Dive Brief:
- Credit Suisse outlined its picks for the most and least promising beverage companies in the industry.
- The investment firm granted Outperform ratings to Monster Beverage, Dr. Pepper Snapple and PepsiCo.
- Coca-Cola and Constellation received neutral ratings while Boston Beer received an Underperform rating.
Dive Insight:
What stands out about PepsiCo is not just its beverages, but its snacks portfolio. Noncarbonated beverages are offering more of a contribution to PepsiCo's sales than soda, but that's something many major beverage companies have experienced in recent years.
Credit Suisse seems less interested in PepsiCo's growing power than the company and its brands' staying power as a franchise. PepsiCo has been focused on internal innovation, but the company hasn't been as quick to sign acquisition or distribution agreements as competitors like Coca-Cola and Dr Pepper Snapple. If PepsiCo were to begin pursuing acquisitions, it could be more of a growth target for investment firms.
The dynamic of Coca-Cola and Monster is also compelling. Monster is currently outperforming Coca-Cola, with whom the company has a distribution partnership and minority stake. Experts have suggested Coca-Cola purchase Monster outright sooner than later, especially because Monster's stock continues to rise, making the company more expensive to acquire. Monster has been focused on innovation and strategic expansion in recent years, which makes the company more appealing to Coca-Cola as it looks for options to offset falling soda sales.