The global beer market made significant progress in 2021, making up nearly half of the volume losses it experienced during the peak of the pandemic in 2020. Looking forward, IWSR predicts that the global beer market will return to pre-Covid levels within the next two years. Furthermore, by 2026, it is expected to surpass pre-pandemic levels by nearly 3%. Throughout the pandemic, wine, ready-to-drink beverages (RTDs), and spirits were not as heavily affected as beer due to the decline in on-trade establishments. As a result, these alternative alcoholic beverages gained market share. In many markets, still wine became a popular choice for "at-home" consumption during lockdowns, while RTDs and spirits capitalized on the growing trend of cocktails worldwide. Despite many brewers diversifying into other categories, they also continue to invest in their core beer brands, as per IWSR data.
The brewery and distillery industry is highly competitive, as indicated by search results from Grata, a private company intelligence engine, cited by Middle Market Growth. The results show that there are 16,559 companies operating in this sector, with 98% of them being privately owned. These companies vary in size and ownership, ranging from small, self-funded businesses run by families to larger enterprises backed by private equity or operating as private subsidiaries. Spencer Finney, partner at private equity firm Sage Capital, told Middle Market Growth on June 8, 2022:
“It’s a very competitive space, and the craft consumer is still an experimenter. They’re not super brand-loyal. They want to try a lot of different things.”
Finney also noted:
“There is a movement away from beer to more wine and liquor, and distilled spirits are definitely a big part of that.”
According to IWSR's latest projections, the beer category is expected to maintain a strong position in 2023, with an estimated volume growth ranging between 1% and 2%. Despite the persisting macroeconomic and geopolitical challenges that bring uncertainty, there are still numerous opportunities for beer on a global scale. Although many markets are experiencing the effects of rising costs of living, IWSR predicts that beer, being considered an "affordable luxury," will remain resilient as consumers choose to postpone more expensive purchases and continue to enjoy beer as a more accessible indulgence. Some of the best alcohol stocks to invest in include Constellation Brands, Inc. (NYSE:STZ), Brown-Forman Corporation (NYSE:BF-B), and Molson Coors Beverage Company (NYSE:TAP).
Our Methodology
We scanned Insider Monkey’s database of 943 hedge funds and picked the top 10 companies that operate in the brewing and distillery sector with the highest number of hedge fund investors. These are the best alcohol stocks to buy according to hedge funds.
Eastside Distilling, Inc. (NASDAQ:EAST) has gained recognition for its innovative and high-quality spirits. The company focuses on creating unique and flavorful products by combining traditional distilling techniques with modern approaches. Their product lineup includes whiskeys, rums, vodkas, gins, and specialty spirits. On March 31, Eastside Distilling, Inc. (NASDAQ:EAST) reported a Q4 GAAP EPS of -$0.62 and a revenue of $2.31 million.
On May 9, 2022, Roth Capital analyst Sean McGowan initiated coverage of Eastside Distilling, Inc. (NASDAQ:EAST) with a positive outlook, giving it a Buy rating and setting a price target of $2.30. McGowan highlighted the company's increased emphasis on canning and bottling operations, which includes the acquisition of a digital can printer. He noted that the growth in revenue will be primarily propelled by the Craft sector in the upcoming years. Furthermore, McGowan found Eastside Distilling, Inc. (NASDAQ:EAST)’s efforts to lower costs and enhance the balance sheet to be promising and encouraging.
According to Insider Monkey’s fourth quarter database, Ken Griffin’s Citadel Investment Group held 17,341 shares of Eastside Distilling, Inc. (NASDAQ:EAST), worth $4.2 million.
In addition to Constellation Brands, Inc. (NYSE:STZ), Brown-Forman Corporation (NYSE:BF-B), and Molson Coors Beverage Company (NYSE:TAP), Eastside Distilling, Inc. (NASDAQ:EAST) is one of the top alcohol stocks to invest in.
Compañía Cervecerías Unidas S.A. (NYSE:CCU) is a beverage company in Chile, Argentina, Bolivia, Colombia, Paraguay, and Uruguay. The company operates through three segments – Chile, International Business, and Wine. Compañía Cervecerías Unidas S.A. (NYSE:CCU) is one of the biggest brewers in Chile. It is one of the best alcohol stocks to invest in. On March 1, the company reported a Q4 GAAP EPS of CLP 126.80 and a revenue of CLP 768.36 billion.
On March 22, HSBC analyst Sorabh Daga increased the target price on Compañía Cervecerías Unidas S.A. (NYSE:CCU) from $13 to $16 while maintaining a Hold rating on the shares. The analyst believes that Compañía Cervecerías Unidas S.A. (NYSE:CCU) is encountering tougher competition in Chile. Nevertheless, the analyst assured investors that the beverage industry should benefit from reduced inflation and stabilized currency in Chile, leading to improved margins and profitability.
According to Insider Monkey’s fourth quarter database, 6 hedge funds were bullish on Compañía Cervecerías Unidas S.A. (NYSE:CCU), compared to 5 funds in the prior quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the largest stakeholder of the company, with 14.7 million shares worth $193 million.
Anheuser-Busch InBev SA/NV (NYSE:BUD) manufactures, distributes, and sells beer and beverages. Its global beer brands include Budweiser, Corona, and Stella Artois. Anheuser-Busch InBev SA/NV (NYSE:BUD) operates numerous breweries worldwide and it is one of the best alcohol stocks to invest in.
On May 4, Anheuser-Busch InBev SA/NV (NYSE:BUD) reported a Q1 non-GAAP EPS of $0.65 and a revenue of $14.21 billion, outperforming Wall Street estimates by $0.03 and $160 million. For full-year 2023, the company anticipates that its EBITDA will increase according to the medium-term projections, which range between 4% and 8%. Additionally, BUD expects its revenue to outpace EBITDA growth due to a favorable combination of both higher sales volume and pricing.
According to Insider Monkey’s fourth quarter database, 15 hedge funds were bullish on Anheuser-Busch InBev SA/NV (NYSE:BUD), with collective stakes worth $921 million, compared to 14 funds in the prior quarter worth $740 million. Ken Griffin’s Citadel Investment Group is the largest stakeholder of the company, with 1.3 million shares worth $80.3 million.
Here is what ClearBridge Investments Large Cap Growth Strategy has to say about Anheuser-Busch InBev SA/NV (NYSE:BUD) in its Q4 2021 investor letter:
“To make room for these new names and optimize the growth profile of the Strategy, we exited two additional positions during the quarter. We sold out of Anheuser-Busch InBev as we see too much work ahead for the world’s largest beer maker to re-ignite sales growth post COVID-19. While the company should benefit from a recovery in the on-premise channel, individual country complexities, the hedging of raw materials, and senior management turnover leave us more confident in the Strategy’s other reopening-related holdings.”
Ambev S.A. (NYSE:ABEV), a Brazilian brewing company that has merged with Anheuser-Busch InBev, is involved in the manufacturing, distribution, and retail of beer, draft beer, carbonated soft drinks and non-alcoholic beverages, malt, and food products. On March 2, Ambev S.A. (NYSE:ABEV) reported a Q4 non-GAAP EPS of R$0.33 and a revenue of R$22.69 billion, up 3.1% year-over-year. The company’s goal for FY 2023 is to achieve consolidated normalized EBITDA growth that surpasses the 17.1% growth it achieved in 2022.
On January 12, UBS analyst Rodrigo Alcantara raised the rating on Ambev S.A. (NYSE:ABEV) from Sell to Buy, along with a revised price target of R$18, up from R$14. The analyst highlighted the company's exceptional digital business-to-business (B2B) ecosystem, which has been overlooked. According to the analyst, Ambev S.A. (NYSE:ABEV)’s Brazil EBITDA is expected to experience a turning point in the third quarter, leading to margin expansion and reaching 31% by 2024.
According to Insider Monkey’s fourth quarter database, 16 hedge funds were long Ambev S.A. (NYSE:ABEV), compared to 17 funds in the prior quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the biggest stakeholder of the company, with 285.75 million shares worth $777.25 million.
Here is what First Eagle Investments Overseas Fund has to say about Ambev S.A. (NYSE:ABEV) in its Q2 2022 investor letter:
“Brazilian brewer Ambev, a subsidiary of Anheuser-Busch InBev, posted better-than-expected earnings for its most recent reporting period driven by improvements in both pricing and volumes. Its stock declined during the quarter, however, weighed down by such Brazil-centric issues as a new wave of Omicron variant infections, high domestic inflation, and a weakened real and national elections in October. We were encouraged that Ambev continued to gain market share despite disruptions associated with Covid and the cancellation of Brazil’s Carnival festivities in April.”
Diageo plc (NYSE:DEO), an alcoholic beverage company based in London, is the owner of several distilleries. The company is responsible for manufacturing a majority of the total production of Scotch whisky and boasts a portfolio of over 24 brands, including Johnnie Walker, J&B, and Vat 69.
On April 18, Morgan Stanley analyst Pinar Ergun raised the firm's price target on Diageo plc (NYSE:DEO) to 3,700 GBp from 3,600 GBp and kept an Equal Weight rating on the shares.
According to Insider Monkey’s fourth quarter database, 23 hedge funds held stakes worth $557.3 million in Diageo plc (NYSE:DEO), compared to 20 funds in the prior quarter worth $527.4 million. Tom Gayner’s Markel Gayner Asset Management is the biggest stakeholder of the company, with 1.35 million shares worth $240.6 million.
In addition to Constellation Brands, Inc. (NYSE:STZ), Brown-Forman Corporation (NYSE:BF-B), and Molson Coors Beverage Company (NYSE:TAP), Diageo plc (NYSE:DEO) is one of the best alcohol stocks to watch.
Here is what ClearBridge Aggressive Growth Strategy has to say about Diageo plc (NYSE:DEO) in its Q2 2022 investor letter:
“Diageo is a leading global distiller and brewer which addresses the large ($500 billion-plus) and fragmented market for spirits. With its portfolio of premium products, we see Diageo as a steady compounder poised for sustained, above industry growth. The company’s margins remain below pre-COVID levels in a number of geographies and should continue to recover as channels reopen, though we also see opportunities for consistent margin expansion beyond this period of rebound. The spirits category is not immune to weaker consumer spending nor inflation; however the majority of Diageo’s profits are from the U.S. market, which has historically been more resilient. Additionally, the company has a number of margin levers to help combat rising input costs.”
