Back to top

Image: Bigstock

Beverage Makers in Spotlight as Consumers Sip On Health Drinks

Read MoreHide Full Article

Beverages, be it the non-alcoholic like soft drinks, health drinks, juices, water, coffees and teas, or alcoholic like beers, wines and other liquors, form part of our daily lives. With restaurants, bars and cinemas closing down due to the pandemic, on-premise sales, which form the majority of revenues of beverage companies, have taken a hit. Moreover, travel restrictions dealt a huge blow to the Travel Retail business.

Despite the pandemic-led disruptions, beverage companies have managed to maintain strong sales, with an increased focus to shift supplies to off-premise. Further, the companies stand to gain from the ongoing digital transformation (e-premise channels) as consumers adopt online shopping options and contactless delivery due to the COVID-19 outbreak. Not only this, the companies have moved a step ahead and made a number of notable innovations on the health drink front.

Notably, consumers are becoming more health conscious since the onset of the pandemic to boost immunity and stay protected from the virus. Consequently, consumers are shifting focus from unhealthy eating and drinking habits, steering clear of sodas and drinks with high alcohol content. Further, the stay-at-home trend encouraged people to make simple cocktails at home. This has given rise to the demand for drinks with low alcohol content.

To capitalize on these trends, beverage companies have ventured out with some interesting product launches, putting the focus on the health of consumers. Drinks containing vitamins, herbs, plants and minerals, with a potential health benefit, as well as probiotic-infused kombuchas, turmeric-based "golden milks" and high-energy teas are gaining popularity among consumers.

This has been making the dice roll for the energy and functional drink market over the past few months. Apart from the non-alcoholic beverage makers, some alcohol companies have jumped to the bandwagon, introducing non-alcoholic or low-alcohol drinks infused with healthy ingredients. Further, tequilas, hard seltzers and ready-to-drink cocktails have been gaining popularity with the rise in at-home consumption occasions.

Beverage Stocks That Catch Up With the Trend

Beverage behemoth PepsiCo Inc. (PEP - Free Report) and The Coca-Cola Company (KO - Free Report) started early in their quest to explore energy and health drink options due to the increased awareness about obesity concerns related to the consumption of carbonated drinks and the health hazards of artificial sugars used in soft drinks. This led the companies to diversify their portfolio with the right blend of juices, water, energy drinks, health drinks, teas and coffee over the years. Additionally, the companies have upped the game with new health drinks to lure consumers amid the pandemic.

PepsiCo has a wide portfolio of functional drinks like Gatorade sports drinks, Tropicana juices, Mountain Dew, Minutemaid, etc. Additionally, it made an addition to the functional drink category last week with Driftwell, recognizing the need for a relaxing drink amid the pandemic-led anxiety in people. This is likely to help consumers deal with stress and promote good sleep. Driftwell is an enhanced water drink, containing L-theanine, which is an amino acid often found in green tea, black tea and mushrooms. It is usually used to release anxiety and improve mental health. Additionally, the new drink contains 10% of the daily value of magnesium.

The company plans to launch the calorie-free and sugar-free drink in small cans of 7.5 ounces and one flavor — blackberry lavender. It expects to launch the health and wellness drink nationwide through its online portals in December 2020. The drink is likely to hit stores in the first quarter of 2021.

Coming to Coca-Cola, it introduced the Coca-Cola Energy drinks earlier this year, which contains Vitamin-B that boosts energy levels. In January 2020, the company introduced AHA in the sparkling water category, containing caffeine in each of its flavors,  including citrus and green tea, and black cherry and coffee. The drinks have been contributing meaningfully to the company’s revenues amid the pandemic. In August 2020, Coca-Cola announced plans to enter the hard seltzer category with the launch of Topo Chico Hard Seltzer in select Latin American cities later this year.

Additionally, Molson Coors Beverage Company (TAP - Free Report) announced its first non-alcoholic innovation last week in partnership with L.A. Libations, in which it acquired a minority stake in November 2019. In partnership with L.A. Libations, the company plans to launch four innovative non-alcoholic brands from its emerging growth division on the lines of health, wellness and social responsibility. This launch is in sync with the company renaming itself as Molson Coors Beverage Company in January 2020 to more precisely present its intent to expand beyond beer and grow in adjacent categories.

The first of these brands to be launched is HUZZAH in the seltzer category. The full-flavored seltzer will include probiotics to support a healthy gut, with lesser sugar and calorie content. Molson Coors plans to launch HUZZAH on the online platform, DrinkHuzzah.com, along with select retailers in South California. The brand will be launched in three flavors — Strawberry & Hibiscus, Juicy Pear, and Raspberry & Lemon. Other brands lined up for launch under the plan are MadVine — a 100% plant-based diet soda with zero calories, sugar and artificial ingredients, and Golden Wing — a grain-based milk alternative made of top-quality barley and no additives, stabilizers or frothing agents, containing proteins and nutrients.

Moreover, it earlier launched non-alcoholic, cannabis-infused beverages through its joint venture with the HEXO Corp., for the Canada and Colorado markets. These launches demonstrate the company’s focus on gaining share in the non-alcoholic beverage space. Additionally, its Vizzy hard seltzer contains anti-oxidant vitamin C, which differentiates it from other sparkling seltzers.

Another long-standing alcoholic-beverage company that is turning to the non-alcoholic beverage space is The Boston Beer Co. Inc. (SAM - Free Report) , which is set to launch the Just the Haze, an India pale ale with 0.5% alcohol by volume, in early 2021. Further, Boston Beer has been the beneficiary of the rise in non-alcoholic beverage trends as its Truly hard seltzer continues to gain popularity. The company has also been making fortune in recent times through growth in the hard seltzer, cider, tea and kombucha categories, while it significantly lost share for its Samuel Adams lager beer in recent years.

Furthermore, Anheuser-Busch InBev (BUD - Free Report) , alias AB InBev, has been benefiting from the near-beer trend, which gained momentum last year, through the introduction of various brands of no- and low-alcohol beer. As health and wellness become a priority for consumers, AB InBev expects no- and low-alcohol beer sales to grow to $25 billion in 2024 in the United States.  Recently, the company introduced Budweiser Zero, with zero alcohol and zero sugar. Budweiser Zero provides the same iconic taste and experience of Budweiser without alcohol.

Apart from providing hydration, beverages serve as an essential way to supplement diets, provide recovery from a workout, boost energy and offer relaxation for consumers. Summing up, the increasing better-for-you beverage trend is likely to help the beverage industry shore up from the adversities of the COVID-19 pandemic.

These Stocks Are Poised to Soar Past the Pandemic

The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.

Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.

See the 5 high-tech stocks now>>