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The US Beer industry landscape is changing fast. AB InBev's North America Normalized EBIT declined by over $1.3 B from 2022 to 2023.
The volume market share decline (relative to Molson Coors Beverage Company and Constellation Brands) contributed to that EBIT decline by an amount of $400 Million.
It has not helped that overall volumes between these three major players has declined by over 4%. It's a general sign of the headwinds facing the beer category as shopper and consumer preferences shift. For #ABInBev, that overall market decline cost them another $200M.
A just less than 4% increase in Net Pricing contributed a +ve $560Million to the Normalized EBIT change, but was insufficient to mitigate the increased inflationary unit costs associated with Cost of Sales and the de-leveraging of other SG&A operating expenses.
It will be interesting to track how these components of EBIT will change for 2024, given growth constraints associated with market share gains and price increase ceilings. Looks like some drastic OPEX cuts might be the only short-term remedy for now as AB InBev looks to rebuild brand equity and volume share.
Send me a DM or write "send" in the comments section and I will forward you the document that also contains the related MVA operating breakdown for #MolsonCoors and #ConstellationBrands.
It's interesting to see how and to what extent Molson Coors and Constellation Brands benefited from AB InBev's headwinds. You will also see why Constellation Brands might be the longer term winner here.
#Beerindustry#beercategory#beerdistribution#Heineken#BeverageAlcohol#Asahi#Carlsberg#BostonBeer#beer#beverages#BudLight#MillerLite#CoorsLight#Corona#ModeloEspecial
Constellation Brands forecast annual profit above Wall Street expectations on Thursday, banking on resilient demand for its core beer brands despite sticky inflation. Demand across the company's beer brands like Modelo Especial and Pacifico remained strong as consumers stretched their budgets even though living expenses persistently rise. Constellation expects annual comparable…
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Modelo Especial is now firmly ensconced as America’s biggest beer as measured by dollar sales.
Its smart marketing strategy is boosting the company financial profile.
We developed a short analysis about Modelo success, trying to understand the reasons behind it, that you can find below as a PDF (we can send it to you on request - please indicate your email in a private message).
This performance is fueling parent company Constellation Brands, who reported a comparable profit of $3.57 per share for the quarter, eclipsing analysts’ estimates of $3.46 per share.
Constellation Brands now expects full-year earnings per share between $14.63 and $14.93, up from its previous outlook of $13.40 to $13.70, based largely on buoyant demand for its Mexican beers, Modelo and Corona.
(source: The Drinks Business)
Constellation BrandsThe HEINEKEN CompanyAB InBevMolson Coors Beverage CompanyDanoneDiageoThe Coca-Cola CompanyPernod RicardThe Absolut GroupNestlé Nespresso SA
Danish brewer Carlsberg Group is set to acquire UK-based soft drinks maker Britvic plc for £3.3 billion ($4.2 billion). This strategic move marks a significant shift in the global beverage landscape, with far-reaching implications for leadership, trade partners, and consumers.
🕒 2 Minute Briefing:
• Carlsberg's offer of 1,315 pence per share won Britvic's approval.
• Creates Carlsberg Britvic, spanning alcoholic and non-alcoholic categories.
• Britvic's portfolio includes Robinsons, Tango, J2O, and licensed PepsiCo brands.
📊 Implications for C-Suite:
1. Portfolio Diversification: Access to growing non-alcoholic market.
2. Synergy Realisation: £100 million annual cost savings over 5 years.
3. Enhanced Growth: Strengthened position in Western Europe.
4. Strategic Partnerships: Reinforced PepsiCo relationship.
🏪 Trade Partner Considerations:
1. Larger Brand Portfolio: Broad offering across categories.
2. Supply Chain Optimisation: More efficient distribution.
3. Innovation Pipeline: Accelerated product development.
👥 Consumer Impact:
1. Short-term Stability: No immediate changes expected.
2. Future Innovations: Potential for cross-category innovation.
3. Pricing: Potential consumer/ trade squeeze on pricing in the future.
4. Loyalty: Careful brand identity management needed
💰 Pricing and Consolidation Implications:
• Increased pricing power across categories.
• Cost savings may not translate to lower consumer prices.
• Potential reduced competition in certain product categories.
• Greater leverage in retailer negotiations.
• Accelerated product innovations may justify premium pricing.
• Long-term consolidation may lead to gradual price increases.
This consolidation highlights the trend of market concentration in CPG, with potential long-term implications for competition, pricing dynamics and consumer choice in the UK beverage market.
#Strategy#Beverages#MergersAndAcquisitions#CPGStrategy#Consumer#Brands#Competitiveness#CostOfLiving#Pricing#Inflation#PurchasingPower#RevenueGrowth
Citations:
[1] https://lnkd.in/ea_MvuHj
[2] https://lnkd.in/egWUmJGV
[3] https://lnkd.in/ewKFMKZc
[4] https://lnkd.in/eKSfBYfs
The beverage industry is becoming more competitive, with big players like Reliance's Campa Cola shaking things up by offering lower prices and better deals for retailers.
At Organico Agro Foods & Beverages Pvt. Ltd., we believe the key to staying ahead is standing out. we focus on creating unique, high-quality beverages that connect with local tastes and build loyal customers. Our goal is to innovate and ensure that our products aren’t just another choice, but the preferred one in the market.
#Organico#OrganicoBeverages#Beverages#FoodAndBeverages#InnovationMatters#Marketleadership#RegionalBrands
The beverage industry is evolving rapidly, and Reliance’s reintroduction of Campa Cola has significantly intensified competition, especially for regional players. By offering products at significantly lower prices and providing retailers with higher trade margins 𝟔-𝟖% compared to the typical 3.5-5%—Reliance is securing prime shelf space and consumer attention.
This aggressive pricing strategy has even prompted industry giants like Coca-Cola and PepsiCo to consider launching budget-friendly alternatives to protect their market share. However, it’s the regional beverage companies—those operating within similar price brackets—that face the biggest challenge.
In this scenario, I firmly believe differentiation is the only way forward. Regional players can no longer rely solely on competitive pricing. Instead, they must innovate and offer unique products that resonate with local tastes and preferences. Whether it’s through distinctive flavors, health-focused options, or leveraging cultural connections, the key is to carve out a niche and build brand loyalty.
At Organico Agro Foods & Beverages Pvt Ltd, we are committed to creating unique, high-quality products that truly stand out. By understanding consumer needs and staying ahead of trends, we aim to deliver beverages that are not just alternatives but the preferred choice.
In an industry where price wars can easily erode value, differentiation is the key to long-term success. By focusing on what makes your product unique, you can not only survive competitive pressures but thrive.
#OrganicoBeverages#InnovationMatters#BeverageIndustry#ProductDifferentiation#MarketLeadership#RegionalBrands#ThinkBeyondPricing
Market Shift: Premiumization in the Alcohol Industry 🚨
Diageo, one of the world's largest drinks makers, has reported a 1.4% drop in sales over the last year — its first since the pandemic. While this may seem like a red flag, it highlights a broader market trend: premiumization.
As consumers become more selective about where they spend, premium brands are poised for long-term growth despite short-term economic pressures like inflation and high interest rates. 🥃
🔹 Johnnie Walker sales fell by 2% globally, with a sharper 10% decline in North America.
🔹 Casamigos tequila (acquired for $700M in 2017) saw a 22% drop in sales. 🔹 Diageo still commands almost 40% of the global Scotch whisky market.
CEO Debra Crew emphasized the power of premiumization, driven by:
Consumers trading up from beer and wine to spirits 🍸
Rising incomes in developing markets 🌍
The long-term trend of prioritizing quality over quantity ✅
Competitors like Pernod Ricard are also doubling down on premium labels, selling off wine brands to focus on premium spirits and champagne.
💡 Key takeaway: While economic headwinds may challenge consumer spending, the push toward premium products signals a lucrative future for brands that cater to evolving tastes.
#Premiumization#AlcoholIndustry#ConsumerTrends#Diageo#BusinessStrategy#JohnnieWalker#Casamigos#MarketShift#Leadership#LinkedInNews
Strategic alliances in the food and beverage sector are formal partnerships between companies to combine resources, expertise, and market reach.
These collaborations advance SDGs and solve customer-centric issues. Smaller startups benefit from scale and routes to market, while larger players enhance their portfolios with new, relevant brands and cleaner products.
📊 Implications:
🚀 Innovation: Accelerate the development of clean, nutritious foods.
🌿 Sustainability: Implement sustainable practices at scale.
🤝 Shared Value: Create shared value across supply chains.
📈 Benefits:
⚖️ Equality: Provide opportunities for small startups and ensure fair market access.
🍎 Food Security: Expand access to nutritious and affordable food options.
♻️ Sustainability: Promote sustainable practices and reduce environmental impact.
💡 Solving Customer-Centric Issues:
🥗 Cleaner Portfolios: Offer healthier and more affordable sustainable product options.
🌐 Market Expansion: Reach new customer segments with innovative products.
💎 Value Creation: Enhance brand reputation and customer loyalty
Potential Partnerships:
🍸 Spirits & Premium Mixers (e.g., Diageo + Fever-Tree/ Double Dutch)
🍺 Beer & Non-Alcoholic Alternatives (e.g., AB InBev + Athletic Brewing)
🥤 Soft Drinks & Health Beverages (e.g., Coca-Cola + GT's Living Foods)
☕ Coffee & RTD Beverages (e.g., Starbucks + La Colombe)
🥜 Snacks & Plant-Based Foods (e.g., PepsiCo + Beyond Meat biltong/ jerky)
🍗 Plant-Based Chicken & Fast Food Chains (e.g., TiNDLE + McDonald's)
Mobilising Actions:
C-Suite:
🔍 Identify Partners: Align with partners that support SDG goals.
🧪 Focus on sustainable and nutritious products.
📊 Impact frameworks to measure and report on sustainability impacts.
📉 Strategic Pricing: Develop pricing strategies to make sustainable products affordable.
Policymakers:
🏆 Offer incentives for sustainability-focused collaborations.
🧪 Regulatory Sandboxes: Facilitate innovation through flexible regulatory environments.
💰 Fair Pricing Regulations: Implement regulations to keep prices fair and competition healthy, avoiding monopolies and oligopolies.
⚖️ Regulations; mitigate the 'Us vs. Them' phenomenon in food choices that lead to social dis-ease.
Consumers:
💚 Support Responsible Brands: Choose brands that align with SDG goals.
🔍 Demand Transparency: Seek transparency/ accountability or vote with your feet.
💵 Affordability: Advocate for affordable pricing of sustainable products.
By strategically pursuing these alliances, companies can address pricing, cost, and food security issues across multiple audiences and cultures while accelerating progress toward a more equitable and sustainable food system.
What are your thoughts on the future of strategic alliances in food and beverage? How do you see them evolving?
by Andrew Soteriou
#StrategicAlliances#FoodAndBeverage#Sustainability#SDGs#GoodGrowth
Managing Partner | CEO/COO/CCO | Global Retail & Commercial Excellence Transformations | Building Conditions For Sustained Economic Growth | Speaker & Author: Smart Growth | 200HR Yogi
Danish brewer Carlsberg Group is set to acquire UK-based soft drinks maker Britvic plc for £3.3 billion ($4.2 billion). This strategic move marks a significant shift in the global beverage landscape, with far-reaching implications for leadership, trade partners, and consumers.
🕒 2 Minute Briefing:
• Carlsberg's offer of 1,315 pence per share won Britvic's approval.
• Creates Carlsberg Britvic, spanning alcoholic and non-alcoholic categories.
• Britvic's portfolio includes Robinsons, Tango, J2O, and licensed PepsiCo brands.
📊 Implications for C-Suite:
1. Portfolio Diversification: Access to growing non-alcoholic market.
2. Synergy Realisation: £100 million annual cost savings over 5 years.
3. Enhanced Growth: Strengthened position in Western Europe.
4. Strategic Partnerships: Reinforced PepsiCo relationship.
🏪 Trade Partner Considerations:
1. Larger Brand Portfolio: Broad offering across categories.
2. Supply Chain Optimisation: More efficient distribution.
3. Innovation Pipeline: Accelerated product development.
👥 Consumer Impact:
1. Short-term Stability: No immediate changes expected.
2. Future Innovations: Potential for cross-category innovation.
3. Pricing: Potential consumer/ trade squeeze on pricing in the future.
4. Loyalty: Careful brand identity management needed
💰 Pricing and Consolidation Implications:
• Increased pricing power across categories.
• Cost savings may not translate to lower consumer prices.
• Potential reduced competition in certain product categories.
• Greater leverage in retailer negotiations.
• Accelerated product innovations may justify premium pricing.
• Long-term consolidation may lead to gradual price increases.
This consolidation highlights the trend of market concentration in CPG, with potential long-term implications for competition, pricing dynamics and consumer choice in the UK beverage market.
#Strategy#Beverages#MergersAndAcquisitions#CPGStrategy#Consumer#Brands#Competitiveness#CostOfLiving#Pricing#Inflation#PurchasingPower#RevenueGrowth
Citations:
[1] https://lnkd.in/ea_MvuHj
[2] https://lnkd.in/egWUmJGV
[3] https://lnkd.in/ewKFMKZc
[4] https://lnkd.in/eKSfBYfs
Managing Director at Greenwich Capital Group and Townsend Street Capital I Food & Beverage / Consumer Products I Investment Banking I Private Equity and Venture Capital Investor
𝗣𝗿𝗶𝗰𝗲 𝗖𝘂𝘁𝘀, 𝗡𝗼𝘁 𝗛𝗶𝗸𝗲𝘀 𝗳𝗼𝗿 𝗢𝗻𝗰𝗲.
With inflation impacting consumer spending, food and beverage companies are under pressure to rethink pricing strategies to stay competitive. General Mills recently made a bold move by cutting prices, leading to a spike in demand as more shoppers choose to eat at home.
Their CEO highlighted that eating at home is now 𝘧𝘰𝘶𝘳 𝘵𝘪𝘮𝘦𝘴 𝘤𝘩𝘦𝘢𝘱𝘦𝘳 than dining out—a key factor in their strategy. But with softer demand across the market, brands face a challenging road ahead.
𝗪𝗵𝗮𝘁 𝗶𝘀 𝘆𝗼𝘂𝗿 𝗽𝗿𝗶𝗰𝗶𝗻𝗴 𝘀𝘁𝗿𝗮𝘁𝗲𝗴𝘆 𝗶𝗻 𝘁𝗵𝗶𝘀 𝗲𝗻𝘃𝗶𝗿𝗼𝗻𝗺𝗲𝗻𝘁? Learn more about General Mills’ approach here: https://lnkd.in/gJAZs2ag
Molson Coors Beverage Company Bullish on Beer as AB InBev Cedes Market Share.
Molson Coors Continues to Soar: Amidst industry shifts, Molson Coors' CEO, Gavin Hattersley, expressed confidence in the company's sustained growth during the quarterly earnings call. The maker of Coors Light saw a remarkable 9.3% net sales growth in 2023 and a 6% revenue increase compared to the previous quarter. This consistent performance has surpassed Wall Street's earnings predictions, signaling the company's ability to adapt to changing consumer preferences. What's particularly noteworthy is Molson Coors' significant increase in marketing spending by 19%, which has allowed the company to effectively capitalize on the weaker position of its rival, AB InBev. This strategic maneuver, coupled with the ballooning sales of beer brands such as Coors Light, Coors Banquet, and Miller Lite, has propelled Molson Coors to new heights in the beer market.
Read the full article here: https://bit.ly/3P5iBKl#FlavorWiki#MolsonCoors#BeerMarket#ConsumerPreferences
Operations Leader
7moSend! Thank you for the insights.