This guide highlights the key performance indicators for the beverage industry and where investors should look to find an investment edge. While this guide is not a fully integrated industry primer, as the market leader in granular consensus estimates data, Visible Alpha works with partners and clients to determine the beverage industry’s key performance indicators (KPIs). This guide will aid market participants in identifying industry trends and the potential future performance of beverage companies, by region and service type.
The global operations of beverage companies are divided by geographic classification into the Americas and other International regions. The Americas includes revenue generated from beverages sold in North America, South America, and all other regions in the Americas. North America includes revenue generated from beverages sold in the U.S., Canada, Mexico, and Central America. International includes revenue generated from beverages sold in EMEA (Europe, Middle East, and Africa), Asia Pacific, and the rest of the world.
For the beverage industry revenue is calculated as volume multiplied by the average selling price (ASP) for a given period in a specific region. Alternatively, it can also be calculated by decomposing revenue growth to isolate the core performance of the business from the impact of M&A and FX on growth. The concepts most commonly used are volume growth, price growth, organic growth, acquisition/divestiture growth, and forex growth.
Volume, also called shipments, is the recorded quantity of products delivered to the customer in a given period. Volume sold can be in metric tons, barrels, liters, hectoliters (hl), or total cases delivered. Generally, a case of beer contains 24 bottles or cans. The definition of a case may differ from company to company and depending on the type of beverage. ASP indicates the price per unit of product sold which is generally represented in the form of ASP per hl, ASP per barrel, or ASP per case.
The beverage industry covers a variety of product categories. As a result, one of the main elements of this industry, volume, is measured in different units for different products. For example, the volume of milk is generally reported in thousands or millions of tonnes/liters. In the case of soft drinks and beer, which are sold in bottles, volume is reported by case. Beer can also be sold in barrels. BBL is the abbreviation for beer barrels, which is the official unit of measurement of beer volume for breweries in the U.S. 1 bbl equals 31 gallons of beer. Liquor is sold generally in tons.
For soft drinks, the volume or shipment units are reported in company-specific terms and are not comparable since some companies may report shipment of cases while others may report in units, liters, or packs. On our insights platform, we employ the following conversion for volume in order to make the KPIs comparable: 1 tonne = 1000 liters = 10 hectoliters = 8.5217 barrels. This is illustrated in the table below.
Two major expenses for beverage companies are the cost of goods sold and selling, general and administrative expenses. Costs of goods sold (COGS) are direct expenses, including labor, that are associated with the production of beverages. For beverage companies, COGS includes the cost of ingredients, raw materials, packaging, and other items directly involved in the production process. The bottling of beverages is a high-cost activity and investment in factories for manufacturing can be significant. COGS also includes these expenses along with freight and warehousing expenses.
Selling, general and administrative (SG&A) expenses are indirect expenses that include distribution, marketing, and sales costs. The highly competitive nature of the beverage industry ensures beverage companies spend a significant amount on marketing and advertising campaigns, making this a major expense for companies in the industry.
To evaluate the profitability of companies in this industry, analysts focus on gross margins, EBIT (earnings before interest and taxes) margins, pre-tax margins, and net margins. Gross margins are particularly important due to the industry’s high raw material costs. Beverage companies with robust expense management skills generally have better gross margins.
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Key performance indicators (KPIs) are the most important business metrics for a particular industry. When understanding market expectations for the beverage industry, whether at a company or industry level, some industry KPIs to consider are:
Overall Beverages
Brewers
Distillers and Vintners
Soft Drinks / Non-alcoholic Beverages
* Company level consolidated volume and average selling prices
To understand market expectations for the beverage industry, a key information source is sell-side analyst estimates and consensus forecast data. The buy-side, sell-side, and public companies leverage this type of data to conduct competitive analysis, a type of analysis conducted by professional analysts that involves comparing standardized metrics of one company with those of similar companies. Because companies report metrics differently – and sometimes on different metrics altogether – standardizing the key metrics for each company can be a cumbersome process.
Visible Alpha Insights includes analyst data, company data, and industry data at a level of granularity unparalleled in the market. Our industry data – Standardized Industry Metrics – enables market participants to quantify and compare market expectations for companies across 150+ industries.
Data as of February 2023
Visible Alpha offers 23 beverage industry-related comp tables, comparing forecasts for key financial and operating metrics, to make it easy to quickly conduct relative analysis, whether you are interested in looking at key values for global companies, the Americas, or Europe. Every pre-built, customizable comp table is based on region, sub-industry, or key operating metrics.
Brewers
Distillers and Vintners
Soft Drinks / Non-alcoholic Beverages
Visible Alpha offers an innovative, integrated experience through real-time, granular consensus estimates and historical data created directly from the world’s leading equity analysts. Using a subset of the below KPIs, this data can help investors hone in on the key drivers of companies to uncover investment opportunities.
Sales Volume
Sales volume / shipment is the recorded quantity of products delivered to customers during a given period. Volume sold can be measured in metric tons, barrels, liters, hectoliters, or total cases delivered.
On the Visible Alpha Insights platform, we offer a further breakdown of sales volume by product type: Sales Volume – Beer, Sales Volume – Liquor & Spirits, Sales Volume – Alcoholic Beverages, Sales Volume – Milk, Sales Volume – Tea/Coffee, and Sales Volume – Non-Alcoholic Beverages.
Average Selling Price (ASP)
Average selling price (ASP) is the price per unit of alcoholic beverages sold, generally represented in the form of ASP per hectoliter (hl), ASP per barrel, or ASP per case.
On the Visible Alpha Insights platform, we offer a further breakdown of ASP by product type: Average Selling Price – Beer, Average Selling Price – Liquor & Spirits, Average Selling Price – Alcoholic Beverages, Average Selling Price – Milk, Average Selling Price – Tea/Coffee, and Average Selling Price – Non-Alcoholic Beverages.
Gross Profit/(Loss)
Gross profit/(loss) is the difference between the cost of goods sold and the revenue earned.
Operating Income/(Loss)
Operating income/(loss) is the amount of income or loss generated from the operations of a company, after deducting operating expenses such as compensation, distribution cost, and other general and administrative expenses.
On the Visible Alpha Insights platform, we offer a further breakdown of operating income/(loss) including Operating Income/(Loss) – Non-Alcoholic Beverages, Operating Income/(Loss) – Organic Impact, and Operating Income/(Loss) – Forex Impact.
Total Operating Expense
Total operating expenses include all expenses incurred by brewers, distillers and vintners, and soft drink companies through their normal business operations. This includes rent, equipment, inventory costs, marketing, and payroll, among others.
EBITDA
EBITDA or earnings before interest, taxes, depreciation, and amortization is a widely used measure of profitability.
Total Revenue – Volume Impact (%)
Total revenue volume impact refers to the revenue growth generated by the number of products sold.
Total Revenue – Price Impact (%)
Total revenue price impact refers to the revenue growth generated by the rise in the price of the products.
Total Revenue – Organic Impact (%)
Total revenue organic impact refers to the revenue growth generated from increasing output and enhancing sales internally. This does not include growth attributable to mergers and acquisitions, currency fluctuations, etc. It is generally calculated as the summation of volume growth and price growth.
Total Revenue Forex Impact (%)
Total revenue forex impact refers to the effect of changes in exchange rates on revenue earned in foreign currencies. A stronger domestic currency will translate into lower foreign revenue when converted to domestic currency.
Total Revenue – Acquisition/Divestiture Growth (%)
Acquisition/divestiture growth isolates the growth in revenue that can be attributable to acquisitions or divestitures.
Total Revenue – Total Impact (%)
Total revenue total impact refers to revenue growth as compared to the base year in percentage.
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This guide highlights the key performance indicators for beverages and where investors should look to find an investment edge, including:
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