Hard Seltzer Eyes Robust Growth For 2021

10/02/20 11:44AM EDT

Below is a brief excerpt from a complementary research note written by our Consumer Staples analysts Howard Penney and Daniel BiolsiWe are pleased to announce our new Sector Pro Product Consumables Pro. Click HERE to learn more.

Hard Seltzer Eyes Robust Growth For 2021 - 10 2 2020 11 47 09 AM

Anheuser-Busch InBev announced yesterday that it would launch Michelob Ultra Organic Seltzer in January.

It is the first nationally available hard seltzer brand that has been certified organic by the USDA. The product will have 80 calories, 4% ABV, and zero grams of carbs or sugar, putting it below White Claw and Truly’s 100 calories, 5% ABV, and 2 grams of sugar.

Michelob Ultra is the second best-selling beer in the US off-premise retailers after Bud Light. Anheuser Busch InBev now has a suite of hard seltzer brands positioned differently.

Bon & Viv is the premium brand, Bud Light Seltzer leverages Bud Light, Bud Light Platinum is positioned for evenings out with 8% ABV, Natural Light Seltzer is an opening price point, Social Club has cocktail flavors, and Michelob Ultra Organic Seltzer is geared for an active lifestyle.

The CEO of PepsiCo had the following to say about a hard seltzer product yesterday.

“We look at every opportunity, there is in the industry and a couple of years ago was CBD. Now it's more alcohol. So, we got a lot of opportunities in front of us. Of course, we're looking at all of them, and we have people that are thinking more long term versus the very immediate 2021. So, we're reflecting, we're thinking what the best options are, and we will make decisions in the coming quarters whether this is an area where PepsiCo wants to play. More importantly, how do we capture a lot of value for this opportunity? Given the three-tier system, it's not obvious how you capture a lot of value.So, there is first, do we play or not? Second, very important, is who do we play with and who do we partner to maximize the value for PepsiCo?”

It sounds like PepsiCo will continue to evaluate the space, but there is a good chance the company could enter the hard seltzer category after 2021 using its Rockstar or Bang brand. PepsiCo seems more concerned about the economics (see our comments about Coca-Cola’s Topo Chico from yesterday) than brand confusion.

We expect 2021 to be another year of robust growth for the hard seltzer category as well as the number of new competitive entrants. PepsiCo is on our Long Bias List.

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