- Sales of the beverages grew 164.3% in the last four weeks, according to data by Nielsen.
- UBS' Sean King told Markets Insider the top five beer stocks that are best exposed to gain on the hype.
- Read more on Markets Insider.
Hard seltzer is taking the US by storm.
Sales of the canned fizzy beverages from brands like Whiteclaw, Truly, and Bon & Viv have boomed over the last year.
The category, currently worth $550 million, could grow to reach $2.5 billion by 2021, said Sean King, an analyst at UBS. That implies an annual growth rate of 66% and a jump in consumption from 14 million cases in 2018 to 72 million cases in 2021.
"The numbers I think are surprising to everyone in the market," King said in an interview with Markets Insider. The strong growth of the category has shown investors that it's durable and not just a flash in the pan, he added.
Hard seltzer has converted beer, wine, and vodka drinkers. According to Nielsen data, hard-seltzer sales grew 164.3% in the last four weeks and roughly 200% over the past year.
Whiteclaw is leading the category with a 50% market share, and sales of the spiked seltzer were up 223% in the last four weeks. Whiteclaw is owned by Mark Anthony, a private company also responsible for Mike's Hard Lemonade.
Even though the spiked-seltzer market leader is privately held, King's analysis shows that hard seltzer presents a big opportunity for big beer and beverage companies that are releasing their own brands to compete. They could see a $200 million opportunity for each 10% share of the category they're able to capture.
Here are the top companies that are exposed to the hard seltzer trend bubbling up, according to King.
1. Anheuser- Busch InBev (BUD)
AB InBev owns the spiked seltzer brand Bon & Viv, which has seen a sales increase of 28% in the last four weeks according to Nielsen data.
2. Constellation Brands (STZ)
Constellation, which is the owner of beer brands such as Modelo and Corona, has a line of flavored malt beverages that are meant to compete with hard seltzer. The line, Corona Refresca, has a variety of fruit flavored beverages. It could boost Constellation's earnings per share by 1.3% over the next 3 years, King said.
3. Boston Beer Company (SAM)
Boston Beer Company is responsible for Truly Hard Seltzer. King estimates that Boston Beer could see 5.9% EPS boost over the next 3 years from the Truly brand.
4. Molson Coors (TAP)
Henry's Hard Sparkling
Molson Coors owns the brand Henry's Hard Sparkling water, which boasts zero sugar in its cans. It could boost Molson Coors' EPS by 0.9% over the next 3 years, according to King.
5. Diageo (DGEAF)
Leanna Garfield/Business Insider
Diageo is the company behind Smirnoff, which also has a line of spiked seltzer. Its spiked-seltzer sales increased 86% over the last four weeks, according to Nielsen data.
- Inside one of the oldest and most expensive mansions in Charleston, which is selling for $15 million and was once owned by Abraham Lincoln's granddaughter
- This tiny NYC penthouse costs $1,843 per square foot, but every detail was designed so it 'functions like one twice its size.' Take a look inside.
- With more than 100 million sold, the PS4 is the most popular game console in the world these are its 30 best games