With the market showing technical resilience, and the Fed apparently ready to downshift in its tightening campaign as CPI continues to fall on a year-over-year basis, investors are starting to look for new ways to put capital to work.
But the devil is in the details, and many major Wall Street firms are still forecasting a cyclical downturn later this year, potentially including a recession.
That tightens up the menu of available options to the narrow mix that is both recession-proof and growth-oriented.
One industry that threads this needle is the craft beer industry, which has been growing in recent years, with an increasing number of breweries and a wider variety of beers available, but a demand function that is as steady as toothpaste and toilet paper.
Analysts think the industry is likely to continue to evolve and adapt to existing challenges with an overall positive outlook.
Consumer demand for craft beer is expected to continue to grow, particularly as younger consumers seek out unique, locally sourced products.
Additionally, the industry is expected to continue to evolve as breweries experiment with new ingredients, brewing techniques, and distribution methods, with more people opting to purchase from local breweries, either through curbside pickup or delivery, which provides more ammunition to the positive outlook.
With that in mind, we take a look below at some of the more interesting players with ties to the craft beer theme.
Boston Beer Co. (NYSE:SAM) is a large American craft brewery founded in 1984 by Jim Koch in Boston, Massachusetts. They are best known for their flagship brand Samuel Adams Boston Lager. The company brews a wide variety of beers, including lagers, ales, and seasonal beers, as well as hard ciders and hard seltzers under the Truly Spiked & Sparkling and Twisted Tea brand names.
They also have a line of non-alcoholic beverages under the Angry Orchard brand. They are known for using high-quality ingredients and traditional brewing methods to produce their beers, and they have won numerous awards for their products. The Boston Beer Company is publicly traded and is the largest craft brewery by sales in the United States.
Boston Beer Co. (NYSE:SAM) recently unveiled the ‘Stop the Stigma’ merchandise collaboration between TeaPot, Boston Beer’s new line of cannabis-infused iced teas, and Peace Collective, a Canadian lifestyle apparel brand. Net proceeds from the merchandise go directly to Pardons Canada, a national non-profit that assists individuals with criminal convictions to obtain pardons, record suspensions, U.S. entry waivers and file destructions.
“It is a privilege to introduce this new line of merch to the cannabis community through such a meaningful collaboration as Stop the Stigma,” said Paul Weaver, director and head of cannabis at The Boston Beer Company. “Everyone benefiting from legalized cannabis, even newcomers like TeaPot, have a responsibility to recognize the inequitable history of the industry and play a part in righting those wrongs. I am confident our drinkers will embrace the message behind this collaboration as we strive to stop the stigma and support Pardons Canada’s excellent work.”
If you’re long this stock, then you’re liking how the stock has responded to the announcement. SAM shares have been moving higher over the past week overall, pushing about 11% to the upside on above average trading volume. Shares of the stock have powered higher over the past month, rallying roughly 16% in that time on strong overall action.
Boston Beer Co. (NYSE:SAM) has a significant war chest ($222.1M) of cash on the books, which compares with about $313.6M in total current liabilities. One should also note that debt has been growing over recent quarters. SAM is pulling in trailing 12-month revenues of $2B. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 6.2%.
1812 Brewing Co. Inc. (OTC US:KEGS) is the upstart disruptor on the make in the craft beer industry. The Company seeks to build a nation-wide network of craft breweries to develop and foster respective brand growth at the local, regional, and national level.
KEGS looks to build a network wherein certain economies of scale can be shared across it such as production, distribution footprint expansion, inter-member contract brewing, new product development, sharing of best brewery practices and scale logistics and transportation. The network is to be built through investment by 1812 Brewing Company while maintaining the members’ respective local and regional uniqueness, brand autonomy and direct involvement with its consumers.
1812 Brewing Co. Inc. (OTC US:KEGS) produces award-winning beers such as War of 1812 Amber Ale (“1812 Amber Ale”), 1812 Light, Hazy Oasis Pale Ale, Thousand Islands IPA, Route 11 Lager, Railroad Red Ale, Helles Bells Pilsner, St. Stephens Stout, Third Rail Porter, Featherhammer Maibock.
The big news just hit: 1812 has started the application process needed to enter the Canadian beer market. The Company’s proximity to the Province of Ontario along with Ontario’s position as Canada’s largest beer market were absolutely factors in management’s decision to begin the process with The Liquor Control Board of Ontario (“LCBO”).
To help assist 1812 Brewing Company in this effort, we are also pleased to announce that the Company has partnered with import specialist Fine Beer Agency Ltd. of Toronto, Canada (www.finebeers.ca) to assist the Company in all aspects of the introduction, store placement and sales and marketing strategies.
According to the stats provided by the Canadian government, the global beer market is expected to reach $770.1 billion by 2023, and Canada placed 12th overall among the top beer markets in the world with forecasts estimating it will increase to $17.3 billion by 2023. Beer exports to Canada reached Can$558.3 million in 2018. Craft beer sales have seen a major increase over the past five years, nearly doubling from Can$1.0 billion in 2014 to Can$1.9 billion 2018. While lagers are favored in the non-craft beer category, ales are the number one choice on the craft beer spectrum with Can$1.7 billion in sales, up from Can$905.2 million in 2014.
1812 Brewing Co. Inc. (OTC US:KEGS) is also radically streamlining its capital structure. The company recently retired 34 billion shares and just tweeted out a plan to reduce its authorized share structure in direct response to share price gains ahead. Given its strong move to widen its footprint and this anti-dilution campaign, that’s a feedback loop primed to take hold that could deliver some fireworks for shareholders.
Anheuser-Busch InBev S.A. ADR (NYSE:BUD) is a large global brewing company based in St. Louis, Missouri. It is a subsidiary of Anheuser-Busch InBev, which is the largest brewing company in the world by sales. Anheuser-Busch produces a wide variety of beer brands, including Budweiser, Bud Light, Michelob, Busch, and Natural Light.
The company also has a portfolio of import and craft beers such as Stella Artois, Goose Island, and Blue Point. They also have a non-alcoholic beverage line under the name of Best Damn and Truly. They are known for their large-scale operations and distribution network, which enables them to produce and distribute their products on a global scale.
Anheuser-Busch InBev S.A. ADR (NYSE:BUD), the Official Beer of the FIFA World Cup, recently unveiled the details of its victory celebration for the tournament champions as part of its #BringHomeTheBud campaign. At the celebrations that took place in various cities in Argentina throughout the holiday season, fans were invited to enjoy limited-edition Budweiser FIFA World Cup packs.
“We are thrilled to #BringHomeTheBud to Argentina, bringing fans together in celebration over the Argentina national team’s monumental World Cup win,” said Todd Allen, Global Budweiser Vice President. “We couldn’t wait to bring their epic victory home and to celebrate with the players and fans as we wrap up our largest global campaign to date.”
Even in light of this news, BUD hasn’t really done much of anything over the past week, with shares logging no net movement over that period. BUD shares have been relatively flat over the past month of action, with very little net movement during that period.
Anheuser-Busch InBev S.A. ADR (NYSE:BUD) managed to rope in revenues totaling $25.7B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 32.7%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($7B against $29.5B, respectively).
Other key players in the space include Molson Coors Beverage Co. (NYSE:TAP), Constellation Brands Inc. (NYSE:STZ), Diageo PLC ADR (NYSE:DEO), Ambev S.A. ADR (NYSE:ABEV), and Heineken N.V. ADR (OTC US:HEINY).
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