One of the biggest stories to hit the food and beverage industry this week was the announcement that per-capita bottled water consumption had surpassed soda consumption for the first time ever.
Although it's a huge milestone, it doesn't come as a total surprise. For years now, we've been watching sales of bottled water grow, while at the same time consumption of sugary soda has dramatically declined.
As consumers shun soda in an effort to live healthier lives, soda giants such as Coca-Cola (KO) and PepsiCo (PEP) have scrambled to pad their product portfolios with everything from better-for you drinks (including organic Gatorade and kombucha, a fermented tea) to organic snacks. But all the while, plain old water was winning over the market.
According to the Beverage Marketing Corp., volume sales of bottled water have risen in every year but two (2008 and 2009) since 1977. In the last 10 years, volume sales soared by more than 50%. The per-capita consumption of bottled water is now 39.3 gallons, versus soft drinks at 38.5 gallons.
While an overwhelming percentage (two-thirds) of sales have gone to single-serve bottles of still water (think Coke's Dasani or Pepsi's Aquafina products), sparkling water grabbed 4% of annual market share.
And it's here that two of the most appealing water plays are to be found.
The first is National Beverage (FIZZ) , which markets the LaCroix brand of sparkling water with gourmet flavors. During the third fiscal quarter ended Jan. 28, the company's sales grew by more than 20% year-over-year. LaCroix is increasingly popular among members of the millennial generation, who pride themselves on being "foodies" with a yen for all things marketed as healthy or gourmet.
Those trends helped National Beverage deliver earnings of 52 cents a share for the quarter, an impressive 117% year-over-year improvement.
"I am extremely proud that we finished our third quarter with industry-leading performance and that we are on course for having a record-setting year," the company's CEO, Nick Caporella, said during a conference call.
Shares of National Beverage shot up following earnings, and are currently hovering around $74. Investors should watch out for any dips in price to grab shares of this bubbly stock.
The Israel-based company was once known for its home soda-making machines. But after some clever marketing, its products have been rebranded as gourmet sparkling water makers. And that has led the company to report five consecutive quarters of solid earnings beats.
But there's still plenty of room to grow. In Europe, which is SodaStream's largest market, the company's products can be found on only 10% of kitchen counters.
The author is an independent contributor who at the time of publication owned none of the stocks mentioned.
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Editors' pick: Originally published March 14.