Hard-seltzer sales are booming in the US - and UBS says these 5 beer companies are best positioned to profit from the trend

Carmen ReinickeJul 31, 2019, 00:01 IST

Leanna Garfield/Business Insider

Hard seltzer could grow to be a $2.5 billion beverage category by 2021, according to analysis by UBS.
Sales of the beverages grew 164.3% in the last four weeks, according to data by Nielsen.
UBS' Sean King told Markets Insider the top five beer stocks that are best exposed to gain on the hype.
Read more on Markets Insider.

Hard seltzer is taking the US by storm.

Sales of the canned fizzy beverages from brands like Whiteclaw, Truly, and Bon & Viv have boomed over the last year.

The category, currently worth $550 million, could grow to reach $2.5 billion by 2021, said Sean King, an analyst at UBS. That implies an annual growth rate of 66% and a jump in consumption from 14 million cases in 2018 to 72 million cases in 2021.

"The numbers I think are surprising to everyone in the market," King said in an interview with Markets Insider. The strong growth of the category has shown investors that it's durable and not just a flash in the pan, he added.

Hard seltzer has converted beer, wine, and vodka drinkers. According to Nielsen data, hard-seltzer sales grew 164.3% in the last four weeks and roughly 200% over the past year.

Whiteclaw is leading the category with a 50% market share, and sales of the spiked seltzer were up 223% in the last four weeks. Whiteclaw is owned by Mark Anthony, a private company also responsible for Mike's Hard Lemonade.

Even though the spiked-seltzer market leader is privately held, King's analysis shows that hard seltzer presents a big opportunity for big beer and beverage companies that are releasing their own brands to compete. They could see a $200 million opportunity for each 10% share of the category they're able to capture.

Here are the top companies that are exposed to the hard seltzer trend bubbling up, according to King.

See Hard-seltzer sales are booming in the US - and UBS says these 5 beer companies are best positioned to profit from the trend >>

1. Anheuser- Busch InBev (BUD)

AB InBev owns the spiked seltzer brand Bon & Viv, which has seen a sales increase of 28% in the last four weeks according to Nielsen data.

2. Constellation Brands (STZ)

Constellation, which is the owner of beer brands such as Modelo and Corona, has a line of flavored malt beverages that are meant to compete with hard seltzer. The line, Corona Refresca, has a variety of fruit flavored beverages. It could boost Constellation's earnings per share by 1.3% over the next 3 years, King said.

3. Boston Beer Company (SAM)

Boston Beer Company is responsible for Truly Hard Seltzer. King estimates that Boston Beer could see 5.9% EPS boost over the next 3 years from the Truly brand.

4. Molson Coors (TAP)

Molson Coors owns the brand Henry's Hard Sparkling water, which boasts zero sugar in its cans. It could boost Molson Coors' EPS by 0.9% over the next 3 years, according to King.

5. Diageo (DGEAF)

Diageo is the company behind Smirnoff, which also has a line of spiked seltzer. Its spiked-seltzer sales increased 86% over the last four weeks, according to Nielsen data.

Cookies on the Business Insider India website