3 Stocks to Watch As Demand for Ready-to-Drink Alcohol Soars
Ready-to-drink (RTD) alcoholic beverages have increased in popularity over the years as consumers are becoming increasingly health-conscious and shifting to drinks with low alcohol and calorie content. Brands are also keeping up with the trend by providing more options to consumers in terms of flavors, attractive packaging and so on. RTDs are also a convenient way of drinking as these do not require any additional preparation before consumption and are widely available in cans which mean they can be consumed on the go.
A survey by Mintel in the United States conducted in November 2019 did show that 46% of the respondents preferred RTD beverages because they don’t need further preparation, as mentioned in an Austria Juice article, while 37% preferred such beverages because they could conveniently take them anywhere.
Although the overall consumption of alcohol took a hit last year following the coronavirus-led shutdown of bars and restaurants across the globe, the RTD category continued to boom. Per a report by the IWSR, RTDs witnessed double-digit global growth in 2020. The high demand for RTDs is also expected to sustain this year. The report stated the RTD volume is set to rise 26.6% in 2021 and witness a CAGR of 10.2% from 2021 to 2025. In the United States, IWSR predicted that by the end of 2021, the volume consumption of RTD will surpass that of wine. Hard seltzers, in particular, have seen a continued uptick in consumption, with volume in the United States alone growing 130% in 2020, per the IWSR report.
E-commerce also came to the forefront last year and aided the overall alcohol sales as people were conveniently consuming alcohol at home. Going forward, RTDs look ready to drive the alcohol e-commerce value as a separate report by the IWSR estimated that these products are set to represent 10% of the overall alcohol e-commerce value by 2024 compared to 2% in 2019. The report further stated that the United States is mainly driving the growth of RTD and the said category is set to represent 20% of U.S. alcohol e-commerce value by 2024, up from 5% in 2019.
3 Alcohol Stocks to Keep a Close Eye On
The RTD market looks set for a boom period as consumers become more health conscious and prefer convenience when it comes to enjoying their drink. This thus makes it a good time then to look at alcohol companies offering RTDs which can make the most of this upswing. We have selected three such stocks that carry a Zacks Rank #2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Molson Coors Beverage Company TAP offers its Vizzy Hard Seltzer brand which can also be bought online. The company recently partnered with CKBG to distribute Superbird, a tequila-based RTD cocktail in North America. The company currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings increased 1.6% over the past 90 days. The company’s expected earnings growth rate for next year is 6.5%.
Anheuser-Busch InBev SA/NV BUD is offering several products under its Beyond Beer category, including hard seltzers, canned wines, canned cocktails and so on. The company also recently announced an investment in an RTD cocktail company, Canteen Spirits. Anheuser-Busch InBev currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 1.6% over the past 60 days. The company’s expected earnings growth rate for the current year is 64.9%.
Constellation Brands, Inc. STZ offers the RTD Svedka Spiked Premium Seltzer, Corona Hard Seltzer and so on. The company currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 0.1% over the past 60 days. The company’s expected earnings growth rate for next year is 16.4%.
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