The 2017 National Football League (NFL) championship kicked off yesterday and soccer lovers are bubbling with excitement. Wait, the soccer mania does not end here. The buzz is also felt in markets as sponsors make a beeline for profits while the ball rolls. It is here that beverages give their best shot.
This year, global viewership is expected to increase manifold, with broad proliferation of digital and social media channels. As such, sponsors are likely to pull off every possible trick in the game to gain maximum brand exposure and top-of-the-mind recall, thus persuading football lovers to spend more on their brands.
Importantly, the league too is trying to capitalize on changing demographics and consumers’ shift in preferences. This season, the NFL will allow its television partners to accept commercials for distilled spirits throughout the season, according to a memo reviewed by The Wall Street Journal. Amid falling beer consumption, this marks a major change in NFL’s advertising policy. The NFL confirmed the policy change and described it as one-season test that is expected to become permanent, per a NFL executive.
According to Fortune, beer lost 10% of its market share to wine and spirits between 2006 and 2016. Spirits made up 35.9% of the industry in 2016, while wine took 17.1%.
This move by the NFL in all likelihood will hit football staples like Anheuser-Busch InBev BUD and Molson Coors Brewing Company TAP, but could be a boon to distilled-spirits companies such as Brown-Forman Corporation BF.B and London-based Diageo plc DEO.
Positive Metrics Set to Cheer Investors
Beverage companies are set to gain the most from this NFL craze. Let’s first take a look at the fundamentals of the industry.
The global beverage market (comprising both non-alcoholic and alcoholic) is likely to reach $1.9 trillion by 2021 and witness a CAGR of 3% from 2016 to 2021, according to ReportLinker quoted on PRNewswire. Growing urbanization and disposable income are its main drivers.
The Zacks Beverage Industry has grown 17.6% so far this year, faring a lot better than the broader S&P 500 market’s 10.3% gain. The Zacks Soft Drink Industry has returned almost 15%, while the Alcohol Industry has climbed 30.5%.
The Zacks Beverage Industry is expected to witness a solid 17.6% growth this year, higher than the broader market’s expected earnings growth rate of 9%. ROE of the industry stands at 25.5% compared with 15.9% of the S&P 500.
The positive momentum is evident from the robust Zacks Industry Rank of these two beverage industries, occupying top 7% out of 256 industries for Alcohol and top 20% for Soft Drinks.
6 Prominent Picks
Investors can bank on these beverage stocks, which are making the most of consumer dynamism amid a shift in preferences. We have chosen companies with the help of Zacks Stock Screener that flaunt a Zacks Rank #1 (Strong Buy) and other important metrics. You can see the complete list of today’s Zacks #1 Rank stocks here.
Diageo plc is engaged in the business of brewing, marketing and selling of craft beers in the United States. The stock flaunts a Zacks Rank #1 and a VGM Score of B. The stock has climbed 30.5% year to date, outperforming the beverage industry.
Its earnings estimate for the current year has moved north by 3.1% over the last 30 days. The company has expected earnings growth of 11% for the current year.
The Boston Beer Company Inc. SAM, the largest craft brewer in the United States, has gained a solid 12.5% quarter to date, outperforming the industry’s 6.3% growth. This top-ranked stock has seen its earnings estimates grow 14.6% for the current year. The stock has a Growth Score of B and surpassed estimates by an average of nearly 50% in the trailing four quarters.
Another on the list is Coca-Cola FEMSA, S.A.B. de C.V. KOF. The stock, with a VGM Score of B, has climbed 28% quarter to date comparing favorably with the beverage industry. Its earnings estimate for the current year increased 15.2% in the last 60 days. The company has a solid earnings growth rate of 53.8% for the current year.
Coca-Cola European Partners plc CCE or CCEP is the world’s largest independent bottler of The Coca-Cola Company KO based on revenue. The stock has surged 37.1% year to date, faring a lot better than the industry’s gain of 17.6%. Earnings estimates have displayed a healthy uptrend, reflecting optimism in the stock’s prospects. The Zacks Consensus Estimate for CCEP’s current-year earnings has moved up 6.8% over the last 60 days.
The company has outpaced/met the Zacks Consensus Estimate consistently in each of the trailing four quarters, the average beat being 6.22%.
Heineken N.V. HEINY is engaged in producing and distributing beverages. The stock has climbed 40.4% year to date and sports a Growth Score of B. the company is expected to witness 16.4% EPS growth this year on sales growth of 15.7%.
Lastly, Craft Brew Alliance, Inc. BREW, another Zacks Rank #1 stock, is engaged in the business of brewing, marketing and selling of craft beers in the United States. Its earnings estimate for the current year increased 14 cents in the last 60 days.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Brown Forman Corporation (BF.B): Free Stock Analysis Report
Molson Coors Brewing Company (TAP): Free Stock Analysis Report
Diageo PLC (DEO): Free Stock Analysis Report
Anheuser-Busch Inbev SA (BUD): Free Stock Analysis Report
Craft Brew Alliance, Inc. (BREW): Free Stock Analysis Report
Heineken NV (HEINY): Free Stock Analysis Report
Boston Beer Company, Inc. (The) (SAM): Free Stock Analysis Report
Coca-Cola European Partners PLC (CCE): Free Stock Analysis Report
Coca-Cola Company (The) (KO): Free Stock Analysis Report
Coca Cola Femsa S.A.B. de C.V. (KOF): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research