Both Anheuser-Busch (NYSE: BUD) and Molson Coors Beverage Company (NYSE: TAP) report earnings this Thursday (Oct. 29th), with analysts closely eyeing developments in each company’s efforts to capture seltzer-share from Mark Anthony Brands’ White Claw & Boston Beer’s Truly lines.
After Boston Beer’s stunning earnings report last Thursday, with FY2020 shipments & depletions now expected to be up between 37-42% YoY (up from a previous forecast of 27-35%), BUD and TAP have big shoes to fill in their seltzer verticals.
Anheuser-Busch Preview
Anheuser-Busch’s stock is down ~30% over the past 12 months, with prevalent issues running rampant across the company’s top and bottom line: beer sales have been sluggish (13.4% global volume decrease in 1H20), commodity costs have been high, and exchange rates have been unfavorable.
While BUD has no issue facing these near-term headwinds, analysts are looking for a strengthening long-term story, expecting FY21 revenue/earnings to grow by 8% and 61%, respectively[1].
As the U.S. hits new highs in terms of COVID cases, and Europe faces a strong second wave and ensuing shutdowns, BUD’s on-premise dominance could be less relevant going forward into 2021, and thus paint a less-rosy picture for the company.
With BUD’s flagship beer lines struggling to find growth domestically, and off-premise sales looking to be a growing % of 2021 sales, there will be heavy emphasis on the company’s efforts into the rapidly expanding hard seltzer category, with current lines (Bon & Viv, Natty Light Seltzer, Bud Light Seltzer) being supplemented by new additions such as Bud Light Platinum Seltzer (rollout began on Aug. 31st) and Michelob Ultra Organic Seltzer (hitting shelves in January ‘21).
The company’s seltzer sales grew 600% in 2Q, doubling the overall category growth, and was a main focal point of management’s conference call–we expect seltzer lines to take the center stage on Thursday.
Molson Coors Preview
Molson Coors has had just as rough of a past 12 months as BUD, down ~35% over the past 12 months. 2Q showed a bit of a turnaround, with premiumization and the reaped benefits of an expansive cost-savings plan leading to leading to a 32% beat on EPS ($.90 vs. exp. $.68, GAAP figures).
Performance regarding investments into TAP’s hard seltzer products, with a planned quintupling of capacity created by the company’s new Fort Worth-based seltzer facility, should see some more clarification from management offered on this quarter’s conference call.
Much of Molson Coors’ progress in the hard seltzer space has happened just this past quarter, with the launching of Coors Seltzer kicking off this past August, and a new Topo Chico Hard Seltzer distribution partnership with Coca-Cola being announced recently.
This quarter’s conference call should give the first real guidance into these new products’ expected performance as TAP cements itself as a product-rich, diverse hard seltzer powerhouse–we expect more clarification on the company’s focus on seltzers to be discussed on Thursday, specifically how investments will be proportioned going forward between Vizzy, Coors Seltzer, and the possibility of new acquisitions.
[1] Via Motley Fool
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