U.S. beverage sales cooled off but energy drinks, tequila and prepared cocktails are still hot

U.S. beverage sales at retail outlets showed a decelerating trend over the last four weeks, according to the latest batch of Nielsen data. Non-alcoholic beverage, combined beer, wine, and spirits dollar sales growth also all slowed in comparison to the 12-week trendline, noted TD Cowen analyst Robert Moskow. Of note, price increases have cooled off and promotional activity in some beverage categories is above last year's levels.

For the four-week period ending on March 9, beverage categories showing a drop in sales compared to a year ago included sports drinks, bottled water, ground coffee, and hard seltzer. The best-performing categories for the tracking period were energy drinks (+3.1%), tequila (+9.5%), and prepared cocktails (+25.7%).

In beer, Anheuser-Busch InBev (BUD) saw its market share decline trend improve over the last four weeks, while Constellation Brands (NYSE:STZ) outperformed peers again. Anheuser-Busch did benefit again from strong Cutwater brand sales to help make up the beer drop. In the spirits category, Brown-Forman (BF.A) (BF.B) saw its sales decelerate over the four weeks, while Diageo (DEO) saw sales trend improve. Coca-Cola (NYSE:KO) took more market share from PepsiCo (PEP) and Keurig Dr Pepper (KDP) in carbonated soda, although sales fell 1.0% Y/Y over the four-week tracking period. In the energy drink category, Celsius Holdings (NASDAQ:CELH) saw its sizzling sales growth move to +67% Y/Y over the 4-week period from +77.7% over the 12-week period. However, Moskow highlighted that Celsius' (CELH) Nielsen numbers are still trending above the Q1 consensus estimate of analysts. Celsius Holdings (CELH) also continues to nab market share from Monster Beverage (MNST) and Red Bull.

Packaged coffee saw a 2.3% Y/Y decline over both the 4-week and 12-week tracking periods. That softness will be a factor for J.M. Smucker (SJM) and Keurig Dr Pepper (KDP), and to lesser degrees Starbucks (SBUX), Kraft Heinz (KHC), Dunkin Donuts, and Krispy Kreme (DNUT).

Within the broad beverage sector, TD Cowen has Outperform ratings on Anheuser-Busch InBev (BUD), Brown-Forman (BF.A), Constellation Brands (STZ), Molson Coors (TAP), PepsiCo (PEP), Celsius Holdings (CELH), and MGP Ingredients (MGPI). Meanwhile, the beverage stocks with the highest Seeking Alpha Quant rating grades are National Beverage Corp. (FIZZ), Coca-Cola (KO), Molson Coors (TAP), and Coca-Cola FEMSA (KOF).