The brewing industry is a massive, international, competitive, and occasionally tipsy. A 2020 study sponsored by the Associated Press found that Americans are drinking more now than during the Prohibition Era, continuing a trend of increasing consumption that has spanned two decades. The average American drinker quaffs 2.3 galls of pure ethanol each year, and 46% of it comes from beer. This means that your average American drinker crushes almost 30 gallons of beer each year.
However, taste preferences change rapidly, as evidenced by the rise of the non-ubiquitous hard seltzer trend that began in earnest in 2019. As consumers increasingly spend their beer money on craft brew, hard cider, and seltzers instead of mass-market beers, large brewing concerns need to move quickly to keep pace. With that in mind, there are a few publicly traded beer stocks that allow investors to take advantage of major industry trends.
The first is Anheuser-Busch (BUD), the St. Louis-based giant brewing Budweiser, Michelob, Stella-Artois, Busch, Landshark, and Shocktop among others. Anheuser-Busch also recently acquired Craft Brew Alliance, which houses brands like Brechenridge Brewery, Elysian, Goose Island, and Wicked Weed. Anheuser-Busch has intentionally built up a respectable craft beer portfolio to complement its mass-market brands and has plans to continue this diversification.
Next is the Molson-Coors company (TAP.A), parent of brands like Coors, Miller, Molson’s, Blue Moon, Crispin Cider, Fosters, Henry’s Hard Soda, Peroni, and Pilsner Urquell. This list of brands highlights Molson-Coors’ international presence and betrays their focus on building a network of global brands. The company has also expanded into seltzers, hard sodas, and craft beer through brands like Vizzy, Henry’s, and Terrapin.
Last, but not least is the Boston Beer Company (SAM), owner of the Sam Adams and Angry Orchard brands. Boston Beer Company brews over 60 varieties of its flagship Samuel Adams brand, and has grown its non-beer portfolio through Twisted Tea, Angry Orchard, Tura Alcoholic Kombucha, and Truly Hard Seltzer. The Boston-based company was an early mover in the craft beer industry but struggled as the number of independent breweries skyrocketed through the 2010s. Recently, the brewer has performed extremely well over the last six months on the strength of its Truly Hard Seltzer brand, which has become a staple in the non-beer market.
The chart above shows the relative performance of these three brewing giants over the last six months. Clearly, the Boston Brewing Company has blown away the competition, notching incredible 128% growth while Anheuser Busch and Molson-Coors have suffered. A significant portion of BBC’s gains came after a shockingly robust Q2 2020 earnings report that saw the company post earnings per share of $4.88 compared to the analyst target of $2.43. Dave Burwick, Boston Beer’s CEO, attributed some of this financial performance to increases in the Truly and Twisted Tea brands. Time will tell if these brands will carry Boston Beer higher or if competition pressures from other brewing organizations will begin to increase.
Each of these beer stocks will provide investors with exposure to the rapidly changing beer industry, which is likely to continue to benefit from increasing alcohol consumption. Anheuser-Busch and Moslon-Coors represent established enterprises able to capitalize on economies of scale and global diversity, while Boston Beer represents a riskier option that is perhaps better poised to move quickly to respond to changing tastes. Whichever beer stock is right for you, remember to invest responsibly.