NetworkNewsWire
Editorial Coverage: Soda sales over the past 15 years have
fallen significantly, leaving major beverage brands looking for
alternative ways to expand their portfolios to capture a portion of
the various new craft beverages that consumers drink each day. Many
of these large companies are opting to go the M&A route,
recognizing the significant impact that smaller specialty brands in
the space might have on their existing offerings. Companies such as
The Alkaline Water Company (NASDAQ: WTER) (CSE: WTER)
(WTER
Profile), one of the fastest-growing enhanced water
companies in the industry, could be an attractive option. In the
meantime, Keurig
Dr. Pepper Inc. (NYSE: KDP) recently announced the
launch of Brew the Love(R) Collaborations, an offering from Keurig,
one of its premier brands, while Celsius
Holdings Inc. (NASDAQ: CELH), maker of the leading
global fitness drink, Celsuis(R), has unveiled Jackfruit, its
latest addition to a diverse lineup of flavors. Another new
beverage offering comes from Anheuser-Busch InBev (NYSE: BUD),
which has unveiled its first zero alcohol brew, Budweiser Zero. And
PepsiCo
Inc. (NASDAQ: PEP) is being creative with its approach
to new offerings — the company has teamed up with Red Lobster to
create new ways to enjoy seafood alongside the taste and variety of
PepsiCo products.
- Volume sales in the carbonated soft drink have declined for 15
consecutive years.
- Specialty and niche market beverage makers offer fast entry to
capture new market share.
- The Alkaline Water Company has the earmarks of a prime
candidate for a strategic M&A move by one of the big
brands.
- WTER has delivered record growth over the past quarter with all
indications pointing to continued growth moving forward.
Click here to view
the custom infographic of The Alkaline Water Company
(NASDAQ: WTER) (CSE: WTER)
editorial.
Desire for Health, Variety, Lead to Soda’s
Decline
A recent “Beverage Industry” article noted that volume sales in
the carbonated soft drink category have seen sales decline for 15 consecutive years. “Today’s
consumers want both variety and healthier refreshment, trends which
have negatively impacted carbonated soft drinks,” said Gary
Hemphill, managing director of research for New York-based Beverage
Marketing Corporation.
In the same article, Jacqueline Hiner, industry analyst for Los
Angeles-based IBISWorld, noted that “the most prominent driver of
this trend is the higher number of health-conscious individuals in
conjunction with rising per capita disposable income. Rising
disposable income levels enable consumers who enjoy the taste of
carbonated beverages to splurge on craft beverages that are made
with natural ingredients. However, growth in this market is
expected to be tempered by the continued increase in health
consciousness driving consumers to drink water.”
As Hiner noted, while soda sales are down, sales of bottled
water globally are soaring. Pre-pandemic, Americans spent $18.5
billion on bottled water each year, and that was projected to rise
to $22 billion by the end of 2024. According to a report from
industry expert Grand View Research, the global bottled water
market is expected to reach $215.12 billion by
2025 — posting a compound annual growth rate of 7.4% over
the next six years. These numbers could go even higher as
health-conscious consumers around the world choose water over soda.
Large soda makers may want a piece of that action.
A Prime Candidate
With those numbers staring them in the face, savvy soda
companies are looking for strategic ways to strengthen the bottom
line. One path that many of the larger companies are taking is
mergers and acquisitions. Just a few examples include Coca Cola’s
acquisition of Vitamin Water for $4.2 billion and Reignwood’s
$105-million acquisition of Voss. Dr. Pepper has taken the M&A
route too, acquiring Core for $525 million and Bai for $1.2
billion.
The Alkaline
Water Company (NASDAQ: WTER) (CSE: WTER) appears to be a
prime target for this type of strategic consolidation. One of the
fastest-growing enhanced water companies in the country, WTER has
posted an astonishing 62% compound annual
sales growth rate over the last five years. The company
reported record annual revenue of
$41.1 million as a health-conscious world has turned away from
sugary soft drinks to bottled water, particularly water that’s been
enhanced in some way.
The pandemic has only enhanced the company’s appeal. While other
beverage companies struggled to put product on the shelf, The
Alkaline Water Company delivered record growth over the past
quarter. The company reported record sales in March ($6.2 million)
and April ($7.1 million), representing year over year growth of
114% and 171% respectively.
Alkaline88 was one of the few water brands able to deliver
during the peak “pantry-stuffing” period, resulting in an estimated
30–40% of new households trying Alkaline88 for
the first time—the largest sampling program in the company’s
history. In fact, a recent Nielsen report ranked Alkaline88(R) as
the 10th best-selling value-added water and the third
fastest-growing, top-ten, value-added water in the country during
the 13 weeks ending May 16, 2020.
Top Brand in Value-Added Water Category
The Alkaline Water Company looks likely to continue its upward
trajectory.
Alkaline88 remains one of the top-selling brands in the
value-added water category. According to recent trade data,
Alkaline88 reported double-digit
growth despite the value added water category contracting 8.2%
for the four-week period ending April 18, 2020.
In addition, the company’s track record of recognizing and
meeting consumers’ needs looks strong. Last year, the company
launched A88 Infused(TM) to meet consumer demand for flavor-infused
products. A88 Infused flavored water is available in seven
all-natural flavors, with new flavors on their way.
Another point worth noting is the company’s strong commitment to
the environment. The company kicked off 2020 with the announcement
that its flagship brand, Alkaline88, was available in 500ml, single-serving aluminum
bottles. “Consumers are demanding more eco-friendly choices,
and we are excited to now offer a refillable, resealable, and 100%
recyclable option,” said company president and CEO Richard A,
Wright. “This is yet another step that the company is taking toward
a more renewable future, and we remain committed to providing
smarter and innovative packaging solutions for the environmentally
conscious consumer.” The company has proven incredibly adept at
identifying and delivering on consumer demands.
Other Catalysts for Growth
Not waiting on the majors, The Alkaline Water Company is eyeing
multiple other catalysts for continued explosive growth this year,
including its entrance into the hospitality space and expansion of
its e-commerce presence to meet new consumer buying habits.
The company recently announced that its products will be
available in more than 15,000 new retail locations, bringing total
availability to an estimated 70,000 retail stores in all 50
states. In addition, the company has identified an additional
40,000 retail locations for further expansion in fiscal 2021.
With a solid sales pipeline in new and existing markets,
Alkaline’s robust lineup of innovative products, and growing
momentum in its lifestyle brands, The Alkaline Water Company may be
a tremendous opportunity for investors interested in a high-growth
company that has a strong track record of delivering on its
promises. Of course, becoming a target for the majors would be an
added bonus.
Opportunities for Growth, Success
The beverage industry has certainly taken a hit from wellness
and health trends as well as the global pandemic, forcing large
companies in the space to make significant moves to hold and expand
market share.
Through Keurig(R), one of its premier brands, Keurig
Dr. Pepper Inc. (NYSE: KDP) unveiled a new platform: Brew the Love®
Collaborations, designed to highlight some of the brand’s biggest
fans through partnerships to design their own collection. For its
first-ever collaboration, Keurig partnered with renowned potter and
designer Jonathan Adler on a limited-edition, beautifully designed
K-Mini(R) Brewer with matching mug, which is available at Target
and online. In addition, a K-Cup(R) Pod Canister will be available
later this year.
Celsius
Holdings Inc. (NASDAQ: CELH) has a new beverage choice
on the market. Jackfruit, a new
flavor available in the company’s Celsius Heat(TM) line, has a
tropical flavor with a burst of sweetness and a tangy twist. A
carbonated performance energy drink, Celcius Heat is packed with
2,000 mg of L-citrulline and 300 mg of caffeine, as well as the
Celsius(R) proprietary blend. “Jackfruit is another great-tasting
option that further expands our line of flavors, and we expect it
will entice fans and new consumers alike,” said Celsius Holdings
CEO John Fieldly. “It is the perfect way to launch our new 16 oz.
Heat can packaging, which will appeal to a broader audience in the
rapidly expanding performance energy category.”
Anheuser-Busch InBev (NYSE: BUD) is
also adding an option to its product line. Earlier this year, the
company unveiled its first
zero-alcohol brew, Budweiser Zero. Developed and co-founded in
partnership with NBA legend, entrepreneur and advocate Dwyane Wade,
this zero-sugar, 50-calorie beverage offers a refreshing,
full-flavored taste. The alcohol-free beer category is a rapidly
evolving space with exciting growth opportunities. Budweiser has
more than a century of brewing heritage and a legacy of
category-setting innovation, making it a perfect brew to provide
drinkers with the freedom of choice.
PepsiCo
Inc. (NASDAQ: PEP) is also making the most of
prestigious partnerships. PepsiCo is working with Red
Lobster to leverage their well-known food and beverage brands
in the creation of a variety of craveable new menu items, starting
with the DEW(R) Garita, the first official MTN DEW(R) cocktail. The
DEW Garita pairs perfectly with Red Lobster's Cheddar Bay
Biscuits(R). Made using a top-secret recipe, the new cocktail will
be available at select Red Lobster restaurants in September
and will be available nationwide by the end of 2020.
The news isn’t all bad for those involved in the beverage world.
Smart companies are making strategic decisions to move in
directions that make the most of opportunities for growth and
success.
For more information about The Alkaline Water Company, please
visit The Alkaline
Water Company (NASDAQ: WTER) (CSE: WTER).
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