The U.S. beverage sector experienced mixed trends in 3Q24, as the impact of Hurricane Milton shifted consumption patterns. Carbonated soft drinks (CSDs) led the charge, supported by robust growth from Coca-Cola (KO) and PepsiCo (PEP), with sales increasing by 7.6% and 8.0% respectively. Energy drinks, while still performing well, saw a slight deceleration, with brands like Red Bull outpacing competitors in both volume and dollar sales.
Spirits, however, struggled, with significant declines in volume as Hurricane Milton disrupted on-premise sales across affected regions. Hard seltzers and ready-to-drink beverages also encountered challenges, although selected brands managed slight improvements. Beer, particularly Constellation’s Modelo (STZ), maintained its momentum, showing resilience against headwinds with modest sales gains.
Market Overview:- CSD sales rose +7.6% for L4W vs. +8.0% QTD, with Coca-Cola and PepsiCo outperforming.
- Beer volumes remained stable, with Modelo showing resilience and steady growth.
- Energy drinks grew 2.9% for L4W, with Red Bull outperforming Monster (MNST) in recent weeks.
- Hurricane Milton impacted spirits sales, particularly in on-premise channels.
- Modelo continued to capture market share within the beer segment.
- Red Bull posted a 6.2% increase, while Monster saw a slight decline.
- CSD growth is expected to continue, backed by strong brand presence.
- Spirits sales may recover as affected areas resume normal operations post-hurricane.
- Energy drinks are positioned for steady demand with new marketing initiatives.
As the beverage sector anticipates recovery in the spirits category, brands are also closely monitoring consumer behavior shifts influenced by macroeconomic factors and competitive pricing. The continued strength in CSDs and beer, coupled with the steady interest in energy drinks, suggests potential growth opportunities for 4Q24. Investors remain watchful of potential regulatory impacts and supply chain considerations as the industry adapts to both seasonal and economic changes.
The sector's outlook remains cautiously optimistic, hinging on the pace of recovery in spirits and broader consumption trends. Market leaders such as Coca-Cola, PepsiCo, and Constellation Brands are likely to sustain their trajectories, provided they capitalize on consumer preferences and mitigate challenges in their respective categories.
