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"The central driver of the decline" in beer this yr "is the impact of the Hispanic consumer," said Evercore ISI's sr managing director Robert Ottenstein on panel of Wall St analysts at Beer Insights Seminar. He figured Hispanics could be as much as 30% of beer consumption, and if down 10%, that could be as much as 3 points out of 5% decline for total beer. "The Hispanic consumer is really weighing on the category," agreed Goldman Sachs' managing director Bonnie Herzog. This yr, "all I see are headwinds" for beer, she added. Better Next Yr? World Cup Could Provide a "Spark" "Next year I am probably more optimistic," noted Bonnie, following several yrs of declines. "Easier comps, maybe the weather is better" and "celebrations," she said pointing to Olympics, World Cup, 150 years of Bud, etc. But HSBC's managing director Carlos Laboy said "as long as the mainstream category remains sick, it's a headwind that's just not going to go away from the overall industry." Carlos remains "worried about the Hispanic consumer over the medium term," but agreed that World Cup could be a "spark.""Blown Away" By AB at NACS; "Gushing Cash Flow," Lower Debt; "Redeploy" Capital on Biz All 3 analysts were complimentary about how ABI is evolving. "I was blown away" by AB's exhibition booth at the NACS convention (Natl Assn of Convenience Stores), said Bonnie. AB is "fastest growing spirits company," has Ultra going great and "it just feels like they're executing," Bonnie added (she doesn't cover the stock). ABI is a "new company now," said Robert. "We have never seen the company like this." It had been "levered up" for almost a decade (after SAB deal), but now "these guys are gushing cash flow" and likely not looking to make big M&A move. Now that ABI has finally gotten debt levels down to more manageable levels, it is "just a really, really tough machine," said Carlos. They are "focused on redeploying capital back into sports properties." Prospect of getting Champions League sponsorship, which was tied to Heineken for decades, is "really, really phenomenal" and "a vicious grab&hellip;. The amount of cash they have now to refocus back behind their brands, rather than paying down debt is going to be important."STZ Brand Equity Still "Strong"; "Leaning in" on Affordability; Corona? Constellation "faces so much pressure" because of what's happening with Hispanic consumer, noted Bonnie. "It's been tough to watch." After many yrs in which it "consistently delivered high single digit sales growth," this yr it's down. So Constellation is "leaning in on affordability." But "I don't think there's any problem with brand equity," said Robert. With "law of large numbers," it's also hard to get 5-7% growth as STZ got so much bigger. Still, STZ "has a long way to run once we get past the Hispanic demographic" challenges, Robert added. Tho Carlos said: "We're a little bit more worried about Corona." Is the Corona consumer "a little too sedentary" and/or aging?MC Changes Could Bring "Breath of Fresh Air," But Where Is "Turnaround" As for Molson Coors, Bonnie found it "encouraging to think" new ceo Rahul Goyal might bring "a breath of fresh air." She liked hearing "yes there are no sacred cows" as co has "a lot more optionality" and its cash flow is still "quite strong." However, "none of us would like to see them buy something large." Carlos was less sanguine, "still on the sidelines" with a "sell rating&hellip;. I don't see where the turnaround is going to come from yet."Lack of Pricing Power; After Initial Surprise, Robert Expects Reyes to Become an AB Distrib All 3 analysts agreed beer biz would not be able to realize 2% incremental price in 2026. "No way," said Carlos. Any increases are likely to be more "net revenue management," whether different packages or trading up, said Bonnie. But Robert not a fan of price reductions and said "I don't like" lack of pricing on Michelob Ultra, reductions on Premier, Modelo Oro and Heineken Silver, cautioning suppliers to be "creative in terms of providing more value, rather than lowering prices.""One of the big surprises this year," said Robert, was news that Reyes Beverage Group ceo Tom Day attended an AB reception at AB's invite (reported by BMI). A few years ago, "I would have been shocked" to even consider the possibility of Reyes becoming an AB distrib, "now I'd be surprised if something doesn't happen within a couple of years." Given "the way the industry is going" with flat-to-down sales, cos have to "find ways to add value" with "new business models." There's a "need for scale, sophistication and cutting edge technology." AB definitely "sending out a signal" to its network, according to Robert.Monster's a Beast Finally, all 3 analysts were wowed by Monster's recent performance, including 18% growth in latest qtr. Monster's "pipeline of innovation is the biggest and strongest I've ever seen from them," said Bonnie, with new "packaging, limited time offers, products that appeal to women." Monster went into alc bevs because they thought energy was running out of steam. "What they discovered was women," according to Robert. Energy drinks only began marketing to women in last 5 yrs. "This ultimately is probably what the beer space needs to do, figure out how to market effectively to women without hurting the core DNA of mainstream beer. The energy category has done that." Many moves Monster is making in energy could be "an opportunity broadly speaking within beer," said Bonnie.

Wall Street Panel: Impact of Hispanic Consumer, "New" ABI, STZ Still Well-Positioned

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