Tag: DEO

Pouring Profits: Why Investing in Liquor Stocks is a Smart Choice

by Fred Fuld III

The history of liquor stocks is mixed with the development of the alcoholic beverage industry, which has evolved significantly over the centuries. The commercial production and sale of alcohol can be traced back to ancient civilizations, but it was during the 18th and 19th centuries that the industry began to take on its modern form, with the establishment of well-known distilleries and breweries. 

The Prohibition era in the United States (1920-1933) posed a significant challenge, leading to a temporary collapse of the industry. However, the repeal of Prohibition saw a resurgence, with companies rapidly recovering and expanding. The mid-20th century marked the consolidation of the industry, as many smaller firms merged to form large, multinational corporations. 

Today, liquor stocks represent a major sector of the global market, characterized by stable demand, strong brand loyalty, and high profit margins. Companies like Diageo, Pernod Ricard, and Anheuser-Busch InBev dominate the industry, offering a wide range of products that cater to diverse consumer preferences. The continued innovation and expansion into emerging markets have solidified the status of liquor stocks as a compelling investment choice.

Why Liquor Stocks Are a Good Investment

Stable Demand and Market Resilience: 

Liquor stocks are often considered a reliable investment due to the consistent demand for alcoholic beverages. Unlike many other consumer goods, the demand for liquor tends to remain stable even during economic downturns. This resilience makes liquor companies less vulnerable to economic fluctuations, providing a steady revenue stream that can translate into stable stock performance. Additionally, established brands with strong customer loyalty can maintain their market share and profitability, further solidifying the attractiveness of liquor stocks.

High Profit Margins:

The liquor industry is known for its high profit margins, which can be attributed to the strong pricing power of established brands and the relatively low production costs. Premium and craft liquors, in particular, command higher prices and generate significant profits. These high margins can lead to robust financial health for liquor companies, making their stocks appealing to investors seeking both growth and income. The ability to pass on costs to consumers without significantly affecting demand helps these companies maintain their profitability even in inflationary environments.

Global Growth Opportunities: 

The liquor market is expanding globally, driven by increasing disposable incomes, urbanization, and changing social norms in emerging markets. Regions such as Asia-Pacific and Latin America are experiencing a growing demand for premium and imported liquors. This global expansion provides liquor companies with new growth opportunities, allowing them to tap into previously underserved markets. Investors can benefit from this international diversification, as companies with a strong global presence are better positioned to capitalize on these growth trends.

Innovation and Diversification: 

The liquor industry is continuously evolving, with companies investing in innovation and diversification to cater to changing consumer preferences. Trends such as craft spirits, ready-to-drink cocktails, and low-alcohol or alcohol-free beverages are gaining popularity. By diversifying their product portfolios and embracing new trends, liquor companies can attract a broader customer base and drive sales growth. This adaptability enhances their long-term growth prospects and makes their stocks attractive to investors looking for dynamic and forward-thinking companies.

Listed below are the top four liquor stocks:

  1. Constellation Brands, Inc. (NYSE: STZ) is a leading international producer and marketer of beer, wine, and spirits, known for popular brands like Corona, Modelo, and Svedka Vodka. STZ stands out as a solid investment due to its strong portfolio of high-demand products, consistent revenue growth, and strategic acquisitions that enhance its market presence. The company also has investments in the burgeoning cannabis industry through Canopy Growth. 
  • Diageo plc (NYSE: DEO) is a global leader in the alcoholic beverages industry, having a diverse portfolio of iconic brands such as Johnnie Walker, Guinness, Smirnoff, and Tanqueray. DEO is considered a strong investment due to its extensive market reach, strong brand equity, and consistent financial performance. The company’s strategic focus includes its expansion into non-alcoholic beverages and ready-to-drink cocktails. 
  • Brown-Forman Corporation (NYSE: BF-B) is one of the largest American-owned spirits and wine companies, renowned for its premium brands such as Jack Daniel’s, Woodford Reserve, and Old Forester. BF-B is an attractive investment due to its strong brand portfolio, which commands significant market share and consumer loyalty globally. Brown-Forman’s includes regular dividend payments make it a reliable choice for income-focused investors. 
  • The Duckhorn Portfolio, Inc. (NYSE: NAPA) is a prominent producer of luxury wines, known for its premium brands such as Duckhorn Vineyards, Decoy, and Goldeneye. NAPA stands out as a compelling investment due to its strong market position in the high-end wine segment. The company’s focus on quality and brand reputation has cultivated a loyal customer base and allowed it to maintain strong pricing power.
CompanyCompany SymbolPrice to BookPEGPEPrice to SalesForward PEYield
Constellation Brands IncSTZ4.621.7119.324.6817.11.42%
Diageo plc ADRDEO7.5214.2918.583.5717.313.08%
Brown-Forman Corp.BF-B5.94NA20.585.0122.632.05%
Duckhorn Portfolio IncNAPA0.844.1513.292.6611.53NA

Liquor stocks are a good investment due to the stable demand and market resilience of alcoholic beverages, which maintain steady revenue even during economic downturns. The industry is known for high profit margins, driven by strong brand pricing power and relatively low production costs, ensuring robust financial health. Global growth opportunities are abundant, particularly in emerging markets like Asia-Pacific and Latin America, offering companies new avenues for expansion. Additionally, continuous innovation and diversification, such as the rise of craft spirits and ready-to-drink cocktails, help liquor companies attract a broader customer base and sustain long-term growth.

Disclosure: Author had no positions in any of the above at the time the article was written.

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Is the Falling Stock Market Driving You to Drink? How About Booze Stocks?

by Fred Fuld III

The liquor and alcoholic beverage industry is a multi-billion dollar industry that has been growing steadily over the years. While the industry is not immune to the impact of global events such as the COVID-19 pandemic, there are several factors that suggest a promising future for the industry.

First, changing consumer preferences towards premium and craft spirits have led to an increase in demand for high-quality, unique and flavorful alcoholic beverages. This has led to a rise in small-scale distilleries and microbreweries, which offer unique and innovative products. The trend of craft beer and small-batch spirits is expected to continue in the future, with consumers looking for unique and high-quality products.

Second, the increasing trend towards health and wellness has also led to the emergence of low-alcohol and non-alcoholic beverages. This segment of the industry is growing rapidly, driven by consumers who are looking for alternatives to traditional alcoholic beverages. This trend is expected to continue as more consumers become health-conscious and seek out healthier beverage options. Plus, there are reportedly even health benefits to drinking alcohol in moderation.

Third, the growth of the e-commerce industry has provided new opportunities for the liquor and alcoholic beverage industry. Online sales have increased significantly over the years, and this trend is expected to continue in the future. As a result, companies that are able to establish a strong online presence and offer convenient and efficient delivery services are likely to benefit from this trend.

Finally, the increasing disposable income and changing lifestyles of consumers in emerging economies such as India and China are expected to drive growth in the liquor and alcoholic beverage industry in these regions. As the middle class grows and consumers become more discerning, demand for premium and high-quality alcoholic beverages is expected to rise.

Overall, while the liquor and alcoholic beverage industry is not immune to challenges, there are several factors that suggest a promising future for the industry. Companies that are able to adapt to changing consumer preferences and trends, and leverage new technologies and business models are likely to benefit from the growth opportunities in the industry.

For investors looking to invest in the booze sector, Constellation Brands (STZ) is one option. It was founded in 1945, and is a California based company with such brands as Robert Mondavi, Clos du Bois, Ravenswood, Black Velvet, and Canadian Whiskey. The stock trades at 18.8 times forward earnings and pays a dividend of 1.46%. Earnings per share are expected to grow next year by 10.8%.

Diageo (DEO), founded in 1997, is based in the UK. Its brands include Blossom Hill, Sterling Vineyards, Beaulieu Vineyard, Navarro Correas, Acacia Vineyard, Rosenblum Cellars, Piat d’Or, Chalone Vineyard, and Santa Rita. The stock has a trailing price to earnings ratio of 22.8 and offers a decent yield of 2.13%. Quarterly revenue growth was 37% year-over-year.

If you like Jack Daniel’s, then maybe Brown-Forman (BF-B) is the way to go. The trailing P/E is 34 and the forward P/E is 31. The yield is 1.3%.

Like anything, drinking should be done in moderation, and allocating your portfolio to liquor stocks should be done in moderation also.

Disclosure: Author didn’t won any of the above at the time the article was written.

Drink Booze, Live Longer, Make Money with Wine & Alcohol Stocks

Here it is. The news you’ve been waiting for. Wondering if having that glass of wine or liquor after work or with dinner is healthy for you? Fortunately for you, scientists at UC Irvine have found that drinking alcohol is better than exercise for living a long life into the 90s.

Over 1,600 participants were involved in the study, with ages ranging from 90 to 99. Researchers found that those who drank two glasses of alcohol or wine a day reduced the chance of an early death by 18%.

So what’s an investor to do in order to have a healthy and long-lived portfolio? Many investors look to stocks of companies involve in the production and sale of alcoholic beverages.

Constellation Brands Inc (STZ), founded in 1945, is a California based company with such brands as Robert Mondavi, Clos du Bois, Ravenswood, Black Velvet, and Canadian Whiskey. The stock trades at 22.9 times forward earnings and pays a dividend of slightly less than one percent.

Diageo (DEO), founded in 1997, is based in the UK. It’s brands include Blossom Hill, Sterling Vineyards, Beaulieu Vineyard, Navarro Correas, Acacia Vineyard, Rosenblum Cellars, Piat d’Or, Chalone Vineyard, and Santa Rita. The stock has a forward price to earnings ratio of 18.9 and offers a generous yield of 2.6%.

For a list of other wine and liquor stocks, go  HERE.

By the way, if you are in your nineties and want to participate in the study,  contact 949.768.3635 or study90@uci.edu for more information.

Would You Put Whiskey in Your Gas Tank?

It may be hard to believe but cars can now run on whiskey, in addition to gasoline and diesel, according to a BBC article. Actually, it is whiskey residue from the whiskey making process called biobutanol. And the best feature is that the automobile engine doesn’t have to be modified.

But it is not just cars consuming liquor; humans seem to do a bit of consuming themselves. Last year, the sale of alcohol was $25.2 billion in the US, a 4.5% increase over the previous year, and the seventh yearly increase in a row.

Relax and Lose Weight

With money flowing into the coffers of liquor producers, some investors are taking a close look at companies in the alcohol industry. Studies have shown that liquor may help you lose weight, will help relax you (obviously), and might even cure blindness. Investors who believe that booze stocks can benefit from these alcohol health benefits, have several choices to choose from.

Jack Daniel’s

Brown-Forman Corporation (BF-B) is a liquor distributor which is famous for its Jack Daniel’s and Southern Comfort brands. The stock has a price-to-earnings ratio of 28, a forward P/E of 26, and provides a fair yield of 1.48%.

 Johnnie Walker

Diageo (DEO) is a London based alcoholic beverage distributor that markets numerous brands of whiskey, including Johnnie Walker Scotch whiskey, Crown Royal Canadian whiskey, JeB Scotch whisky, Buchanan’s Scotch whiskey, Windsor Premier Scotch whiskey, and Bushmills Irish whiskey. It also sells vodka, rum, and wine. The stock trades at 24 times trailing earnings, and 20 times forward earnings. It sports a higher-than-industry-average yield of 2.5%.

How to Invest in Donald Trump

Did you know that you can invest in a stock that developed and distributes Trump Super Premium Vodka? The company is Drinks Americas (DKAM), a Connecticut based company that trades Over the Counter on the Pink Sheets, and last traded for one hundredth of a cent. The vodka received four out of five stars by Spirit Journal. Unfortunately for potential tasters, the beverage is no longer sold in the US.

For a free list of stocks in the liquor and wine industry, click on the following link:

Wine & Liquor Stocks

Disclosure: Author did not own any of the above stocks at the time the article was written.