Prepare For A Summer Beverage Boom: Which Companies Are Worth Considering?

As summer arrives and the heat becomes more intense, who doesn't love to enjoy a cold beverage? It not only refreshes and cools you down but also provides hydration and nutrition for your body.

Investing in your own summer vacation is possible by considering investing in your favorite beverage company and receiving a portion of the income from your own contribution.

The beverage industry peaks in summer may due to several reasons:
The rising temperature causes people to sweat more and require more water to replenish dehydration;
Summer is peak travel season and people are more likely to purchase convenient drinks while on the go;
Many families hold outdoor barbecues and outdoor gatherings, which require beverages.

According to Polaris Market Research, the global energy drink market was worth US$45.8 billion in 2020 and is expected to grow at a compound annual rate of 8.2% and reach US$104 billion by 2031.

In terms of sales of non-alcoholic beverages, data released by the American Beverage Association indicates that it has been steadily increasing over the years.

Source: zippia

You can find potential investment opportunities in the following companies:

Source: moomoo app. Data as of June 24, 2023. Market cap is in U.S. dollar

The Coca-Cola Company is a leading global beverage producer, recognized for its most famous brand, Coca-Cola, and other popular brands like Sprite, Fanta, Gatorade, Dasani, and more that have won consumers' hearts. The company launched innovative products such as Coca-Cola Zero and Coca-Cola Light in the early 2000s to capture increasing demand among health-conscious consumers, contributing to the rise of its stock price.

Business segment: Coca-Cola Company made US$43 billion in revenue in 2022 and earned US$9.57 billion in profit. The biggest market for their products was North America, which contributed US$15.67 billion or 36.43% of their total revenue.

Pepsi-Cola is PepsiCo's most renowned brand, known for its carbonated beverage with a robust American flavor that is favored by consumers worldwide. Additionally, the company offers an extensive range of categories, including carbonated beverages, juices and juice drinks, teas, coffee drinks, energy drinks, water, and sports drinks. With operations spanning over two hundred countries and regions, PepsiCo serves billions of consumers globally.

Business segment: PepsiCo Company made US$86.39 billion in revenue in 2022 and earned US$8.98 billion in profit. Most of their revenue, 30.34%, came from selling PepsiCo Beverage North America, which made US$26.21 billion. The biggest market for their products was the United States, which contributed US$49.39 billion or 57.17% of their total revenue.

From early 2000 to October 22, 2019, the company's stock price surged by 624 times, making it the highest-returning US stock of the past 20 years. This means that if you invested US$100 in Monster Beverage stock in 2000, your shares would be worth US$62,444 at the end of 2019.

Business segment: Monster Beverage Company made US$6.311 billion in revenue in 2022 and earned US$1.192 billion in profit. Most of their revenue, 92.43%, came from selling Monster Energy Drink, which made US$5.83 billion. The biggest market for their products was the United States and Canada, which contributed US$4.12 billion or 65.21% of their total revenue.

Vita Coco is a beverage company specializing in producing coconut water, coconut juice, coconut milk, and other coconut-based beverages. Vita Coco Coconut Water is marketed as a healthy drink due to its natural ingredients, low-calorie content, and high levels of electrolytes and vitamins. These attributes have made them increasingly popular among consumers. Additionally, the company has expanded its product line to include other flavors of coconut water like grapefruit coconut water, orange coconut water, and more.

Business segment: Vita Coco Company made US$427.79 million in revenue in 2022 and earned US$7.81 million in profit. Most of their revenue, 73.53%, came from selling Vita Coco Coconut Water, which made US$314.53 million. The biggest market for their products was the United States, which contributed US$352.73 million or 82.45% of their total revenue.

Although the beverage industry has a bright future, it still faces many challenges.

The most pressing obstacle is intense competition due to the presence of well-established brands such as Coca-Cola and Pepsi. New entrants must create innovative and unique products and allocate hefty amounts of money on promotion and marketing to secure a share of the market.
Moreover, the rising cost of aluminum can raw materials could impact companies' profits. To cater to consumer demands, the beverage industry needs to continuously investigate more environmentally friendly and sustainable packaging and production methods.

Do any of these companies or their products mentioned resonate with you? Feel free to drop their tickers in the comments section.