Rotation Ahead? Watch the Spirits Space (STZ, SBEV, TAP)

As the election process winds down, we appear to be heading toward a gridlock government, with Biden taking the White House, and the GOP holding onto control of the Senate.

That promises to restrain fiscal stimulus and possibly drive capital flows from cyclical stocks into staples. One area that often wins during rotations like this is the spirits industry, where growth is stable, debt is generally low and booked on strong terms due to the stability of cash flows.

With that in mind, we take a look at a few stocks poised and ready to be on the receiving end of those flows, including: Molson Coors Beverage Co (NYSE:TAP), Splash Beverage Group Inc (OTCMKTS:SBEV), and Constellation Brands Inc (NYSE:STZ).


Molson Coors Beverage Co (NYSE:TAP) is a key player in the alcoholic beverage space, with widespread traction, diverse brand holdings, and investments across the space and into other areas, including cannabis.

The company sells various products under the Blue Moon, Coors Banquet, Coors Light, Miller Genuine Draft, Miller Lite, Hamm’s, Icehouse, Keystone, Mickey’s, Miller64, Miller High Life, Milwaukee’s Best, Olde English, Steel Reserve, Hop Valley, Leinenkugel’s, Peroni Nastro Azurro, Pilsner Urquell, Revolver, Saint Archer, Sol, Terrapin, Crispin, Smith & Forge, Arnold Palmer Spiked, Cape Line, Henry’s Hard, Redd’s, and Steel Reserve Alloy Series brands.

Molson Coors Beverage Co (NYSE:TAP) just recently reported results for the 2020 third quarter, noting that net sales decreased 3.1% on a reported basis, and 3.6% in constant currency driven by financial volume declines related to continued on-premise restrictions from the coronavirus pandemic, as well as unfavorable channel mix across all major markets, partially offset by higher net pricing in the U.S. and Canada as well as positive brand and package mix in the U.S.

Molson Coors president and chief executive officer Gavin Hattersley said, “We are very pleased with our performance in the third quarter, as we beat top and bottom-line expectations and made tangible progress on our revitalization plan. We had bold plans for our business at the beginning of 2020: to build on the strength of our iconic core brands, aggressively grow our above premium portfolio, expand beyond the beer aisle, invest in our capabilities and support our people and our communities.”

If you’re long this stock, then you’re liking how the stock has responded to the announcement. TAP shares have been moving higher over the past week overall, pushing about 13% to the upside on above average trading volume.

Molson Coors Beverage Co Class B (NYSE:TAP) managed to rope in revenues totaling $2.8B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -3.1%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($731.3M against $4.3B, respectively).


Splash Beverage Group Inc (OTCMKTS:SBEV) has been incubating a model with prolific potential, given the stability and growth of the spirits space and the juggernaut potential of its TapouT brand of fitness sports beverages.

The company specializes in manufacturing, distribution, sales & marketing of various beverages across multiple channels. SBEV operates in both the non-alcoholic and alcoholic beverage segments which they believe leverages efficiencies and dilutes risk.

Splash Beverage Group Inc (OTCMKTS:SBEV) recently announced that it has secured distribution and Manufacturing capabilities in Greater China for its hydration and recovery brand TapouT Performance and distribution for its brand SALT Naturally Flavored Tequila by entering into a distribution agreement with China-based American Software Capital.

According to its release, ASC is a National Chinese manufacturer and distributor for fast moving consumer goods and other items. The company runs a state-of-the-art facility and has impactful relationships with chains and outlets throughout China. ASC CEO David Chen states, “ASC is delighted to become an investor and strategic partner of Splash Beverage to co-develop the market of Greater China, ASC has marketing resources in the area, and definitely the best candidate and partner for the job!”

As noted by the company, ASC will initially import and distribute TapouT and SALT Tequila beverage products in China as it works with Splash to position the Company for manufacturing capabilities over the intermediate term in order to streamline operations and maximize profitability in the region. ASC is also well-positioned to seamlessly incorporate additional brands as Splash continues to acquire and/or internally develop new brands, product lines and concepts.

“The thirst for Western brands continues to increase across Asia,” commented Robert Nistico, CEO of Splash. “We believe our relationship with ASC, one of China’s top manufacturers and distributors, will position Splash to capitalize on this trend. ASC has extensive relationships with top retail chains, and I’m confident this will further our advantage as we enter the Chinese market.”

Shares of SBEV have been pulling back inside a bullish trend that took flight in June. The stock is up about 300% since that point, but has pulled back 70% in the past 2 months into the big Asian expansion catalyst.

Splash Beverage Group Inc (OTCMKTS:SBEV) estimates the Company will have net sales between $750,000 to $1,000,000 for the 13-week third quarter ended September 30, 2020. This would represent significant sequential quarterly growth. The company posted sales of just over $600k in its prior quarter ended June 30.


Constellation Brands Inc (NYSE:STZ) produces, imports, and markets beer, wine, and spirits in the United States, Canada, Mexico, New Zealand, and Italy. It provides beer primarily under the Corona Extra, Corona Premier, Corona Familiar, Corona Light, Corona Refresca, Corona Hard Seltzer, Modelo Especial, Modelo Negra, Modelo Chelada, Pacifico, and Victoria brands.

The company offers wine under the 7 Moons, Drylands, SIMI, Charles Smith, Auros, Kim Crawford, Spoken Barrel, Prisoner, Champagne Palmer & Co, Meiomi, Robert Mondavi, Cooper & Thief, Mount Veeder, Schrader, Crafters Union, Nobilo, Cuvée Sauvage, and Ruffino; and spirits under the Casa Noble, High West, Mi CAMPO, Nelson’s Green Brier, SVEDKA, The Real McCoy brands. It provides its products to wholesale distributors, retailers, on-premise locations, and state alcohol beverage control agencies. The company was founded in 1945 and is headquartered in Victor, New York.

Constellation Brands Inc (NYSE:STZ) recently announced the election of Nicholas I. Fink, chief executive officer of Fortune Brands Home & Security, Inc., to serve as a member of its board of directors, effective as of the close of business on January 4, 2021. This election increases the size of Constellation’s board from 12 to 13 members.

“We are excited to welcome Nick to our board of directors,” said Rob Sands, Constellation Brands’ Executive Chair of the Board of Directors. “Nick brings extensive beverage alcohol, international business, and legal experience, and has a proven track record of leveraging consumer insights to meet consumer needs in fast moving, highly regulated markets. Nick will serve as a tremendous asset for our board as we work to continue building industry-leading brands people love and remain focused on our proven strategy of long-term, profitable, and sustainable growth.”

And the stock has been acting well over recent days, up something like 10% in that time.

Constellation Brands Inc (NYSE:STZ) pulled in sales of $2.3B in its last reported quarterly financials, representing top line growth of -3.6%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($204.6M against $1.9B, respectively).


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