Market Overview

The Alcohol Market's Changing Chemistry: Younger, Healthier Drinkers Want Options

The Alcohol Market's Changing Chemistry: Younger, Healthier Drinkers Want Options

Younger alcohol drinkers are more health-conscious and want less sugar, alcohol and calories in their brews. At the same time, they want more choices, including hard seltzer waters and no-calorie beverages.

These were some of the key takeaways for Macquarie Research from Harry Schuhmacher’s Beer Industry Summit in San Diego, analyst Caroline Levy said in a Jan. 30 note to investors.

The Buzz On CBD

Other interests that could create growth in the sector include the growing buzz around CBD- and cannabis-infused beverages and alcohol-free beer, the analyst said.

“Low- [and] no-calorie alternatives are here to stay and growing fast!” Levy said. “This could also be the year ‘better-for-you’ evolves into non-alcohol alternatives (including cannabis). It is clear that young millennials are conscious drinkers who are more likely to go weeks at a time without beer.”

All that may be bad news for some big brands, which are likely to see volume erosion Levy said — although companies could get in on new interests through acquisitions or investments in some of the more niche-oriented innovators. Big brands also have more ability to use advertising and strong distribution systems to build new brands, which means Big Beer could become more and more interested in new categories like cannabis beverages or spiked seltzer, she said.

Spiked Seltzer's Moment 

Hard seltzers were huge in 2018, seeing more than 200-percent growth, and that could double in 2019, Levy said. The hard seltzer category is already equal to the cider category in size, she said.

Non-Alcoholic Beer

Levy is watching Heineken N.V. (OTC: HEINY) for its 0.0 beer, which the company expects to grow to 5 percent of the market size for regular Heineken.

“We think that is conservative given its market tests and opportunity to capture new drinking occasions (e.g. weekday lunch, bars that serve cannabis but can’t serve alcohol),” Levy said. “We believe the brand will be marketed similarly to Coke Zero, a healthier, low-calorie alternative to brand Coke. The launch ‘premiumizes’ non-alcohol beer the same way Coke Zero premiumized diet."

Levy has the following ratings on beer companies:

Boston Beer Company Inc (NYSE: SAM): Underperform with a $260 price target.

Anheuser Busch Inbev NV (NYSE: BUD): Neutral with a $66 price target.

Constellation Brands, Inc. (NYSE: STZ): Neutral with a $162 price target.

Related Links:

Battle Lines Drawn Over Corn In Beer After Super Bowl Ads

Anheuser's Labatt, Tilray's High Park Farms To Research Non-Alcoholic THC, CBD Beverages

Photo courtesy of Heineken.

Posted-In: alcohol BeerAnalyst Color Cannabis Reiteration Top Stories Markets Analyst Ratings Best of Benzinga


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