UBS on U.S. Beer Market Intel

UBS on U.S. Beer Market Intel

UBS analyst says, "Weak volumes and strong pricing continue for US beer - US domestic beer shipments in May fell -2.7% y/y. Importantly, Nielsen data for the 4 weeks to 11 June shows price/mix remains solid at 2.0% y/y. We continue to believe volume weakness is not related to price increases as beer has low price elasticity (21-March-11 note for details). The core beer consumer (21-34 year old, blue collar, minority demographics) remains weak due to high unemployment and low confidence but will eventually recover. But, it is more likely to be after 2011."

"Reducing MillerCoors estimates and target - We are lowering our 2011 and 2012 volume forecasts at MillerCoors from -0.8% to -2.1% and from +1.0% to 0.0%, respectively. Our Molson (NYSE: TAP) 2011 EPS is now $3.71 (from $3.76), and 2012 is $4.13 (from $4.20). We are taking our Price Target on TAP to $51, or 12.5x our new 2012 estimate, from $53. Correspondingly, we reduce our SABMiller EPS by -0.4% to reflect the MillerCoors downgrade."

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