As the Q3 earnings season wraps, let’s dig into this quarter’s best and worst performers in the beverages, alcohol and tobacco industry, including Anheuser-Busch (NYSE:BUD) and its peers.

These companies' performance is influenced by brand strength, marketing strategies, and shifts in consumer preferences. Changing consumption patterns are particularly relevant and can be seen in the rise of cannabis, craft beer, and vaping or the steady decline of soda and cigarettes. Companies that spend on innovation to meet consumers where they are with regards to trends can reap huge demand benefits while those who ignore trends can see stagnant volumes. Finally, with the advent of the social media, the cost of starting a brand from scratch is much lower, meaning that new entrants can chip away at the market shares of established players.

The 14 beverages, alcohol and tobacco stocks we track reported a slower Q3. As a group, revenues missed analysts’ consensus estimates by 2.1% while next quarter’s revenue guidance was 2.7% below.

In light of this news, share prices of the companies have held steady as they are up 3.6% on average since the latest earnings results.

Anheuser-Busch (NYSE:BUD)

Born out of a complicated web of mergers and acquisitions, Anheuser-Busch InBev (NYSE:BUD) boasts a powerhouse beer portfolio of Budweiser, Stella Artois, Corona, and local favorites around the world.

Anheuser-Busch reported revenues of $15.05 billion, down 3.4% year on year. This print fell short of analysts’ expectations by 4.2%. Overall, it was a slower quarter for the company with a miss of analysts’ EBITDA estimates.

“Beer is a passion point for consumers. Consumer demand for our megabrands and the execution of our mega platforms delivered another quarter of top- and bottom-line growth with margin expansion. Our teams and partners continue to execute our strategy and we are confident in our ability to deliver on our raised FY24 EBITDA growth outlook of 6-8%.” – Michel Doukeris, CEO, AB InBev

Unsurprisingly, the stock is down 11% since reporting and currently trades at $55.96.

Read our full report on Anheuser-Busch here, it’s free.

Best Q3: Zevia PBC (NYSE:ZVIA)

With a primary focus on soda but also a presence in energy drinks and teas, Zevia (NYSE:ZVIA) is a better-for-you beverage company.

Zevia PBC reported revenues of $36.37 million, down 15.6% year on year, falling short of analysts’ expectations by 6.8%. However, the business still had a strong quarter with optimistic EBITDA guidance for the next quarter and an impressive beat of analysts’ EBITDA estimates.

The market seems happy with the results as the stock is up 85.3% since reporting. It currently trades at $2.01.

Is now the time to buy Zevia PBC? Access our full analysis of the earnings results here, it’s free.

Weakest Q3: Celsius (NASDAQ:CELH)

With its proprietary MetaPlus formula as the basis for key products, Celsius (NASDAQ:CELH) offers energy drinks that feature natural ingredients to help in fitness and weight management.

Celsius reported revenues of $265.7 million, down 30.9% year on year, in line with analysts’ expectations. It was a softer quarter as it posted a miss of analysts’ operating margin estimates.

Celsius delivered the slowest revenue growth in the group. As expected, the stock is down 14.1% since the results and currently trades at $27.27.

Read our full analysis of Celsius’s results here.

Vita Coco (NASDAQ:COCO)

Founded in 2004 followed by a 2021 IPO, The Vita Coco Company (NASDAQ:COCO) offers coconut water products that are a natural way to quench thirst.

Vita Coco reported revenues of $132.9 million, down 3.7% year on year. This print lagged analysts' expectations by 4.3%. In spite of that, it was a strong quarter as it recorded an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ gross margin estimates.

Vita Coco achieved the highest full-year guidance raise among its peers. The stock is up 13.7% since reporting and currently trades at $35.01.

Read our full, actionable report on Vita Coco here, it’s free.

PepsiCo (NASDAQ:PEP)

With a history that goes back more than a century, PepsiCo (NASDAQ:PEP) is a household name in food and beverages today and best known for its flagship soda.

PepsiCo reported revenues of $23.32 billion, flat year on year. This result lagged analysts' expectations by 1.9%. Overall, it was a slower quarter as it also produced a miss of analysts’ organic revenue growth and EBITDA estimates.

The stock is down 1.9% since reporting and currently trades at $164.

Read our full, actionable report on PepsiCo here, it’s free.

Market Update

As expected, the Federal Reserve cut its policy rate by 25bps (a quarter of a percent) in November 2024 after Donald Trump triumphed in the US Presidential election. This marks the central bank's second easing of monetary policy after a large 50bps rate cut two months earlier. Going forward, the markets will debate whether these rate cuts (and more potential ones in 2025) are perfect timing to support the economy or a bit too late for a macro that has already cooled too much. Adding to the degree of difficulty is a new Republican administration that could make large changes to corporate taxes and prior efforts such as the Inflation Reduction Act.

Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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