consumers, viral marketing, relentless innovation, and ability to swiftly react to competition. While the hard-seltzer category is not guaranteed to follow this pattern, energy drinks offer an indication of how the dominant players can stay on the top of an ever-growing heap.
Write to Teresa Rivas at teresa.rivas@barrons.com
"still" - Google News
February 12, 2021 at 10:33PM
https://ift.tt/3s0lJth
Why Hard Seltzer Is Still a Growth Story for Boston Beer, Constellation Brands - Barron's
"still" - Google News
https://ift.tt/35pEmfO
https://ift.tt/2YsogAP
Bagikan Berita Ini
0 Response to "Why Hard Seltzer Is Still a Growth Story for Boston Beer, Constellation Brands - Barron's"
Post a Comment