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04 May 2023
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Heineken NV (HEIA:AMS), 0 | Pernod Ricard (RI:EPA), 0 | Pernod Ricard SA (RI:PAR), 0 | Remy Cointreau (RCO:EPA), 0 | Remy Cointreau SA (RCO:PAR), 0 | Diageo plc (DGE:LON), 2,836 | Carlsberg (CARL-B:CPH), 0 | Carlsberg AS Class B (CARL.B:CSE), 0 | AB INBEV (ABI:EBR), 0 | Anheuser-Busch InBev SA/NV (ABI:BRU), 0 | Davide Campari-Milano (CPR:BIT), 0 | Davide Campari-Milano N.V. (CPR:MIL), 0 | Coca-Cola Europacific Partners plc (CCEP:NAS), 0 | Coca-Cola HBC AG (CCH:LON), 2,529 | Fevertree Drinks PLC (FEVR:LON), 1,102
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Blurred lines
Heineken NV (HEIA:AMS), 0 | Pernod Ricard (RI:EPA), 0 | Pernod Ricard SA (RI:PAR), 0 | Remy Cointreau (RCO:EPA), 0 | Remy Cointreau SA (RCO:PAR), 0 | Diageo plc (DGE:LON), 2,836 | Carlsberg (CARL-B:CPH), 0 | Carlsberg AS Class B (CARL.B:CSE), 0 | AB INBEV (ABI:EBR), 0 | Anheuser-Busch InBev SA/NV (ABI:BRU), 0 | Davide Campari-Milano (CPR:BIT), 0 | Davide Campari-Milano N.V. (CPR:MIL), 0 | Coca-Cola Europacific Partners plc (CCEP:NAS), 0 | Coca-Cola HBC AG (CCH:LON), 2,529 | Fevertree Drinks PLC (FEVR:LON), 1,102
- Published:
04 May 2023 -
Author:
Stent Jeff JS | Cross Gen GC | Ford Matthew MF -
Pages:
39
US industry slowdown to intensify cross-category innovation
The post-pandemic era has intensified pre-existing industry trends in US Beverages. One notable result has been the increased blurring of category lines within Total Beverage Alcohol (TBA), with industry incumbents branching out across traditional boundaries in search for pockets of growth. As fears around the US industry slowdown continue to build, we expect category blurring to become a more competitive theme within US beverages going forward.
RTDs: Still the conduit for category convergence
The Ready-to-Drink (RTD) category has evolved in recent years, with spirits-based RTDs now driving growth in the segment. The main share gainer from the Hard Seltzer slowdown, Spirits-based RTDs/Cocktails are expected to account for just under half of the US RTD category by 2026 (from c.18% in 2021).
Do RTDs add value to the overall TBA industry? Somewhat
We estimate c.70% of spirits-based RTD growth sourced within TBA is coming from outside of core-spirits, mainly from Hard Seltzers and Beer.
US regulatory hurdles far from insurmountable
While the idiosyncratic US regulatory system does somewhat confuse matters when it comes to category blurring, we believe the hurdles that do exist are far from insurmountable.
We believe that Diageo (=) and Pernod Ricard (+) look well positioned
With most Spirits-based RTD growth sourced from hard seltzers and beer, we believe that Diageo (=) and Pernod Ricard (+) are relatively well positioned. As to ABInBev (+), we believe that its efforts in this area are significantly ahead of the other US brewers. Elsewhere, we believe category blurring presents an interesting opportunity for the Coke system.