The Latest Trends In Alcohol: Panel Sees Rise In Hard Seltzer, Spirits

Macquarie's Caroline Levy provided clients with an outline of some of the key trends a panel of experts sees ahead for the alcohol market. 

The sell-side firm recently hosted a panel of beer and cannabis experts including beer-guru Harry Schuhmacher, founder of Beer Business Daily; Emily Pennington, editor of Wine & Spirits Daily; and Harrison Phillips, cannabis industry financial advisor.

Schuhmacher said beer has been losing pricing leverage due to the rise in popularity of spirits versus beer in the U.S.

Constellation Gains Share

At the moment, Schuhmacher said Constellation Brands, Inc. STZ is gaining market share. Due to its high debt load and declining sales volumes, he said rival Anheuser Busch Inbev NV BUD is unlikely to enter a pricing war, giving Constellation the pricing power advantage as well.

“We maintain our constructive view on STZ’s beer business, but we are more cautious on the returns from its Canopy investment,” Levy said in a Monday note. 

Schuhmacher said the popularity of the hard seltzer category is good news for Boston Beer Company Inc SAM. The company plans to invest heavily in its Sam Adams brand to return it to sales growth in 2019, and expanding its product portfolio has increased costs due to R&D and supply chain complexity, he said. 

Ratings And Targets

• Macquarie has a Neutral rating and 66-euro ($74.72) price target for Anheuser Busch’s European-listed shares.
• Macquarie has an Underperform rating and $285 target for Boston Beer.
• Macquarie has an Outperform rating and $245 target for Constellation Brands.

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