The hard seltzer category will continue to grow, but one of the winners in the space today, Boston Beer Company Inc (NYSE:SAM), will remain a leader, according to RBC Capital Markets.

The Boston Beer Analyst: Nik Modi maintained an Outperform rating on Boston Beer Company's stock with a price target lifted from $427 to $575.

The Boston Beer Thesis: The hard seltzer category could show a similar trajectory compared to the energy drink market, and this would bode well for Sam Adams and Truly's parent company, Modi said in a Monday note. (See his track record here.)

The energy drink category is one of the fastest-growing beverage sub-segments, with a 20-year volume compounded annual growth rate of 25%, the analyst said. 

Despite the strong overall industry growth, the original winners in the 2000s are still winners today, he said.

Monster Beverage Corp (NASDAQ:MNST) and Red Bull's combined market share is "substantially higher" now at around 70% to 80%, despite hundreds of new entrants, Modi said. 

The same trend is playing out in the hard seltzer space, as Truly and White Claw's combined market share of around 80% in the end of 2018 rose to around 90% by the end of 2019, the analyst said. 

The two brands have strong distribution systems, and industry checks suggest that distributors are not "very willing to swap out SKUs" of their growth drivers for "unproven brands," he said.

Even in stores, rivals Bud Light Seltzer and Corona Seltzer have "significantly less" space on shelves, Modi said. 

Truly and White Claw both have a "head start" on firsthand category trends, with more experience with flavors than rivals, the analyst said.

SAM Price Action: Shares of Boston Beer Company were trading down 0.97% at $517.26 at the time of publication Monday. 

Related Links:

Courtesy photo.