The beverage industry continues to gain momentum in 2022 and extend its pandemic-era growth. That’s because the beverage industry is a part of consumer staples, which are always in demand and usually the last to feel the heat of an economic downturn.
The Upheaval in the Beverage Industry
The beverage industry has an enormous growth potential given the constant upheavals and changing trends. Several reports suggest that consumers now prefer healthy beverages over sugary sodas and traditional drinks. A report by Grand View Research estimates that the global reduced sugar food & beverages market size in 2021 was $46.18 billion. This market is expected to grow at a compound annual growth rate (CAGR) of 8.9% from 2022 to 2030. The major cause of this new trend is the rising awareness about obesity and diabetes, which are caused by sugary drinks and high-fructose beverages.
This key industry development has caused the market to see a plethora of new players entering the space. Innovative startups with healthy beverage formulas are garnering eye-popping funding rounds and vowing to upend industry juggernauts like Keurig Dr Pepper Inc (NASDAQ:KDP), Coca-Cola Co (NYSE:KO), Molson Coors Beverage Co Class B (NYSE:TAP) and Monster Beverage Corp (NASDAQ:MNST).
Small, up-and-coming beverage companies like Celsius Holdings, Inc. (NASDAQ:CELH) and Glucose Health, Inc. (OTCPK:GLUC) are launching healthy drinks which also taste better, luring the young-adult demographic whose spending power is strong. A report from Pipecandy.com expects the beverage industry’s value to reach $1813 billion in 2022. The industry, according to the report, is still growing at a CAGR of 4%. Spurring this growth are important social factors like high disposable income, increasing urbanization and changing lifestyles.
As the industry looks beyond traditional players and weighs new entrants, we decided to discuss some of the best small-cap beverage stocks in this article.
Our Methodology
These companies have innovative products, long-term growth potential and interesting stories. We picked high-growth beverage companies having market caps between $8 million to $8 billion. We ranked this list based on the descending order of the number of hedge funds having stakes in these stocks. This data was taken from Insider Monkey’s database of 895 elite funds.
Pixabay/Public domain
10 ) Celsius Holdings, Inc. (NASDAQ:CELH)
Market Cap: $7.69 Billion
Number of Hedge Funds Having Stakes in the Company: 21
Celsius Holdings, Inc. (NASDAQ:CELH) is a Florida-based beverage company that makes carbonated and non-carbonated functional energy drinks, liquid dietary supplements, flavored drinks and on-the-go drinkable packets and canisters. Celsius Holdings, Inc. (NASDAQ:CELH) is making waves as it vows to compete with industry leaders like Keurig Dr Pepper Inc (NASDAQ:KDP), Coca-Cola Co (NYSE:KO), Molson Coors Beverage Co Class B (NYSE:TAP) and Monster Beverage Corp (NASDAQ:MNST) with its innovative drinks for various kinds of customers.
Despite rising costs and supply-chain issues, the company is seeing a huge demand, which led to the company CEO John Fieldly deciding to significantly ramp-up inventory levels last year. Latest data shows that Celsius Holdings, Inc. (NASDAQ:CELH) saw a whopping 143% year-over-year rise in sales for four weeks ending July 16. Last month, Pepsi announced a $550 million investment in Celsius Holdings as part of a long-term distribution deal. Celsius Holdings, Inc. (NASDAQ:CELH) shares shot up over 11% on the news. Jefferies analyst Kevin Grundy said the deal would help Celsius scale and gain traction in international markets. The analyst has a Buy rating and a $125 price target on the stock.
9) MGP Ingredients Inc (NASDAQ:MGPI)
Market Cap: $2.49 Billion
Number of Hedge Funds Having Stakes in the Company: 17
Kansas-based MGP Ingredients Inc (NASDAQ:MGPI) makes distilled spirits, branded spirits, and food ingredients. On a year-to-date basis, the stock is up 35% despite the market volatility and downturn. Analysts think the stock still has a lot of room to run. Wells Fargo on August 15 started covering MGP Ingredients Inc (NASDAQ:MGPI) with an Overweight rating. The firm praised the company’s “premiumization strategy” and sustained category momentum initiatives and said the stock offers growth at a “reasonable valuation.”
Wells Fargo has a $126 price target on MGP. In addition to its growth potential, what makes MGP Ingredients Inc (NASDAQ:MGPI) one of the best small-cap beverage stocks to buy in 2022 is its dividend. The stock has a dividend yield of 0.46%, having announced a $0.12/share quarterly dividend last month, which was payable September 2.
8)Primo Water Corp (NYSE:PRMW)
Market Cap: $2.25 Billion
Number of Hedge Funds Having Stakes in the Company: 24
Primo Water Corp (NYSE:PRMW) is operating in the old-school, evergreen market of bottled water, offering stability and visibility to investors without making splashy claims. The Canadian-American company has operations in 22 countries. In North America alone, Primo Water Corp (NYSE:PRMW) provides pre-filled water in multi-gallon format containers at over 13,000 locations and self-service drinking water refill units at approximately 22,000 locations.
Primo Water Corp (NYSE:PRMW) is also a dividend-payer, with a yield of about 2%. Last month, the company said its board has approved a $100 million share repurchase program which commenced on August 15, 2022 and will expire on August 14, 2023.
On September 14, Primo Water Corp (NYSE:PRMW) said it has bought two French companies specializing in the marketing and packaging of spring water, Eureau Sources and Defeaus. Earlier in the month, the company’s CEO Thomas Harrington bought 39,000 Primo Water Corp (NYSE:PRMW) shares at $13.07 per share.
7) Duckhorn Portfolio Inc (NYSE:NAPA)
Market Cap: $1.7 Billion
Number of Hedge Funds Having Stakes in the Company: 13
Duckhorn Portfolio Inc (NYSE:NAPA) is another interesting small-cap beverage stock to consider for the long-term. Duckhorn Portfolio Inc (NYSE:NAPA) sells luxury wines under several brands, including Duckhorn Vineyards, Decoy, Kosta Browne, Goldeneye, Paraduxx, Calera, Migration, Canvasback, Greenwing, and Postmark. As the company operates in the niche market of luxury beverages, it’s natural that analysts are growing skeptical as customers cut spending amid rising inflation.
However, the long-term prospects of the stock look bright. On September 15, despite issuing a downgrade on the back of an expected guidance decrease and seasonal concerns, JP Morgan’s Andrea Teixeira said that Duckhorn Portfolio Inc (NYSE:NAPA)’s long-term prospects are promising. In the last reported quarter, Duckhorn Portfolio Inc (NYSE:NAPA)’s sales jumped 1.3% on a year-over-year basis, while net income came in at $15.6 million, up from $9 million reported in the same quarter last year.
6) Vita Coco Company Inc (NASDAQ: COCO)
Market Cap: $739 Million
Number of Hedge Funds Having Stakes in the Company: 3
New York-based Vita Coco Company Inc (NASDAQ: COCO) is getting investors’ attention with its outperformance in 2022. The stock is up 50% in the past six months. It is yet another name that provides a healthy alternative to consumers who are looking beyond Keurig Dr Pepper Inc (NASDAQ:KDP), Coca-Cola Co (NYSE:KO), Molson Coors Beverage Co Class B (NYSE:TAP) and Monster Beverage Corp (NASDAQ:MNST).
Vita Coco Company Inc (NASDAQ: COCO) stands out in the beverage industry as it focuses on coconut water products. It also sells coconut oil and coconut milk, flavored coconut water, sparkling water, a plant-based energy drink and a protein-infused fitness drink. Last month, Vita Coco Company Inc (NASDAQ: COCO) said it expects gross margin improvement for the remainder of 2022 compared to the first quarter. Vita Coco Company Inc (NASDAQ: COCO) said its rising transportation costs would be partially offset by higher net pricing and efficiency initiatives. BofA analyst Bryan Spillane recently upgraded the stock to Buy from Neutral with a price target of $12, up from $10. The analyst expects upside for the stock in 2023 as he sees ocean freight costs easing.
5) Zevia Pbc (NYSE:ZVIA)
Market Cap: $316 Million
Number of Hedge Funds Having Stakes in the Company: 7
Zevia Pbc (NYSE:ZVIA), which went public last year, makes soda, energy drinks, organic tea, mixers, sparkling water and beverage products for kids. In June, Zevia Pbc (NYSE:ZVIA) announced leadership changes. Analysts believe the new management can hasten the company’s path to profitability. From 2008 to 2021, Zevia’s top-line jumped 47% on a compounded basis. Zevia Pbc (NYSE:ZVIA) has a solid gross margin in the mid-40s range. In the first quarter, the company saw a 40% rise in production costs as aluminum prices and supply-chain issues hit the results. These short-term issues are expected to be resolved in the coming months.
Zevia Pbc (NYSE:ZVIA) is focusing more on natural sweeteners like Stevia to lure health-conscious customers. However, the company still has to do a lot to resolve its competition and cost issues. Despite the risks, Zevia Pbc (NYSE:ZVIA) remains a decent small-cap beverage stock to consider.
4) Alto Ingredients Inc (NASDAQ:ALTO)
Market Cap: $283 Million
Number of Hedge Funds Having Stakes in the Company: 11
California-based Alto Ingredients Inc (NASDAQ:ALTO) is tapping into a diverse range of market segments in the beverage industry. Alto Ingredients Inc (NASDAQ:ALTO) makes specialty alcohols used in healthcare items; grain neutral spirits used in alcoholic beverages; and corn germ used in corn oils and carbon dioxide for food and beverage markets.
Alto Ingredients Inc (NASDAQ:ALTO) is one of the largest producers of specialty alcohol in the US, with an annual alcohol production capacity of 350 million gallons, as of the end of last year. Alto Ingredients Inc (NASDAQ:ALTO) is taking several measures to increase its profitability and curb volatility. One such measure is the company’s plan to cut natural gas consumption at its plants. Alto Ingredients Inc (NASDAQ:ALTO) saw an improvement in its revenue and income last year. Between 2017 and 2019, the company’s net loss swelled to $90.2 million from $36.2 million, before narrowing to $16.4 million in 2020 and eventually turning into a profit of $44.2 million in 2021. At a PE ratio of 5.6 (as of September 15), ALTO is one of the best small-cap beverage stocks to consider.
3) Splash Beverage Group Inc (NYSEAMERICAN:SBEV)
Market Cap: $75.3 Million
Number of Hedge Funds Having Stakes in the Company: 3
Splash Beverage Group Inc (SBEV)’s main focus is the lucrative tequila market, which is expected to reach a value of $15.6 billion by 2029. The Florida-based company sells flavored tequilas under the SALT Naturally Flavored Tequila brand. The company also makes all natural sports drinks and wine. SBEV’s sports drink brand TapouT avoids artificial flavors and includes only natural ingredients. The company last month announced that it received approval to sell TapouT in certain Target stores across the country. Splash Beverage Group Inc (SBEV) recently announced that Central Distributors of Las Vegas will now distribute its SALT Tequila brand across Nevada. It also announced agreements with Maryland-based Carey Distributors and Wantz Distributors. Splash’s SALT brand has a strong distribution with Walmart and Total Wine. The brand was a success in Mexico, which led the company to launch SALT in more South American countries.
Splash Beverage also announced that its single serve wine, Copa Di Vino, will be available in Love’s Travel Center’s Texas locations. In the first quarter, Splash Beverage Group Inc (SBEV)’s sales jumped by 86% to $2.45 million.
Splash Beverage Group Inc (SBEV) has an edge over its competitors due to its ecommerce initiatives. Its vertically integrated B2B and B2C e-commerce distribution platform named Qplash sells products on Amazon and Shopify stores.
While some analysts are skeptical of the stock because of its high cash-burn rate and declining margins, the company believes its marketing initiatives and acquisitions will bear fruit. In June, Splash Beverage Group Inc (SBEV) said it acquired 80% of Pulpoloco Sangria, a Spanish beverage company. The deal would give Splash control over the manufacturing and distribution of Pulpoloco across the US.
2) Bevcanna Enterprises Inc (OTCMKTS: BVNNF)
Market Cap: $9.9 Million
Number of Hedge Funds Having Stakes in the Company: N/A
Canada-based Bevcanna Enterprises Inc (OTCMKTS: BVNNF) has a strong upside potential as the company operates in the cannabinoid-infused beverages market and specializes in cannabis processing and white label manufacturing services for the production of infused beverages.
Bevcanna Enterprises Inc (OTCMKTS: BVNNF) is up 25% over the past month as the company recently said it plans to file annual filings and financial statements by early October, after which it expects to see its stock resume trading on all currently listed exchanges.
Bevcanna Enterprises Inc (OTCMKTS: BVNNF) is making a strong foray into the cannabis beverages market. Last year, it signed a deal to manufacture and distribute white-label cannabis beverages for Averi Health Products. It also signed an agreement with Tinley Beverage Company to co-manufacture its cannabis-infused beverages for the Canadian market. Other important parties it signed agreements with include United Natural Foods (UNFI), ABcann Medicinals, a wholly-owned subsidiary of VIVO Cannabis (OTCQB:VVCIF), and Riviera Beverages of California.
1) Greene Concepts Ord Shs (OTCMKTS:INKW)
Market Cap: $7.9 Million
Number of Hedge Funds Having Stakes in the Company: N/A
Greene Concepts Ord Shs (OTCMKTS:INKW) is a California-based water bottler that is currently in the limelight after the company announced that its BE Water brand bottles will be for sale at all Florida Turnpike Shell Gas Station service plaza convenience stores. Greene Concepts Ord Shs (OTCMKTS:INKW) is up 6% as of September 15. Greene Concepts also plans to enter the high-growth market of athletic drinks industry, which was valued at about $22.37 billion in 2018 according to the company’s press release which cited Grand View Research data. Last year, Greene Concepts Ord Shs (OTCMKTS:INKW) bought all-natural hemp infused sports drinks company Stay Hemp 4 Life.
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Disclosure: None. This article is originally published at Insider Monkey.
