The Brewers Association defines American craft brewers as "small, independent and traditional."
The popularity of craft beers, however, is anything but small.
In fact it has skyrocketed in the past few years. According to trade industry publication Beer Marketer's Insights, the craft beer industry produces 16 million barrels annually, or almost 8 percent of the total beer volume in the United States. That is up from about nine million barrels, or a little more than 4 percent in 2008.
Of course, the big brewers have not failed to recognize this trend and have made moves into "craft" brewing as well. If the American taste for diverse and specialty brews continues to grow, the giants in the brewing industry will have no choice to but follow the lead, and they have resources to do it in a big way.
Anheuser-Busch InBev (NYSE: BUD), the world's largest beer brewer, is based in Belgium and produces about 18 percent of the world's supply of beer. Better known for brands such as Budweiser, it also produces regional favorites like Goose Island, Landshark, Shocktop and Zigenbock. Its price-to-earnings (P/E) ratio is lower than the industry average, and the operating margin is greater than the industry average.
Five of the seven analysts surveyed by Thomson First Call rate the stock at Strong Buy, and one more also recommends buying shares. After shares hit a multi-year high in June, they pulled back about 7 percent to the end of July, but they have started to rebound. The stock has underperformed Molson-Coors over the past six months.
The world's second-largest brewer has a market cap of almost $89 billion and is responsible for more than 9 percent of world production. Its MillerCoors joint venture produces Belgian-style Blue Moon ales, and products of its Wisconsin-based Leinenkugel subsidiary are available mainly in the Midwest.
SABMiller is based in London and its shares are traded on the London Stock Exchange. The analysts' consensus recommendation has been to hold those shares for at least two months. However, over-the-counter shares have narrowly outperformed the S&P 500 over the past six months.
With a market cap of less than $14 billion, Molson Coors (NYSE: TAP) is less than a tenth the size of Anheuser-Busch. And it holds less than 3 percent of the world beer market. Besides its eponymous brands, it also makes Blue Moon and Henry Weinhard's through its MillerCoors joint venture. Note that Molson Coors has a P/E ratio that is greater than the industry average.
More than half of the surveyed analysts recommend buying shares and the rest recommend holding them. The share price flirted with a new multiyear high on Monday before pulling back. The stock is up more than 34 percent and has outperformed Anheuser-Busch and Boston Beer over the past six months.
While Boston Beer (NYSE: SAM) positions itself like a craft brewer in its marketing and it well known for its great variety of different brews, it is in fact a national company rather than a regional one, and it has a market cap near $3 billion. Its return on equity is a healthy, nearly 24 percent, but its P/E ratio that is much greater than the industry average.
Two of the four analysts polled recommend buying shares and the other two rate the stock at Hold. Shares have retreated more than 8 percent since hitting a year-to-date high back in March. Over the past six months, Boston Beer has underperformed the S&P 500, as well as Anheuser-Busch and Molson Coors.
Craft Brew Alliance
With a market cap of only around $250 million, it would be fair to say Craft Brew Alliance (NASDAQ: BREW) isn't exactly a big beer company. But this handful of craft beer brands, including Redhook, Kona and Widmer Brothers, is around 33 percent owned by Anheuser-Busch, one reason the Brewers Association does not recognize it as a craft brewer. Its long-term earnings per share growth forecast is about 20 percent.
Only two analysts follow this stock, one rating it a Buy and the other at Hold. The share price has yet to recover from a sell-off in May following the release of first-quarter results. It is more than 15 percent lower than six months ago and the stock has underperformed the S&P 500 in that time.
At the time of this writing, the author had no position in the mentioned equities.
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