Hard Seltzer or Budweiser?

With this week’s fast and furious weakness in US and global stock markets – primarily based on spread of the Coronavirus – the next “shoe to fall” likely will be slower short-term economic growth in parts of the US and definitely longer, more pronounced slow-downs in China. These types of slowdowns do happen as a part of market cycles. This situation also got me to thinking about how economic slowdowns, often over decades, have benefited beer and alcohol sales.

First a bit more context:

• Apple, one of the most significant manufacturers in the world, already released a warning of lower sales in the current quarter related to production delays of iPhone components sourced from China.
• There is little doubt that there will be at least a temporary slow-down in other high-profile manufacturing processes (electronics, even automobiles) worldwide as the number of cities and places affected by the coronavirus increases.

Not trying to minimize in any way the seriousness of the virus, this potential for market weakness drew attention to a statistic that could “take the edge off” of the panic we are experiencing: it seems that Hard Seltzer has recently over-taken Bud Light in terms of pace of growth in market share! Yes, White Claw, owned by Mike’s Hard Lemonade, is for real. Budweiser, to counter this trend, recently rolled out a Bud Light Seltzer (as if Bud Light does not already taste like seltzer).

Meanwhile, AB InBev, the owner of Budweiser, says that sales overall in the first quarter of the year will slow slightly. Partly due to overall hard seltzer trends and partly due to slow downs related to the coronavirus. (Note that Bud Light is still by far the Number One selling beer in the world.)

Amidst this cycle, if you are looking for a refreshing beverage to take your mind off the markets and the 24/7 news feed, it may be time to try a White Claw or your favorite brand of hard seltzer.

Most important – please do not hesitate to call me to talk through any aspects of your portfolio, or the market action experienced this past week and anything else affecting your goal setting for 2020 and beyond. That is what I am here for.