NetworkNewsWire
Editorial Coverage: With sales of carbonated drinks steadily
declining for more than a decade, major players in the space are
eager to find ways to expand their portfolios into the booming
craft beverages and bottled water sectors. One way to accomplish
that may be the M&A route, with companies such as The
Alkaline Water Company (NASDAQ: WTER)(CSE: WTER) (WTER
Profile), one of the fastest-growing
enhanced water companies in the industry, looking like an
attractive option. In the meantime, Coca-Cola Company (NYSE: KO) is
making strides on its previously announced Beverages for Life
strategic transformation. New Age
Beverages Corporation (NASDAQ: NBEV) has entered into
a definitive agreement to acquire ARIIX, together with four
additional companies in the e-commerce and direct-selling channels.
Nestle
(OTC: NSRGY) is sharpening its water focus on
international, premium mineral and functional brands while
exploring strategic options for parts of its North American
business. And Monster
Beverage Corporation (NASDAQ: MNST) is reporting
sequential improvement in sales during the latter-half of the
quarter after seeing a dip in sales earlier in the quarter.
- Sales in the carbonated soft drink category have been sliding
for 15 years.
- New market share may be available through specialty and niche
market beverage makers.
- Major players may see The Alkaline Water Company as an
attractive M&A candidate.
- Reporting record growth over the past quarter, WTER is eyeing
continued success moving forward.
Click here to view
the custom infographic of The Alkaline Water Company
(NASDAQ: WTER) (CSE: WTER)
editorial.
Trends Impacting Soft Drink Sales
Recently, a “Beverage Industry” article reported that volume
sales in the carbonated soft drink category have declined 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 worldwide are rising. Pre-pandemic, Americans spent $18.5
billion on bottled water annually; that number was projected to
rise to $22 billion by the end of 2024. According to 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
end up even higher as health-conscious consumers opt for water over
soda.
An Enhanced Appeal
Major beverage makers can’t ignore what looks like the future of
beverages. As these large companies evaluate the forecast numbers,
savvy soda companies are looking for strategic ways to get in on
the action. One path that many of the larger companies are pursuing
is mergers and acquisitions. 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) could be a prime
target for any company considering this type of strategic
consolidation. One of the fastest-growing enhanced water companies
in the country, WTER has reported an astonishing 62% compound annual sales growth rate over the last
five years. The company posted record annual revenue of $41.1 million as
health-conscious consumers have turned away from sugary soft drinks
to bottled water, particularly water that’s been enhanced.
The pandemic has only boosted the company’s appeal. While other
beverage companies struggled to put their drinks 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.
WTER 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 quenching their thirst with
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.
A Strong Track Record
The Alkaline Water Company’s upward trajectory appears likely to
continue.
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 identifying and
meeting consumers’ needs is well documented. 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 consideration is WTER’s strong commitment to the
environment. The company began 2020 by unveiling its flagship
brand, Alkaline88, 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.
Strong Indicators for Continued Growth
The Alkaline Water Company has other strong indicators for its
continued growth moving forward, including its entrance into the
hospitality space and expansion of its e-commerce presence to meet
new consumer buying habits.
The company recently reported that its products will be
available in more than 15,000 new retail locations; with those new
numbers, WTER products can now be found in an estimated 70,000
retail stores in all 50 states across the country. In
addition, the company has identified an additional 40,000 retail
locations it is eyeing 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
Health and wellness trends have certainly made a dent in the
beverage industry. The downward trend appears to be further fueled
by the global pandemic. Large companies in the space are looking
for ways to maintain and even expand market share.
Coca
Cola Company (NYSE: KO) recently announced that plans
to streamline its
beverage lineup and modernize its marketing have been escalated
by the COVID-19 pandemic. The company’s Beverages for Life
strategic transformation was well underway before the pandemic, but
the global crisis is speeding the changes. The company outlined
plans to drive this strategy through a more networked global
organization led by nine operating units, five marketing category
leadership teams and a new Platform Services organization.
Health and wellness is the focus of the new global firm created by NewAge
Inc (NASDAQ: NBEV). The omni-channel
Colorado-based healthy and organic products company and ARIIX have
agreed to create a leading health and wellness firm with a unique
route to market, depth in the e-commerce and direct-selling
channels, a team of more than 400,000 independent representatives,
and a portfolio of healthy products unrivaled in the industry.
Other companies involved in the endeavor include Zennoa, LIMU,
MaVie and Shannen; the combined companies are creating a global
firm with estimated pro forma revenues in excess of $500 million
across more than 75 countries worldwide.
Nestle
SA’s (OTC: NSRGY) Board of Directors approved a new strategic direction for its waters
business. The company will sharpen its focus on its iconic
international brands, its leading premium mineral water brands, and
invest in differentiated healthy hydration, such as functional
water products. The board also confirmed its intent to explore
strategic acquisitions to grow in this category, while pledging to
make its entire global water portfolio carbon neutral and replenish
associated watersheds by 2025.
Despite COVID-19, Monster
Beverage Corporation (NASDAQ: MNST) has announced that all of the company’s flavor
manufacturing facilities, co-packers, warehouses and shipment
facilities are operating. Safety precautions have been instituted,
which were developed and adopted in line with guidance from public
health authorities and professional consultants. While Monster’s
second-quarter net and gross sales were adversely impacted by
pandemic, the company is seeing an improvement in sales as certain
countries and states begin to gradually re-open.
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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