Wolfe Research reports that Ball Corporation (NYSE:BALL) may see a volume uptick as a result of persistent demand for energy drinks and consumption tied to the FIFA World Cup, based on recent channel checks.
Energy drink volumes remain in a range described by the firm as high single-digit to low double-digit percentage growth, with variability across brands and regions. Distributors contacted by Wolfe expressed comparatively greater optimism for Celsius and Monster, while noting that Red Bull plans to raise its prices in August.
Feedback from beer distributors was uneven. One factor dampening beer sales has been poor Memorial Day weather, according to Wolfe, and convenience store trends were challenged as gasoline prices pressured consumer spending. Within the beer category, Constellation Brands was reported to be performing well, which Wolfe said should be a positive for Ball’s business, while Molson Coors showed weaker trends and Anheuser-Busch InBev produced mixed results.
Wolfe expects the World Cup to add a low single-digit percentage volume increase for beverage can demand, and it observed that promotional activity tied to the tournament is already underway. The research note highlighted that Ball’s customer mix is showing steady trends overall, which the firm believes should mitigate investor concerns about potential headwinds arising from large beer brands.
Commentary from Ball on second-quarter volumes was described by Wolfe as consistent with the channel checks, pointing to mid-single-digit percentage growth. In South America, trends that were soft in the first quarter have shifted and are now offsetting earlier weakness, in part because of World Cup-related demand, while European momentum appears set to continue into the second half of the year.
Finally, Wolfe identified a list of national teams whose advancement in the World Cup would be likely to support U.S. beverage can suppliers, naming the United States, Spain, Portugal, Scotland, England, Brazil and Argentina as nations whose continued participation could be beneficial to suppliers including Ball.
Summary
Wolfe Research’s channel checks suggest Ball Corporation may benefit from sustained energy drink growth and incremental World Cup-driven beverage consumption, with mixed signals from beer distributors and geographic offsets between regional trends.