Beverage companies largely offer a selection of consumer staples that remain in demand even when global industries are devastated by disaster or recession. Not only are beverages an ongoing necessity, but they typically offer big profit margins and marginally forecastable trends for both soft and hard drinks. Beverages are recession-proof but is now the right time to invest? Let’s take a closer look at the current state of alcoholic and non-alcoholic markets.
The Resilience Of Beverages, Proven
Nielsen reporting shows that non-alcoholic beverages have risen in value by more than $7 billion in four years. During the height of the pandemic, the online alcohol sales platform Drizly saw a 300% increase in its sales. Furthermore, alcohol consumption is forecast by the International Wines and Spirits Record to grow by 31% by 2024, and as we all saw, if stores physically shut down, people simply switch to buying online. Keen investors will certainly find potential in several beverage stocks.
Top 3 Beverage Industry Stocks
Here are three of the most promising beverage stocks based on leading global analyst opinions and the current market movement, momentum, and growth observed.
The Coca-Cola Co (NYSE: KO)
No discussion concerning beverages would be complete, whether about stock investing or otherwise, without talking about Coca-Cola. The Coca-Cola Co is emerging from the pandemic strong and found itself trading just below its 52-week high by the end of January 2022. Not only has its own umbrella of brands been performing very well, but Coke has been snapping up alternative beverages as well, as can be seen in its recent large investment in Monster Beverage. Sales may have lagged during the pandemic, but all this did was prove the beverage giant’s stability. KO is, almost always, a good investment.
Britvic (LSE: BVIC)
Britvic, the United Kingdom’s second-biggest soft drinks company, is set for a good year. Britvic’s distribution network sources products from PepsiCo, and the company owns several of its own large drink brands like Robinson’s, Tango, and J20. Britvic is the United Kingdom’s second-biggest soft drinks company. Its shares are trading at approximately sixteen times their earnings, making them a bargain compared to similar industry investments. The contract with Pepsi, 7Up, and Mountain Dew guarantees sole distribution in the UK until 2040. That’s a lot of growth to come as markets normalise and there’s no sign of Britvic’s momentum slowing down yet.
J.M. Smucker Co.
The J.M. Smucker Co. emerged as one of the S&P 500 best-performing stocks in 2021. The dividend yield fell at a reasonable 2.76%, opening up the opportunity for future dividends in addition to the prospect of a rapidly rising stock price. Even though SJM stock attained a 52-week high of $144.89 on January 10th, net sales are up by a full percent. That’s roughly 24% growth in a single year. Prospective investors should keep in mind that it’s highly likely for the price momentum to be sustained in 2022 as J.M. Smucker Co is closing a deal to sell its natural and organic beverage and grains companies to Nexus Capital Management for about $110 million in the third quarter.
Beverage Industry Risks And Outlook
Despite the largely favourable investment environment, one has to keep risk in mind. The beverage market is dominated by large brands, and the beverage industry has been around for a very long time. This makes any potential earnings slow and steady. New brands are volatile, and gains are generally slower than other industries. Emerging energy drinks and other drinks with health-based claims or alternative drink types do still offer the potential for rapid returns on investment, but overall, beverage stocks are extremely reliable once you’ve evaluated all of your options carefully.
Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only.