Stocks to Watch Out for as Coca Cola Says Cheers to the Alcohol Industry

Coca Cola is about to get a new fizz.

Next time you visit a liquor store, chances are you will be surprised with a Coca Cola brand sitting next to the familiar names.

The company is launching its ready to drink alcoholic beverage in the domestic market.

Already, pilot tests are on in a few states including Goa and Maharashtra.

This is not entirely a new arena for Coca Cola. The product is already in global markets like Japan, China, and Philippines.

If it does well, this could just be the beginning with more alcoholic products in the offing.

Earlier this year, Coca Cola, along with the global spirits maker Pernod Ricard announced a global collaboration to launch Absolut vodka and Sprite as a ready-to-drink pre-mixed cocktail in 2024.

The product will use Pernod's vodka and Coca-Cola's soft drinks. While this collaboration so far is mainly for European markets, I won't be surprised if more of these products soon find their way to India.

It's too soon to say what that will mean for Indian incumbents in the alcohol industry. I personally believe it will be neutral.

I've seen a lot of liquor stores and new bars coming up in my neighbourhood. And no one is frowning.

The liquor segment in India is expected to grow at 8% CAGR for next five years. And the growth rate for beer is estimated at 9% CAGR.

More Indians, including women are raising glasses. Considering India's population, favourable demographics, life style changes, mass urbanisation and premiumisation, the liquor industry is set for new highs.

If you share this view with me and are keen on how to ride that high through investment returns, researching beer, wine, and liquor companies is just the starting step.

I won't be surprised if better opportunities are in the offing in the supply chain.

And that's what I wish to bring to your attention today.

But before that, let me give you some context.

Consider the defence sector. The companies in this business are growing with rising allocation to the defence budget and policies that push local manufacturing.

However, unless you are an expert at predicting peaks and downturns, you could suffer betting on pure manufacturing and capital-intensive firms.

A better way to play this theme could be to look for companies focusing on technologies that would find application in, but not limited to, defence.

You know, the likes of communications, sensors, radars, imaging systems, advanced materials, unmanned vehicles, or drone technology and so on.

Now the liquor industry has its own challenges. It is highly regulated. There are quotas, controlled pricing, and rules about production, taxes, licenses, and so on.

So, is there a way to ride this trend and minimise these risks?

The answer lies in the supply chain.

Whether you are a teetotaller or a connoisseur, one thing we all agree on is the aesthetic appeal of glass liquor bottles.

Not only for aesthetics, but glass also remains a preferred packaging material as it is non-reactive unlike plastic.

AGI Greenpac is one of the listed companies in this space.

Glass containers make 89% of its revenue. Of this, alcoholic beverages segment comprises 75%.

The company has over 500+ diversified institutional clients across industries such as - Abbott, Kingfisher, Bagpiper, Johnnie Walker, Corona, Carlsberg, Sula, Glenmark, Bacardi, Carlsberg, Nestle, HUL, and of course, Coca Cola, among others.

It claims to have best industry margins in the glass container industry.

The company expects the growth and premiumisation in the liquor market to some of the key growth drivers.

Haldyn Glass is another player in glass bottlemaking with clients in liquor manufacturing, foods/FMCGG and non-alcoholic beverage manufacturing, pharmaceutical and perfumery sector.

About 70% of its sales come from liquor sector, with clients like Pernod Ricard, United Spirits, Tilaknagar Industries, and Shiva Distilleries.

Another microcap to keep an eye on is Oricon Enterprises. This little-known company has marquee clients in its list -Coca Cola, Pepsi, Bisleri, Diageo, Heineken, United Breweries.

It's a leading closure (metal and plastic) manufacturer in India with over 30% market share in each category.

Praj Industries, a leading biotechnology player, is another key beneficiary. The company has 70% share in the domestic brewery industry.

Now don't consider any of these names as a recommendation. But they should indeed be in your watchlist for liquor industry.

The point is, when you see a particular sector growing, try to look beyond direct players. Sometimes, the real riches in the gold rush lie with pick and shovel stocks.

Warm regards,


Richa Agarwal
Editor and Research Analyst, Hidden Treasure