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Although the beer industry had its ups and downs in 2023, the six-pack trend is slowly creeping into 2024.
As the dust still settles on the boycott against Anheuser-Busch InBev (BUD), companies like Constellation Brands (STZ) and Molson Coors (TAP) compete to grab more market share, while Bud Light maker will try to make a comeback.
Companies also need to respond to changing tastes, such as a switch to imported beer from Mexico (light lager), canned cocktails, and non-alcoholic options.
“The Bud Light controversy…was probably the most important driving force within the beer industry.” [in 2023]City Vice President Filippo Farolni told Yahoo Finance. He said domestic brands such as Coors Light and Miller Lite covered 80% to 85% of Bud Light’s stock losses.
Molson Coors’ third-quarter results showed U.S. brand volume growth of 4.5%, driven by double-digit growth in Coors Light and Coors Banquet and single-digit growth in Miller Lite.
Constellation Brands (STZ), which owns beer, wine and liquor brands, was also a winner.
On Friday, the company announced: Quarterly results were mixed, with beer sales up 4% on demand for the Modelo Especial and Pacifico series. Chief Executive Officer Bill Newlands said on a conference call with investors that the two Mexican importers grew to No. 1 and No. 2 in draft beer market share last year.
Corona Extra, to which Constellation owns the rights in the U.S., is the No. 1 packaged beer sold internally, he said.
The beverage giant and others with Mexican imported brands could make further progress this year, according to Bump Williams of Bump Williams Consulting.
“We’re already seeing retailers giving more shelf space to brands in this space in the second half of 2023,” Williams told Yahoo Finance by phone. “We’ll probably see that expand further as spring sets come out in March and April.” [2024]”
Others on the street seem to agree.
Cowen managing director Vivian Azar called the Constellation brand a top idea for 2024 that “reflects the strength and health” of the Modelo brand, which is “very popular” with young drinkers. told Yahoo Finance.
Goldman Sachs analyst Stephen Kron also added Constellation Brands to his list of “23 Most Differentiated Buy Recommendations.” The company is “a company that is gaining market share through positive changes in shareholder value,” Kron wrote in his client note.
Bud Light’s parent company, Anheuser-Busch InBev, is a different story, with North American sales volume down 17.1% from a year ago in its latest quarterly results.
The company also has until February 29 to negotiate new contracts with brewery employees. Teamsters from 12 U.S. breweries have voted to authorize a strike if no agreement is reached.
But there is one bright spot for all brewers in 2024. That is, the price of aluminum will finally fall and the cost of raw materials will fall. Bernstein analyst Trevor Sterling told Yahoo Finance on the phone that U.S. beer companies will particularly benefit from the change.
Other potential disruptors to the beer industry include flavored beverages, ready-to-drink cocktails, health and wellness trends, and the rise of tequila. According to Veylinx research, demand for alcoholic and non-alcoholic canned cocktails has surged by 20% and 4%, respectively, over the past year.
Williams said Twisted Tea, a sweet tea whiskey drink, is growing in popularity, which could be good news for Boston Beer Company (SAM). Please keep an eye on Surfside Iced Tea, an up-and-coming brand that may be an acquisition target.
Other flavor-based, ready-to-drink cocktails like High Noons and Cutwater (an Anheuser-Busch InBev unit) remain underperforming. Williams said these options are especially appealing to light beer drinkers and younger consumers.
Williams said there is also a shift toward non-alcoholic beverages, but such options currently account for only 3% of total sales. Brands like Heineken 0.0 and Athletic Brewing Company are likely to gain even more traction as this trend gains further traction.
Tequila also has its moment. Evercore ISI analyst Robert Ottenstein said in a note to clients that the category as a whole is seeing “remarkable” 7.2% year-over-year growth in volume. Diageo (DEO), which owns Casamigos and Don Julio, led the pack with a 15.7% volume increase.
And pour that one into the wine category, which saw a decline in both sales value and volume in 2023, according to Williams data.
Farolni said Constellation Brands’ Robert Mondavi and Woodbridge are “significantly losing market share in a category that is slowing down,” and the company is currently on track to increase its wine and spirits business’ sales by 2024. He said he expected a decline of 7% to 9%.
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Brooke DiPalma is a senior reporter at Yahoo Finance. Follow her on Twitter @brooke di palma Or email bdipalma@yahoofinance.com.
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