Hard Seltzer Stocks Look Tasty

Hard Seltzer Stocks Look Tasty

over 3 years ago2 mins

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Another brewing giant announced a fresh assault on the fast-growing hard seltzer category this week – but analysts think one smaller stock is in a better position to bubble up 🍹

What does this mean?

Hard seltzer’s combination of alcohol and flavored carbonated water (but with minimal sugar and carbs) has made it the beverage of choice for calorie-conscious millennials of all genders – and across an increasing number of countries. Small wonder, then, that big drinks companies are increasingly muscling in.

Holland’s Heineken said this week that it would shortly expand its hard seltzer offering in the US. Together with Denmark’s Carlsberg, it’s arguably made the most waves internationally to date – although Britain's Diageo is also keen to grow its global seltzer business. Coca-Cola, meanwhile, is following in the footsteps of Constellation Brands – which made its biggest-ever individual product investment in launching Corona Hard Seltzer earlier this year 😯

June 2020’s US hard seltzer sales reportedly quadrupled June 2019’s, with the drink now accounting for 3% of all American alcoholic beverage purchases – and consumption predicted to triple again by 2023. But with the US and Canada currently representing 70% of global sales, there’s plenty of room for international growth; analysts predict the $4.4 billion worldwide market will expand to $15 billion by 2027…

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Why should I care?

The big question is how far an international boom in hard seltzer sales might benefit beverage giants. AB InBev’s Bon & Viv is one of the three three top seltzer brands which reportedly outsold the top six beer brands in the US combined in August. But as big brewers suffer from decreasing beer consumption, the growing seltzer market remains dominated by two smaller players.

Leading brand White Claw, which accounts for over half of all US sales, is made by a private firm. But Truly hard seltzer – the US number two, with around 25% market share – is owned by the public Boston Beer Company, creator of Samuel Adams. Boston now makes more non-beer than beer, with Truly contributing around 40% of its revenue – and the hard seltzer’s ongoing popularity has helped Boston’s shares soar in 2020.

Boston (green) has far outperformed the US S&P 500 (pink) while AB InBev (yellow) has suffered
Boston (green) has far outperformed the US S&P 500 (pink) while AB InBev (yellow) has suffered

Bigger brewers investing in hard seltzer may risk cannibalizing their brands and stealing sales from their own beers. And some analysts predict the sector will mature similarly to the energy drink market, which remains dominated by Red Bull and Monster Energy. If that’s the case, then Boston could be set to do well out of hard seltzer’s growing international appeal…

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