Analysis

The bloody weather - Which drinks companies will be hit hardest by a cool summer 2019? - Analysis

Most popular

Mangrove MD warns of coronavirus impact on spirits

Advice for brewers in the time of COVID-19

Could coronavirus make for more caring companies?

Provenance and quality not enough for spirits - II

Coronavirus special - US Distilled Spirits Council

MORE

Here in London, we've had a miserable June so far, weather-wise: Unseasonably cold, barely any sunshine and wetter than an otter's pocket. Indeed, as one analyst surmised today, bookmakers in the UK are slashing their odds on this month being the wettest June on record in the UK.

Much of Western Europe has been battling similarly with concerning climatic conditions in recent days. So, with summer traditionally being boom-time for brewers and soft drinks producers, the second quarter of 2019 for many looks like it will throw up some tough numbers. Particularly when the corresponding period a year ago was so heady.

In a note to clients today, Ed Mundy at Jefferies set the three months to the end of June this year against the same quarter in 2018. "Summer 2018 (in Europe) benefited from tailwinds, including a UK royal wedding (19 May), a flavoured-gin boom, the FIFA World Cup (14 June-15 July) and a prolonged period of warmer than average weather (albeit versus a poor 2017 summer in some regions, notably Scandinavia)," Mundy says.

Turning his attention to the listed drinks companies on his radar, in soft drinks there's Britvic - Mundy estimates 89% of group sales are concentrated in European markets - Coca-Cola Hellenic - 90% of sales from the region - and Fever-Tree - 80%.

In beer, Mundy's eye is on Royal Unibrew - over 90% of sales from Europe - Carlsberg - 75% - Heineken - 50% - and Anheuser-Busch InBev - 5%.

Here's a look at what Mundy believes are the implications for his runners and riders in this quarter and the next.

  • Fever-Tree

Last Summer represented gin's peak (so far), which proved a major benefit for the mixers producer. "With the World Cup, a royal wedding and hot weather," Mundy says, "more gin was sold in summer 2018 than in the summers of 2014 and 2015." With fewer one-off 'events' and lousy weather, then, the biggest success-story in drinks may stop for breath in 2018.

  • Britvic

Like its peer, Britvic benefitted from the World Cup and the good weather a year ago. At the same time, however, the company had to deal with a CO2 shortage in 2018, while its innovation activity was brisk. Mundy hedges his bets by forecasting a "noisy" second-half for the company.

  • Coca-Cola Hellenic

The Coca-Cola bottler, whose Europe sales are split 50/50 between Eastern and Western, will likely be in line for a less-impressive summer 2019, if only because of brand Coke's sponsorship of last year's World Cup.

  • Royal Unibrew

The Scandinavian brewer had a bumper summer last year, with third-quarter volumes jumping by over 12% on the corresponding period a year earlier. Unibrew has taken a sobering stance on this year, however, with its guidance having been set with one eye on a likely less-impressive set of weather conditions this year compared to last.

  • Carlsberg

In Western Europe - 58% of the brewer's total sales -  Carlsberg saw volumes in the three months to the end of September last year increase by almost 10%, Mundy notes. Like Unibrew, the group has also factored into its guidance the expectation that last year's heat may not return in 2019.

  • Heineken

A 2% lift in third quarter Western European volumes last year was preceded by a near-3% decline for Heineken in the same period in 2017. How the three months in 2019 will behave for Heineken in the region, then, is more of a lucky guess.

  • Anheuser-Busch InBev

The brewing giant has such a relatively small exposure to Western Europe that performance in the region this Summer probably won't move the needle too greatly. Bear in mind, though, that brand Budweiser was very active last year around its World Cup sponsorship platform.


Expert Analysis

Key Trends in Alcoholic Beverages: Powerful changes shaping the wine, beer, spirits and alcohol-free beverages industry

Key Trends in Alcoholic Beverages: Powerful changes shaping the wine, beer, spirits and alcohol-free beverages industry

Key Trends in Alcoholic Beverages: Powerful changes shaping the wine, beer, spirits and alcohol-free beverages industry...

VIEW REPORT

Related Content

Diageo Performance Trends 2015-2019 - results data

Diageo Performance Trends 2015-2019 - results data...

Pernod Ricard Performance Trends 2015-2019 - results data

Pernod Ricard Performance Trends 2015-2019 - results data...

Will the sugar tax story pan out as expected? - Comment

Will the sugar tax story pan out as expected? - Comment...

Start of a

Start of a "new chapter" for Diageo - Analysis...

Oops! This article is copy protected.

Why can’t I copy the text on this page?

The ability to copy articles is specially reserved for people who are part of a group membership.

How do I become a group member?

To find out how you and your team can copy and share articles and save money as part of a group membership call Sean Clinton on
+44 (0)1527 573 736 or complete this form..



Forgot your password?