If you read only one thing... - This week's must-reads on just-drinks

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The just-drinks analyst returns


Here's a look at the biggest stories and the best content from just-drinks this week.

In these times of uncertainty, I'm willing to guarantee one thing - the word of 2020 will be 'resilience'. Pernod Ricard CEO Alex Ricard deployed it back in February to describe his company's business model when the effects of the coronavirus were first felt in China. Since then, companies including UK soft drinks makers Britvic and AG Barr, as well as Australasian bottler Coca-Cola Amatil have used the word to describe their coronavirus-hit quarterly financial results.

Over the next few weeks, the drinks industry will see the release of some of the most anticipated - and, not in a good way - quarterly results in its history. The coronavirus pandemic has ripped apart full-year outlooks across the board but, for soft drinks and alcohol, the chaos has been further obscured by the central dichotomy of the industry - its split between the on-premise (or out-of-home) and off-premise and retail.

None of us - not even just-drinks' in-house analyst, Ian Shackleton - has seen anything like this. The coronavirus pandemic has thrown us all into panic. As the need for calm heads grows, allow Ian to talk you down.

With widespread restaurant and bar closures effectively halting on-premise sales around the world, most alcohol brands are appealing to the needs and aspirations of self-isolating consumers. These brands must be mindful, however, of associating alcohol consumption too explicitly with emotional and social fulfilment.

In Japan, Kirin Beverage Co's recently-launched Kirin iMUSE water, featuring immunity-boosting lactic bacteria, reached its three-month sales target within a week of release. Kirin has been developing non-alcoholic beverages containing its unique lactic bacteria called 'Lactococcus lactis strain Plasma' since 2017. Its iMUSE brand has seen significant growth between January and March.

Beer and soft drinks production in the US could be severely impacted by a shortage of carbon dioxide, a coalition of trade groups has warned. In a letter this month to the country's Vice President, Mike Pence, the groups said urgent Government action is needed to ward off the "significant risk" of a shortage

The beer and carbonated soft drinks categories are at high risk of production grinding to a halt, due to supply chain consequences arising from the knock-on impacts of COVID-19. With the demand for petrol at a historic low, the supporting ethanol industry is having to scale back production to match demand. As a consequence of this, less carbon dioxide, a by-product of ethanol production, is being produced and captured.

Applying the thinking that has shaped its obesity policy to the COVID-19 crisis has landed the UK Government in difficulty. During the pandemic, discussion of further anti-obesity measures targeted at soft drinks firms has been further deferred, Ben Cooper writes. How governments address conflicts between commercial freedoms and wellbeing may be up for a thorough re-appraisal as part of the post-COVID-19 reset.

In just-drinks' results coverage:

The Coca-Cola Co's global volumes are down 25% this month as out-of-home outlets close their doors. The soft drinks giant, which released Q1 results for January to March this week, revealed that April volumes so far are significantly down on last year because of the coronavirus lockdown that has shuttered the HoReCa (Hotel/Restaurant/Catering) channel in many countries around the world.

Heineken has increased its focus on e-commerce sales, with the first three months of 2019 proving the calm before the coronavirus storm of a tempestuous nine months ahead.

Fever-Tree retained its double-digit growth rate last year - just - with the top-line holding firm so far in 2020 thanks to "robust" at-home consumption. The UK-based mixer company issued full details of its results for 2019 this week, honouring a request from UK regulators last month to delay releasing figures.

A marked slide in Asia has put an end to Pernod Ricard's sales growth in fiscal-2020, with nine-month sales going into reverse after a positive half-year. In results for the nine months to the end of March, released earlier today, the group posted a 2.1% decline in sales.

On our news pages:

Coca-Cola Consolidated, the largest independent Coca-Cola bottler in the US, is to put 700 staff on temporary leave.

US restaurants are on course to lose a combined US$240bn by the end of this year as the coronavirus puts the industry at risk, a new survey has said. According to a National Restaurant Association survey, four in ten US restaurants are closed because of lockdown measures.

The Coca-Cola Co will focus on core brands during the coronavirus pandemic as supermarkets change shelf space, the soft drinks company's CEO has said. In the past few years, Coca-Cola has expanded its portfolio into categories beyond long-standing CSD brands such as Coke and Fanta. Acquistions of kombucha and coffee brands and moves towards fitness beverages have bolstered Coca-Cola's portfolio in fast-growing emerging categories as demand for sodas fluctuates.

The US on-premise may not recover for years, The Boston Beer Co has warned, as the Samuel Adams brewer witnesses the "complete devastation" of its draught keg business. In a call with analysts this week, chairman Jim Koch said keg sales have dropped to "damn near-zero" as bars and entertainment venues across the US close under coronavirus lockdown measures.

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