BUD - Anheuser-Busch InBev SA/NV
78.26 0.00 (0.00%)
After hours: 4:52PM EST
| Previous Close | 78.11 |
| Open | 77.82 |
| Bid | 78.25 x 800 |
| Ask | 78.21 x 800 |
| Day's Range | 77.27 - 78.29 |
| 52 Week Range | 72.87 - 102.70 |
| Volume | 1,248,876 |
| Avg. Volume | 1,172,051 |
| Market Cap | 153.934B |
| Beta (5Y Monthly) | 0.84 |
| PE Ratio (TTM) | 16.59 |
| EPS (TTM) | 4.72 |
| Earnings Date | N/A |
| Forward Dividend & Yield | 2.01 (2.57%) |
| Ex-Dividend Date | Nov 17, 2019 |
| 1y Target Est | 98.93 |
- American City Business Journals
Retired baseball superstar joins forces with one of Anheuser-Busch's beer brands
Retired baseball star Alex Rodriguez is joining forces with Anheuser-Busch InBev's Presidente Beer. A-Rod, as he's known, is given the title of co-owner and chairman of Presidente USA, though it's unclear whether he's acquired a stake in the brand. Founded in 1935 in the Dominican Republic, Presidente Beer was acquired by A-B in 2012.
- PR Newswire
A-Rod Up To Bat For Presidente
Anheuser-Busch InBev today announced a landmark partnership between the iconic Dominican pilsner Presidente Beer and Alex Rodriguez, with the baseball legend and entrepreneur joining as Chairman of Presidente USA.
- American City Business Journals
Molson Coors acquires its 1st craft brewery in 4 years
Molson Coors Beverage Co. (NYSE: TAP) announced Wednesday that it’s purchased Atwater Brewery of Detroit, marking the first time since 2016 that the now-Chicago-based company has acquired another brewery and offering a hint that the recently announced revitalization efforts under new CEO Gavin Hattersley could involve more M&A activity involving both independent breweries and non-beer makers. Atwater, a 23-year-old brewery known for its Vanilla Java Porter and other riffs on traditional beer styles, joins Molson Coors’ Tenth and Blake portfolio of craft-style beer makers that includes AC Golden Brewing of Colorado as well as brands like Terrapin Beer Col, Saint Archer Brewing Co. and Hop Valley Brewing Co. Company officials did not disclose terms of the transaction, which is expected to be completed in the coming months.
- TheStreet.com
Alex Rodriguez Buys Stake in AB InBev's Presidente Beer
Alex Rodriguez is going from the clubhouse to the board room after purchasing a minority stake in Dominican beer brand Presidente, according to a report by the New York Post. Rodriguez will serve as chairman, the report said. Presidente is part of the Anheuser-Busch InBev drink family.
- Barrons.com
AB InBev Boss Carlos Brito Is Optimistic On The Global Economy After Progress On Trade Deals
Carlos Brito, who is attending the World Economic Forum in Davos, told Barron’s the business isn’t as affected by trade deals as some industries because AB InBev “buys locally, brews locally and sells locally.”
- American City Business Journals
Goose Island Beer going national with its first-ever low-cal beer
Goose Island Beer Co. is going national with its first-ever IPA low-calorie brew, called So-Lo. The brew has been in test for several months as it was served only to visitors to the Goose Island brewery in Chicago. A spokesman for Goose Island declined to say exactly how many markets nationally will carry So-Lo in the early going.
- Benzinga
Anheuser Busch CEO On Dry January, Hard Seltzer And CBD
One of the immediate trends in the beverage industry is "dry January" where consumers give up drinking alcohol for the first month of the year. Regardless, the CEO said there is zero impact on its financials from "dry January," although it won't ignore the profitable market.
- PR Newswire
Natural Light Seltzer Is Inviting You To Their House Party For The Big Game
Natural Light Seltzer is launching its newest flavor, a delicious strawberry-kiwi blend called House Rules, by throwing the most epic house party for the big game alongside Rick Ross on Star Island in Miami, FL on February 2. The best part is...you can get on the guest list.
- Reuters
Brazil's Ambev sets ambitious target to end plastic pollution in packaging
Brazilian beverages company Ambev SA has set an ambitious target of eliminating plastic pollution in its packaging by 2025, in a push that an executive said on Monday has the potential to generate approximately 1 billion reais ($239.09 million) in business. Latin America's largest brewer is partnering with stakeholders, including suppliers, recycling cooperatives, startups and universities to have all its beverages either in returnable packaging or made of 100% recycled material. "Today 40% of our beers already use returnable packaging, but as we made progress our dream got bigger and we decided to end plastic pollution in our packaging," Ambev's vice-president of sustainability and supply chain, Rodrigo Figueiredo, said in an interview.
- MarketWatch
Millennials like White Claw better than wine — and it’s shaking up the alcohol industry
Millennials are putting a cork in their wine habit. U.S. wine sales have fizzled for the first time in 25 years as young adults sip spiked seltzers and spirits, instead. The volume of U.S. wine purchases slipped 0.9% in 2019, according to alcohol industry tracker IWSR — the first drop since 1994.
- Moody's
Anheuser-Busch InBev Worldwide Inc -- Moody's announces completion of a periodic review of ratings of Anheuser-Busch InBev SA/NV
Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Anheuser-Busch InBev SA/NV and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future.
- InvestorPlace
The Big Rebound in Canopy Growth Stock Will Only Get Bigger
The long overdue rebound in marijuana stocks is finally here. The cannabis sector, led by the segment's most important company, Canopy Growth (NYSE:CGC), are breaking out in early 2020. Investors are betting that the demand and legislative troubles of 2019 will fade, and the whole industry will rebound in a big way over the next several quarters.Source: Shutterstock This isn't a small breakout, either, but a material one: Canopy Growth stock is already up 12% in 2020. That's basically 1% growth every trading day and represents the most upward momentum this stock has seen since early 2019. And it's worth noting that the move has also been on big volume, so there appears to be a lot of money out there staking big on a huge CGC turnaround.That's the good news for bulls. Here's the better news -- this big Canopy Growth stock turnaround will only get bigger as we go deeper into 2020.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Cheap Stocks to Buy Under $10 In a nutshell, favorable fundamental developments in the cannabis market will spark a significant growth trend reversal for Canopy over the next few quarters. This growth trend reversal will converge on what is still a very beaten-up and relatively discounted CGC stock. That convergence will spark a huge rally in shares to levels north of $30.Here's a deeper look. Favorable Fundamentals Will Develop in 2020Thanks to weakening fundamentals in the global cannabis market, Canopy's growth trajectory meaningfully slowed in 2019. I think that will change in 2020. Cannabis market fundamentals will strengthen and Canopy's growth trajectory will meaningfully improve.This thesis breaks down into three components: revenue growth re-acceleration, profit margin stabilization and net loss reduction.First, the introduction of new products like vapes and edibles into the Canadian market, coupled with significant legal retail footprint expansion, will re-ignite demand growth throughout Canada's legal cannabis market over the next few months. At the same time, Canopy Growth will aggressively pivot into the U.S. market with its First & Free hemp product line. Canadian legal demand revival coupled with new U.S. revenue streams will improve Canopy's revenue growth trajectory in 2020.Second, as demand trends in Canada improve in 2020, demand will finally start to catch up to a supply glut in the market. This will lead to more favorable market pricing and higher gross margins for Canopy Growth. Simultaneously, Canopy's 2019 production facilities will start to produce at capacity in 2020, which will also provide a year-over-year margin boost. Net net then, Canopy's 2019 margin headwinds could turn into 2020 margin tailwinds.Third, the combination of revenue growth re-acceleration and profit margin stabilization will lead to Canopy reporting narrower losses. That's a big deal for a hyper-growth, unprofitable company that needs to inch towards profitability in order to justify its valuation. Canopy Growth Stock Will SoarBecause of the three aforementioned fundamental improvements, CGC is set to soar in 2020.The logic is pretty simple. Investors once believed that Canopy would emerge as the top dog in an ultra valuable global cannabis industry. But slowing growth and profitability concerns clouded that bull thesis, and ultimately knocked shares down to $20. Those slowing growth and profitability concerns will ease significantly in 2020. As they do, investors will start to once again buy into the idea that Canopy is going to emerge at the top dog in a huge global cannabis industry.The last time investors believed that, Canopy Growth stock was up at $50. Shares could make a run for that level again as investors once again adopt this bullish mentality amid re-accelerating growth, stabilizing margins and narrowing losses.The numbers are pretty simple, too. Under the paradigm that Canopy will leverage its unparalleled size, resources, partnerships, and distribution to turn into the Altria (NYSE:MO) or Anheuser-Busch (NYSE:BUD) of a several hundred billion dollar global cannabis industry at scale, I think that Canopy reasonably projects to earn $5 in profits per share by fiscal 2030.Based on a forward earnings multiple of 16 and a 10% annual discount rate, that implies a a 2020 price target for Canopy Growth stock of about $33 to $34. Bottom Line on CGC StockCGC had an awful 2019 amid deteriorating cannabis market fundamentals. Shares will bounce back in 2020 amid improving cannabis market fundamentals. This rebound has already started in the first two weeks of 2020, and will continue for the balance of the year. Ultimately, Canopy Growth stock will head way higher over the next several months.As of this writing, Luke Lango was long CGC. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Cheap Stocks to Buy Under $10 * 5 Retail Stocks Placer.ai Thinks Can Win Big in 2020 * 6 Cheap Stocks to Buy Under $7 The post The Big Rebound in Canopy Growth Stock Will Only Get Bigger appeared first on InvestorPlace.
- Bloomberg
AB InBev Turns to Solar Power as South Africa Suffers Blackouts
(Bloomberg) -- Sign up to our Next Africa newsletter and follow Bloomberg Africa on TwitterAnheuser-Busch InBev is installing solar panels at South African breweries in a push to reach global environmental goals that comes as state-owned utility Eskom Holdings SOC Ltd. struggles with blackouts.The brewer of Budweiser beer said it’s joined an 18 billion rand ($1.3 billion) pan-African plan to generate more energy from environmentally friendly sources. The solar panels in South Africa are just one part of the initiative, which includes partners and spans the region.The world’s biggest brewer has set a global target of securing all of its purchased energy from renewable sources by 2025. The company this month partnered with others in Europe to tap green power from BayWa r.e., a German renewable energy developer.The latest move comes as Eskom has had to institute rolling electricity blackouts due to operational problems. That has prompted South African companies to secure electricity through other means, although regulations require them to buy some of their power from the utility.“We can’t do 100% renewable power in Africa at this stage” because of the sourcing rules and the instability of some power grids, said Taryn Rosekilly, vice president for sustainability at AB InBev Africa.AB InBev is completing solar electricity projects at seven South African manufacturing sites and also testing electric trucks for deliveries.Solar power at the breweries will provide 10% to 15% of the energy needs of AB InBev’s South African businesses and costs 15-20% less than buying electricity generated by Eskom, the company says. Other green power generation options being considered include wind and converting liquid waste produced by the breweries into gas.By the end of this year, AB InBev plans to use wind and solar power at a malting plant in Caledon, in South Africa’s Western Cape province. It will be the first South African site using 100% renewable energy.To contact the reporter on this story: Janice Kew in Johannesburg at jkew4@bloomberg.netTo contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, John LauermanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Investopedia
Top Beer Stocks for Q1 2020
The beer industry is made up of companies specializing in the production of beer, but which also produce other alcoholic and non-alcoholic beverages. Beverages are considered consumer staples and thus the beer industry may be considered a small part of the broader consumer staples sector.
- Benzinga
Budweiser Spending Millions To Advertise Hard Seltzer During Super Bowl
Investors looking for further evidence of the growth of hard seltzer should pay extra attention during Super Bowl LIV. AB InBev, the parent company of Budweiser, believes it has a "beautiful opportunity" during the Super Bowl to market its Bud Light Seltzer to both Bud Light drinkers and non-Bud Light drinkers, WSJ quoted the company's U.S. marketing chief Marcel Marcondes as saying on a conference call.
- Simply Wall St.
Here's How We Evaluate Anheuser-Busch InBev SA/NV's (EBR:ABI) Dividend
Is Anheuser-Busch InBev SA/NV (EBR:ABI) a good dividend stock? How can we tell? Dividend paying companies with growing...
- Bloomberg
AB InBev’s CFO Felipe Dutra May Be Stepping Down After 15 Years
(Bloomberg) -- Anheuser Busch InBev’s Felipe Dutra may step down after about 15 years as chief financial officer of the world’s largest brewer, a person familiar with the matter said.Succession planning is routine for officials at his level, according to the person, who asked to remain anonymous as the information isn’t public. Timing of the change isn’t known and Nelson Jamel, the company’s financial head for North America, is one of a number of people under consideration as a replacement, the person said.AB InBev has disappointed investors as Chief Executive Officer Carlos Brito reported earnings below analysts’ estimates in four of the past eight quarters. Brito halved the brewer’s dividend payout in 2018 amid sluggish progress on debt reduction following the acquisition of SABMiller in 2016, although moves such as the disposal of the Asian business are aimed at cutting borrowings.The shares fell as much as 1% in Brussels Wednesday.The Financial Times reported earlier that AB InBev was considering replacing Dutra. A company representative declined to comment. A call to Dutra’s office after business hours wasn’t answered.(Updates with shares in fourth paragraph)To contact the reporter on this story: Thomas Buckley in London at tbuckley25@bloomberg.netTo contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, John Lauerman, Jonathan RoederFor more articles like this, please visit us at bloomberg.com©2020 Bloomberg L.P.
- Benzinga
Beer Companies And Dry January: A Sign Of The Times?
Beer sales typically drop in January in reaction to the month long sobriety pledge which traces its roots to the United Kingdom in 2013, according to CNBC. Coupled with a growing trend away from beer sales amid health concerns, one would assume beer companies are panicking. Molson Coors Beverage Co (NYSE: TAP) is promoting its low-alcohol beer Miller64 by targeting consumers demanding lower calories in their drinks.
- Bloomberg
Five Things to Watch in European Food and Drink Stocks in 2020
(Bloomberg) -- A stellar start to 2019 for food and drink stocks largely fizzled out in the second half of the year, and Unilever’s recent sales warning has left a cloud hanging over the sector outlook for 2020.Despite a lackluster few months, the Stoxx 600 Food & Beverage index is still on course for its best year since 2009, with a 27% gain slightly outperforming the region’s main gauge. But after what Citigroup Inc. described this month as one of the worst staples earnings seasons of the past 20 years, investors have become unsettled, not helped by this month’s announcement by Unilever that revenue will be in the lower half of its guidance range in 2020.In beverages, beer stocks were hot in 2019, led by a surge in Carlsberg A/S, but 2020 may be a better year for spirits, which are ripe for a rebound thanks to elements such as emerging-markets growth and continuing high levels of cash returns, according to Citi analyst Simon Hales. Brewers should get a boost from the UEFA Euro 2020 soccer tournament starting in June, in particular sponsor Heineken NV.Below are five things for investors to watch in 2020:More M&A (and an IPO?)Expect staples giants to continue reshaping their portfolios after Nestle SA’s divestment of U.S. ice cream and Herta meats, and Anheuser-Busch InBev NV’s Asian IPO in 2019.Unilever’s new Chief Executive Officer Alan Jope must make “sharper decisions” on this front, and the company’s food & refreshment brands could be the focus of disposals, according to Jefferies analyst Martin Deboo. Nestle also may shed more assets, with Buitoni pasta in the U.S. being one potential candidate, says Vontobel Holding AG’s Jean-Philippe Bertschy. Meanwhile, JAB Holding Co. is mulling an initial public offering of its coffee business in Amsterdam, which could raise as much $3.4 billion.In beverages, Aperol maker Campari SpA is still scouting for acquisitions and AB InBev also may return to M&A after making inroads on debt, with the buyout of Castel Group an often-touted target. Still, a dearth of big M&A candidates may be a bigger problem for beverage companies, according to Sanford C. Bernstein analyst Trevor Stirling.Healthy Munching and BoozeAfter January’s introduction of a vegan sausage roll by Greggs Plc and a new plant-based burger by Nestle, healthier eating (and drinking) will remain a focus in 2020.Consumers, companies and investors alike are showing increased interest in environmental, social and governance issues and healthier lifestyles, and this continues to accelerate, according to Eddy Hargreaves, an analyst at Investec Wealth & Investment Ltd.Stocks to watch include Kerry Group Plc, whose flavors and fragrances might help food and beverage companies develop new products with less sugar, according to Berenberg analysts. They also give a mention to sports nutrition leader Glanbia Plc and to AB InBev and Molson Coors Brewing Co. for their low-calorie beer offerings.Drinks such as Diageo Plc’s Ketel One Botanical (vodka infused with natural fruit essences, no artificial sweeteners and no added sugar) are gaining traction in the U.S. because of their low-calorie content, while no- or low-alcohol beer remains popular in Europe, says Berenberg analyst Javier Gonzalez Lastra.China and More ChinaThe outlook for a China-U.S. trade deal may have brightened, but the threat of U.S. tariffs will continue weighing on the likes of Remy Cointreau SA and Pernod Ricard SA. There are direct potential impacts such as tariffs on single-malt Scotch whisky, which would disadvantage single malts compared with other spirits, but there are also indirect tariffs as companies pass the higher input costs onto consumers, according to Liberum analyst Nico Von Stackelberg.“It’s a bit like having a higher oil price,” he says. “The net impact is less money in the wallet after all essentials are paid for.”Social upheaval in Hong Kong will also remain a drag for these and other stocks. China is a key growth engine and executives will continue strategizing on how best to grow there after deals such as Heineken’s partnership with China Resources Beer Holdings Co. in 2019.There’s another new threat coming from China in the form of local premium brands that finally seem to be taking off there, Berenberg’s fivGonzalez Lastra said. “Consumers appear more open about embracing Chinese champion brands,” he said.Hard Seltzers, Gin and CannabisAnalysts are wondering whether the mania of U.S. millennials for low-calorie, low-carb hard seltzers, a mix of water, alcohol and fruit flavors, can ever catch on with Europeans too. Questions also linger on whether the current gin craze in Europe will last and whether rum could be the next big thing.One thing’s for sure: in 2020 investors will continue closely tracking developments made on cannabis-infused drinks. A joint venture between Tilray Inc. and AB InBev is currently introducing cannabis-infused teas in Canada, soon to be followed by carbonated soft drinks also containing pot, according to Bryan Garnier & Co.Last but not least, one product that’s nowhere close to falling out of favor is chocolate, but even in this field innovation matters: Barry Callebaut AG’s ruby chocolate recently won U.S. regulatory approval.PremiumizationU.S. Nielsen data has been closely watched among Fevertree Drinks Plc analysts this year as they gauge the growth potential for premium mixers in that market. The acceleration of growth in the second half of 2019 bodes well going into the new year, according to Berenberg.Meanwhile, Pernod Ricard SA has been ramping up its purchases of premium liquor brands. The Paris-based company bought the owner of the TX American whiskey and bourbon brands in August, as well as the Malfy Italian gin brand in April. Jefferies called Pernod “one of the few remaining change stories within beverages,” with the shift toward premium spirits continuing to be strong, while Citigroup upgraded the stock to buy this month, predicting a pick-up in trading momentum in the last three quarters of fiscal 2020.\--With assistance from Phil Serafino.To contact the reporters on this story: Albertina Torsoli in Geneva at atorsoli@bloomberg.net;Lisa Pham in London at lpham14@bloomberg.netTo contact the editors responsible for this story: Beth Mellor at bmellor@bloomberg.net, Paul Jarvis, Namitha JagadeeshFor more articles like this, please visit us at bloomberg.com©2020 Bloomberg L.P.
- Zacks
Simple Market Timing Strategies That Work - December 30, 2019
Have you ever dreamed of being that one in a million investor who has the talent to perfectly time the markets?
- InvestorPlace
3 Beer Stocks to Own Heading Into New Year 2020
Apparently, beer is a bear market.After dominating the U.S. beverage market, beer sales have fallen flat -- all as consumers opt for alternatives. For example, craft beer sales were up 7% in 2018 to $27.58 billion, giving it a 24.2% share of the $114.2 billion U.S. beer market. That's up from 23.4% in 2017.The bearish trend can also be attributed to millennials, who are less likely to drink beer, and are more likely to drink wine or spirits when they do consume alcohol.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAdditionally, this shift can also be attributed to cannabis. "The emergence of legal cannabis in certain U.S. states and Canada may result in a shift of discretionary income away from our products or a change in consumer preferences away from beer," once noted Molson Coors (NYSE:TAP).It is part of the reason Constellation Brands took a 9.9% stake in cannabis giant, Canopy Growth Company (NYSE:CGC)."We believe alcohol could be under pressure for the next decade, based on our data analysis covering 80 years of alcohol and 35 years of cannabis incidence in the US," analysts at Cowen noted. "Since 1980, we have seen 3 distinct substitution cycles between alcohol and cannabis; we are entering another cycle." * 7 Stocks to Buy to Get 2020 Started the Right Way However, as beer companies wake up to changing demands for cannabis and health-conscious beverages, I'm spotting quite a few big opportunities. Here are three beer stocks to look into before the New Year. Beer Stocks to Buy Before 2020: Anheuser-Busch InBev (BUD)Source: legacy1995 / Shutterstock.com One of the biggest beer companies in the world got an icy reception in the latter part of 2019.In fact, Anheuser-Busch InBev (NYSE:BUD) lost 23% of its value after weak sales in China became a drag on earnings, and after cutting its forecast for the year ahead. However, it appears the worst has been priced into the stock."While the quarter left much to be desired, management believes the company is well positioned for accelerating revenue growth over time. With the addition of SAB Miller, Anheuser-Busch is more diversified than ever," says Motley Fool contributor, John Ballard. "Emerging markets make up about 70% of the company's total volume, which holds a lot of opportunity to bring in new consumers for the largest beer maker in the world, with 26% global market share."Plus, BUD is well-diversified in cannabis. In late 2018, it announced a $100 million cannabis deal with Tilray (NASDAQ:TLRY) to develop cannabis-infused, non-alcoholic drinks. Not only is BUD well-positioned for international growth, it is positioning itself among a health conscious, cannabis-loving generation. Plus, Guggenheim analyst Laurent Grandet reiterated a "buy" on BUD. While he argues earnings weren't as strong as he would have liked, he still believes BUD has "one of the most attractive growth algorithms in the space with continued optionality for M&A given the recently completed IPO in Asia-Pacific." Boston Beer Co. (SAM)Source: LunaseeStudios / Shutterstock.com Since the year began, Boston Beer Co. (NYSE:SAM) has been one of the most explosive alcohol stocks on the market. Between January and December, shares have run from $231.57 to nearly $385 with plenty of upside remaining.UBS just upgraded the SAM stock to a buy from a neutral rating, with a new price target of $440 -- all thanks to strong growth in the company's seltzer business. In fact, sales of Boston Beer's Truly brand of hard seltzer are so hot, the company can't handle the demand; That's not a fad either.White Claw's hard seltzer is already seeing a nationwide shortage of its drinks in the U.S. As Americans seek out drinks with fewer calories and less sugar, they're turning to hard seltzers. White Claw and competitor Truly both have around 100 calories per can, for example. * 7 Momentum Stocks Refusing to Slow Down Even Anheuser-Busch launched its line of seltzer. "These new products can help those companies, such as Anheuser-Busch, 'buffer those losses,'" Beth Bloom, associate director of US Food and Drink for Mintel has said, because beer sales are declining. Constellation Brands (STZ)Source: ShinoStock / Shutterstock.com Constellation Brands (NYSE:STZ) shares are up nicely from a 2019 low of $150.37 to around $200 in October with plenty of volatility in between.While its biggest beer brands -- including Modelo and Corona -- are still enjoying fast growth, STZ's diversification into the wine business should also bolster higher highs for the stock. For example, it just announced a deal with E&J Gallo Winery to buy more than 30 wine and spirit brands along with six wine-making facilities in the U.S. It is also launching a Corona-branded spiked seltzer mid-2020. Because of that and once the cannabis boom gets back underway, I strongly believe Constellation can be a $250 stock before long.As of this writing, Ian Cooper did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks to Buy to Get 2020 Started the Right Way * 10 Best ETFs for 2020: The Competition Is Stacked Full of Potential * 4 Gold Stocks to Buy as the Yellow Metal Surges The post 3 Beer Stocks to Own Heading Into New Year 2020 appeared first on InvestorPlace.
- Bloomberg
A Festive Warning for World's Favorite Liquor
(Bloomberg Opinion) -- Growing up in the U.K. in the 1980s, the Christmas season was associated with particular foods and drinks. Pies made from fruit “mincemeat”; the same dried fruits cooked into Christmas pudding; grandparents passing round glasses of sherry.Believe it or not, that nostalgic memory hints at a long-term risk to the most bullish corner of the global liquor market: China’s sorghum-based firewater, baijiu.The past few years have seen extraordinary growth for baijiu makers. Kweichow Moutai Co., the maker of the most prestigious brand, overtook Diageo Plc to become the world’s biggest distiller by market capitalization in 2017. Now it’s in a whole other league, overtaking even Anheuser-Busch InBev SA and PepsiCo Inc. on that measure and within spitting distance of taking Coca-Cola Co.’s crown as the world’s largest beverage company.What’s more, this success has been built on the back not of a valuation bubble, but of relatively pedestrian assumptions about earnings. Kweichow Moutai is on a lower price-earnings multiple than Brown-Forman Corp., Davide Campari-Milano SpA and Remy Cointreau SA. Luzhou Laojiao Co. is cheaper on that measure than any major western distiller.What could possibly put a cloud on the horizon of this thriving market? The most serious looming risk is embodied in those nostalgic memories of a British Christmas: demographics.Throughout baijiu’s boom, it’s struggled to shake the perception that it’s primarily a drink for older men. Its former image as an unofficial currency of corrupt government officials has receded since a campaign against official graft in the early years of President Xi Jinping’s reign. Still, the connotations of rich older men exchanging drunken toasts remain, even if the drinkers in the stereotype are now more likely to be employed in the private than the public sector.“Many young people still think that baijiu isn't for them, that no matter the flavor, it's not a drink for the young,” according to a China Daily article this year. “Drinking baijiu is increasingly seen as a dated behavior by younger Chinese uninterested in banquets and bravado,” wrote Jing Daily, a site specializing in the Chinese luxury market.That association with oldsters is a problem Spain’s sherry industry has been enduring for several decades. In the 1970s and 1980s, exports to the U.K., the Netherlands and the U.S. boomed in an unprecedented manner, to the point that bodega conglomerate Rumasa was reported to account for as much as 2% of Spanish GDP.Since then it’s been in long-term decline. Sherry’s core consumers outside Spain have reached a more abstemious age or died out, while younger drinkers shun a product they associate with their grandparents. For all that many wine connoisseurs sing its praises and lament sherry’s fall from grace, it’s hard to see the glory days returning.This trajectory is a common one in the alcohol business, which lives and dies on the changing demographics of its consumers. One reason Japan’s brewers have been so desperate to acquire overseas businesses while Vietnamese ones have been M&A targets is that beer is drunk by thirsty workers, and Japan’s labor force is declining while Vietnam’s is rising. The same goes for clear spirits like baijiu. Its success is hard to separate from the fact that China’s population of men aged 40 to 60 increased by more than half over the past two decades, adding about 78 million people to the core baijiu-drinking market. That demographic is set to stagnate over the coming decade, though, before beginning an accelerating decline after 2030.To the extent that the industry is making any inroads with women and younger people, it’s in lower-cost, lighter-flavored “rice aroma” products where margins are tighter. The giant listed baijiu-makers specialize in the complex, higher-cost “sauce aroma” and “strong aroma” varieties such as Maotai and Luzhou Laojiao, which is quite a different product.This needn’t be the end of the world. The drinks market’s best defense against unfavorable demographics is “premiumization” — counting not on a larger number of consumers, but a small group paying more and more. Premiumization is already the strategy of the high-end listed baijiu companies, so there's no reason they can’t keep going with it.Still, chasing the luxury market is notoriously expensive in marketing terms, and baijiu makers for years have been able to rely on a product that sells itself.Major distillers typically dedicate a third or more of their revenue to selling, general and administrative costs — mostly marketing and distribution. Baijiu makers are far more thrifty, one reason their profit margins are so much fatter than those of peers. As their core demographic ages out of its drinking habit, though, they’re likely to have to spend more and more converting younger drinkers.Every cellar manager knows that liquors can get better with age, but the process of maturation has to be carefully monitored and cultivated if the precious drink isn’t to turn into drain-cleaner. Marketing departments of baijiu companies will have to be no less careful over the coming decades maintaining the shine on their storied brands. To contact the author of this story: David Fickling at dfickling@bloomberg.netTo contact the editor responsible for this story: Matthew Brooker at mbrooker1@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
