California beer market (STZ, BUD)
Total beer volume in California declined 1.6% in 2021, the fourth consecutive year of decline according to Beer Marketers’ Insights. Over the past four years volumes have decreased one million barrels to 22.6 million. Average beer consumption in California decreased 7.5% in 2021 while wine increased 10% and spirits increased 15%. Over the past decade the beer category has lost five points of share of the alcohol market to 43.5% measured by ABV. Between 2015 and 2020 AB InBev lost 1.35 million barrels, representing five share points to less than 30%. Recreational sales of cannabis started in January 2018 in California and beer has declined since then. It is important to note that cannabis legalization did not have a negative impact on Constellation Brands. Constellation Brands gained 10% share of the category to 26% with 2.1 million additional barrels from 2015 to 2020.
Mild flu season (PRGO)
During the 14th week of the year 2.0% of patient visits reported through ILINet were due to respiratory illness that included fever plus a cough or sore throat. The percentage increased 10bps from the prior week. Influenza activity is highest in the central and south-central regions of the U.S. and is increasing in most regions. 3,170 patients were admitted to hospitals with influenza this week. 2.0% is below the baseline despite multiple respiratory viruses that are co-circulating. This flu season is higher than last year’s nearly non-existent season and in the middle of the previous six years. The CDC estimates there have been at least 4.3 million flu illnesses this season. This year’s flu season would be a disappointment any other year except compared against last year. It pushes out the cough & cold upside to next year for PRGO, but we still three other investment themes.
Celsius Side Effects (CELH, MNST)
The rising popularity of Celsius has brought increased attention to its side effects. It’s marketing around a healthy pre-workout drink that is proven to increase metabolism has been effective. One person shared a video on TikTok three weeks ago saying consuming Celsius before workouts for the last two years led him to an electrocardiogram at a doctor’s office had 1.2 million views in less than a day. Many side effects that users report may be due to the high levels of caffeine. Celsius has 200 mg of caffeine in a 12-ounce can. It contains nearly twice the caffeine of Red Bull and Monster Energy. Google search trends for “side effects” peaked at the end of January, indicating that concern is not elevated.
