Wells Fargo Polls Wholesalers on Beer Outlook

Wholesalers note price gaps are narrowing, and competition is brewing from wine and spirits.

Wells Fargo conducted a survey of beer wholesalers that collectively service 150,000+ retail outlets to gauge current industry trends.

The survey revealed key trends including:

(1) Import/craft cans are hot — a potential opportunity.

(2) The “entire beer industry faces headwinds from Wine & Spirits. Constellation Brands (STZ) appears to be best positioned” per several wholesalers;

(3) Most wholesalers expect industry consolidation to continue, particularly in craft beer, and many believe a Molson Coors Brewing Co. (TAP)/Heineken USA (HUSA) partnership is likely;

(4) Pricing gaps are narrowing, driving trade-ups, which should benefit STZ’s premium portfolio; and

(5) the majority of wholesalers surveyed (63%) believe that STZ is best positioned ahead of the peak summer selling season with its exceptional momentum expected to continue.

Wholesalers reported that STZ growth “will continue for the foreseeable future.”

Wells Fargo Senior Analyst Bonnie Herzog, noted that, in particular, wholesalers are excited about:

(1) Corona Premier, a strong challenger to Mich. Ultra;

(2) Modelo, which “shows no signs of slowing down”; and

(3) Pacifico, which “has a lot of runway” and “will emerge as the next up and coming Mexican brand.”

Wholesalers surveyed expect STZ’s beer sales to grow +9% this year, and importantly indicated they expect STZ depletions to grow at 7% over the next three years.





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