4 Companies That Will Benefit From the Healthy Lifestyles Trend
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With the New York City ban on sodas over 16 oz, it is clear that the new paradigm leans toward a healthier lifestyle. Politicians and business executives alike worry about rising healthcare costs. Within the beverage industry lays opportunity as companies adapt to this trend by slowly moving away from the traditional soda business and into “healthier” products such as bottled water and juice. Four companies stand to benefit.
Coca-Cola (NYSE: KO), the beverage company typically associated with “trademark” brands such as Coca-Cola, Sprite, and Fanta, increasingly grows its earnings through “non-sparkling” beverages such as Dasani bottled water, Minute Maid juice and Gold Peak tea.
According to Coca-Cola’s 2011 annual review, Dasani experienced the highest percentage gain in case volume of 10%. Juices made up the second highest growing category with a 7% gain driven by the Minute Maid Pulpy.
The trend continues into 2012 for Coca-Cola with the growth in case volume for “non-sparkling” beverages exceeding the “sparkling” category in every region of the world. Tea, sports drinks, and bottled water drove growth within those segments. The trend indicates a global population increasingly educated to the need of drinking healthy.
The grim reaper proves elusive for Coca-Cola’s flagship sparkling beverages for they experienced growth in all regions for those products as well just not as much as the “healthier” beverages.
Nestlé’s (NASDAQOTH: NSRGY) description, a health and nutrition products company, tells you this company stands to benefit from healthy lifestyles trend. Nestle recently started a health science division for the purpose of designing “nutrition solutions” for chronic medical problems.
Nestle ranks #1 in the bottled water category according to beverageworld.com solidifying the company’s potential to gain from the healthy lifestyles trend. Nestlé’s Pure Life bottled water ranks among the “billionaire” brands within its product portfolio and experienced 11% organic growth in 2011.
So far in 2012, Nestlé’s bottled water products experienced 4% growth. The highest level of growth occurred in the emerging markets where bottled water growth was in the double digits.
National Beverage (NASDAQ: FIZZ), one of the “other” beverage companies, has soda brand names such as Shasta, Faygo, and La Croix. The non-carbonated soda brands include Everfresh juices, Mega Sport drinks, and Sundance Natural. National Beverage also experienced a higher percentage growth in their Power+ Brands which encompass everything but carbonated sodas.
Power+ Brands have increased case volume 10% so far in 2012 versus a 2% gain for carbonated sodas further indicating the overall macro trend of consumer preference for the perceived healthier non-carbonated drinks. In the most recent quarter Power+ Brands and carbonated soda drinks rose 12% and 10% respectively.
Cott (NYSE: COT) makes private label beverages. If you see a store brand soda or juice it may come from this company. Cott represents the most extreme example of the healthy lifestyles trends.
From 2009-2011, Cott’s carbonated soda sales have essentially been flat (pardon the pun). Juice sales multiplied 6 fold during that time. According to the most recent earnings announcement energy and sports drinks softened the blow to earnings.
In each of the four companies listed above, products with positive health perceptions such as juices, tea and bottled water provided the foundation for revenue growth momentum. These companies will continue to grow not so much on the traditional products such as the Coca-Cola brand sodas but on the distribution of clean water, energy drinks and nutritional juices.
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