GLOBAL: Moody's 'positive' over drinks sector

An expected easing of commodity prices and growing consumption in emerging markets has boosted the outlook for the global beverage industry, according to the ratings agency Moody's.

The agency, which changed its outlook for the sector from “stable” to “positive”, said on Monday (11 March) that it expects beverage companies' operating profits to grow by 6% over the next 12 to 18 months as growth returns in “several important emerging markets”. The report said that commodity cost inflation, under pressure for the past three to four years, will ease this year.

“While beer sales have declined in the UK, Australia and, until recently, the US, an expanding middle class will boost demand for premium beers, high-end wine and spirits in countries including China and parts of Latin America,” said Moody's senior VP Linda Montag in “Outlook for Global Beverage Industry Revised to Positive”.

There was also good news on price hikes. “Producers of soft drinks, beer, wine and spirits have all sustained recent price increases, and can selectively continue to raise them without dramatically hurting volumes,” Montag said.

Headwinds included falling consumption of mainstream beers in developed markets, declining consumption of carbonated soft drinks, new excise taxes and continuing economic challenges in Europe, the report said.

The report's views on commodity prices contradict a January Rabobank report that predicted rising costs this year