There are some gentle gains across the beer sector after Anheuser-Busch InBev (BUD +1.1%) and SABMiller (OTCPK:SBMRY +2.2%) formalize their merger plan.
Heineken (OTCQX:HEINY +1.6%), Molson Coors (TAP +0.7%), Ambev (ABEV +0.9%), Carlsberg (OTCPK:CABGY +5.9%), Craft Brew Alliance (BREW +1.8%), and Boston Beer (SAM +0.2%) are showing increases of varying degrees.
Most analysts think the beer giants will make the necessary concessions to appease regulators in the U.S. and China. On SA, Chris DeMuth says the deal will extend the reach of the best operators in the business.
Molson Coors in particular is widely identified as a winner in the deal through its pickup of a full stake in MillerCoors. Still to play out is what beer company makes a bid for SABMiller's position in CR Snow in China. China Resources Beer Holdings (OTCPK:CRHKY, OTC:CRHKF) is the 51% owner of the alluring JV.
Craft soda is starting to become a trend to watch closely, according to industry insiders.
Though still accounting for only ~1% of the total U.S. soda market, major retail chains have increasingly been willing to bet on local craft brands in store aisles.
The craft craze is old news for the beer industry where coming-of-age millennials buy craft/local beers at a 50% higher rate than brand-loyal older generations. Fading stars such as Budweiser and Bud Light are testament to the impact of the millennial paradigm.
The craft influence in coffee hasn't been lost on Starbucks which has strategically deployed trucks on college campuses in an effort to win over students.
Despite the progressive reputation of Starbucks, analysts think new upstarts such as Craft (subscription) and Cups (app) have a shot of gaining influence with the Indie-minded millennial crowd on "customization" and pricing.
What to watch: An increase in M&A activity in the beverage sector is expected as major companies strategically pick off more local craft brands to incubate.
A unit of Boston Beer Co. (SAM) has acquired the rights to the Coney Island Brand from Shmaltz Brewing Company.
Under the terms of the deal, "Shmaltz will produce some of the beer to be sold under the Coney Island brand name" and Shmaltz founder Jeremy Cowan will advise the SAM unit on matters related to the brand for up to two years. (8-K)