In 2020 and 2021, alcohol stocks were among the best-performing consumer staples stocks. But it's been a different story over the last three years. Higher prices brought on by inflation have caused many consumers to cut back on consumption. Or, in some cases, move away from more expensive wine and spirits to beer.
However, the long-term outlook for this sector remains bullish. A study by Allied Market Research shows the industry growing at a compound annual growth rate of 2.2% between 2021 and 2031, which would have valued it at over $2 trillion.
In this special presentation, we're looking at seven alcohol stocks that are interesting buys heading into 2025. These are companies that have popular—even iconic—brands that provide pricing power and strong free cash flow. And many of these companies make a commitment to rewarding shareholders with share buybacks and/or dividends.
Quick Links
- Constellation Brands
- Anheuser-Busch InBev
- Molson Coors
- Diageo
- Brown-Forman
- Monster Beverage
- MGP Ingredients
#1 - Constellation Brands (NYSE:STZ)
Constellation Brands Inc. (NYSE: STZ) is the parent company of iconic beer, wine, and spirits brands like Corona Extra, Modelo Especial, Pacifico, Robert Mondavi Winery, Kim Crawford, Meiomi, and Casa Noble Tequila, and more.
The company’s stock is only down 1.9% in 2024, making it among the best in a category that has been under pressure. Much of that pressure has to do with a decline in the sale of hard liquor.
However, beer sales continue to grow, which is boosting the company’s top line on a year-over-year basis. The same is true of earnings. The company expects this trend to continue in 2025 with the rise in beer revenue offsetting a decline in wine and spirits sales. The fact that the slowdown is limited to wine and spirits likely means that the company’s sales reflect the state of a consumer that is shifting to beer.
Analysts are lowering their price targets and investors won’t hear from the company until it reports earnings in early January. However, STZ stock still has a consensus price target of $290.47, which is a 22% gain from the stock’s closing price on November 18, 2024. Constellation also pays an attractive dividend which yields 1.7% and has an annual payout of $4.04 per share.
About Constellation Brands
Constellation Brands, Inc, together with its subsidiaries, produces, imports, markets, and sells beer, wine, and spirits in the United States, Canada, Mexico, New Zealand, and Italy. The company provides beer primarily under the Corona Extra, Corona Familiar, Corona Hard Seltzer, Corona Light, Corona Non-Alcoholic, Corona Premier, Corona Refresca, Modelo Especial, Modelo Chelada, Modelo Negra, Modelo Oro, Victoria, Vicky Chamoy, and Pacifico brands.
Read More - Current Price
- $239.72
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 13 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $290.47 (21.2% Upside)
#2 - Anheuser-Busch InBev (NYSE:BUD)
Anheuser-Busch InBev SA/NV (NYSE: BUD), the world's largest brewer, boasts a portfolio of 21 brands with annual retail sales exceeding $1 billion, including seven of the top 10 most valuable beer brands.
Those numbers carry more weight at a time when global beer sales are down. And with the proliferation of microbreweries and craft beers, consumers have more choices in the category.
Unquestionably, Anheuser-Busch benefits from partnerships like the one it enjoys with the National Football League. That partnership is a key reason the company’s Bud Light brand continues to be the top beer brand in terms of volume sales. Anheuser-Busch is also well positioned for the trend towards the premiumization of beer, with many brands like Michelob and Stella Artois under the its umbrella.
Putting all that aside, BUD stock has been a difficult hold over the past five years. The total return is negative 23.51%. And after three quarters of reporting in 2024, the stock is down 12%. However, that decline came from three markets, the largest being China. Otherwise, the company reported revenue growth in more than 60% of its markets.
About Anheuser-Busch InBev SA/NV
Anheuser-Busch InBev SA/NV produces, distributes, exports, markets, and sells beer and beverages. It offers a portfolio of approximately 500 beer brands, which primarily include Budweiser, Corona, and Stella Artois; Beck's, Hoegaarden, Leffe, and Michelob Ultra; and Aguila, Antarctica, Bud Light, Brahma, Cass, Castle, Castle Lite, Cristal, Harbin, Jupiler, Modelo Especial, Quilmes, Victoria, Sedrin, and Skol brands.
Read More - Current Price
- $55.19
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 7 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $79.00 (43.1% Upside)
#3 - Molson Coors (NYSE:TAP)
The Molson Coors Beverage Company (NYSE: TAP) is the home of iconic brands such as Coors/Coors Light, and Miller/Miller Lite. As part of the company’s forward strategy, it plans to take steps to expand its premium beer category.
Molson Coors's market capitalization is nearly 1/10th of Anheuser-Busch. However, TAP stock has been one of the better performing stocks in the category. It's up nearly 2% in 2024 after a strong run since its October 2024 earnings report.
In that report, the company delivered mixed results, beating on the bottom line but coming in slightly light on the top line. The results reflected some softening volume but not in the company’s core power brands, which showed an increase in volume.
Analysts have mixed opinions about TAP stock after earnings. The consensus price of $60.31 suggests a 2% downside. However, Molson Coors has been delivering a solid total return over the last five years of 33.7%, which has been a shining star in a sector that has been under some pressure.
About Molson Coors Beverage
Molson Coors Beverage Company manufactures, markets, and sells beer and other malt beverage products under various brands in the Americas, Europe, the Middle East, Africa, and the Asia Pacific. The company offers flavored malt beverages including hard seltzers, craft, spirits and energy, and ready to drink beverages.
Read More - Current Price
- $60.38
- Consensus Rating
- Hold
- Ratings Breakdown
- 3 Buy Ratings, 8 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $60.31 (0.1% Downside)
#4 - Diageo (NYSE:DEO)
Diageo plc (NYSE: DEO) is a spirits manufacturer headquartered in the United Kingdom. The company’s portfolio of over 200 brands includes many iconic names such as Captain Morgan, Johnnie Walker, Casamigos, Guinness, Seargram, and Bulleit.
In a volatile year, the company’s full-year projections show a low single-digit decline in organic volume. However, the company has a strong balance sheet that is reflected in the its ability to increase its free cash flow—which resulted in an increase to its dividend. The 4.2% yield on that dividend is another factor that makes Diageo stock attractive to investors.
DEO stock is down approximately 18% in 2024, making it one of the worst-performing stocks in the category. But even while maintaining a consensus Hold rating, analysts give the stock a consensus price target of $139.88, which would be a 17.5% gain from the stock’s closing price on November 18, 2024.
About Diageo
Diageo plc, together with its subsidiaries, engages in the production, marketing, and sale of alcoholic beverages. The company offers scotch, gin, vodka, rum, raki, liqueur, wine, tequila, Chinese white spirits, cachaça, and brandy, as well as beer, including cider and flavored malt beverages. It also provides Chinese, Canadian, Irish, American, and Indian-Made Foreign Liquor whiskies, as well as flavored malt beverages, ready to drink, and non-alcoholic products.
Read More - Current Price
- $119.44
- Consensus Rating
- Reduce
- Ratings Breakdown
- 2 Buy Ratings, 3 Hold Ratings, 3 Sell Ratings.
- Consensus Price Target
- N/A
#5 - Brown-Forman (NYSE:BF.B)
Brown-Forman Corporation (NYSE: BF.B) is another leading spirits manufacturer. The company has over 40 brands in 170 countries and includes the iconic Jack Daniels.
Brown-Forman stock is down nearly 30% in 2024 as it continues to report year-over-year declines in revenue and earnings. This is evidence of the company’s own reports that show a slowdown in volume in virtually every category.
Analysts maintain a mixed outlook. The consensus price target of $52.75 is a 30% increase over the stock’s closing price on November 18, 2024.
Although the company is a Dividend Aristocrat with over 30 consecutive years of dividend growth, the stock's negative 37% total return over the past five years is concerning. But when you look over a longer period, you can see that this has been a stock that’s rewarded investors for both growth and income.
About Brown-Forman
Brown-Forman Corporation, together with its subsidiaries, manufactures, distills, bottles, imports, exports, markets, and sells various alcoholic beverages. It provides spirits, wines, whiskey spirits, whiskey-based flavored liqueurs, ready-to-drink and ready-to-pour products, ready-to-drink cocktails, vodkas, tequilas, champagnes, brandy, bourbons, and liqueurs.
Read More - Current Price
- $40.30
- Consensus Rating
- Hold
- Ratings Breakdown
- 1 Buy Ratings, 3 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $52.75 (30.9% Upside)
#6 - Monster Beverage (NASDAQ:MNST)
If you’re not a regular follower of the alcoholic beverage sector, Monster Beverage Corp. (NASDAQ: MNST) may be a surprise to see on this list. The company is famous for its signature energy drinks that have propelled the stock to an impressive 77% total return in the last five years.
However, MNST stock is down 9.7% in 2024 as the energy drink sector continues to get more and more crowded. This is particularly evident in a decline in convenience store sales.
To diversify its portfolio, Monster acquired the Canarchy Craft Brewery Collective for $330 million in 2022. The following year, Monster launched its “The Beast Unleashed” product line of malt alcoholic beverages, which accounted for over $39 million or approximately 2% of the company’s total revenue. Monster is also planning to launch this line in select international markets.
The MNST stock consensus price target of $56.45 provides only about 5.8% upside. However, analysts are bidding the stock higher.
About Monster Beverage
Monster Beverage Corporation, through its subsidiaries, engages in development, marketing, sale, and distribution of energy drink beverages and concentrates in the United States and internationally. The company operates through three segments: Monster Energy Drinks, Strategic Brands, Alcohol Brands, and Other.
Read More - Current Price
- $53.70
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 13 Buy Ratings, 6 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $56.45 (5.1% Upside)
#7 - MGP Ingredients (NASDAQ:MGPI)
MGP Ingredients Inc. (NASDAQ: MGPI) is a small-cap stock that analysts love. In addition to its own portfolio of distilled spirits, the company supplies food-grade alcohol to other spirits producers and industries such as personal care, cleaning, and pharmaceuticals.The company also provides specialty wheat starches for various food applications.
MGPI stock took a sharp turn lower in October 2024 after the company announced it was cutting back ingredient production to focus on its own portfolio of brands, citing weakness in the brown goods category, specifically whiskey. Another bearish factor to consider is the short interest on the stock, which is over 27%.
While analysts have been lowering their price targets for the company’s stock, MGP Ingredients still has a consensus price target of $76.67 as of November 18, 2024. That would be a 56.8% gain for investors who can buy the stock for less than $50 per share.
About MGP Ingredients
MGP Ingredients, Inc, together with its subsidiaries, engages in the production and supply of distilled spirits, branded spirits, and food ingredients in the United States and internationally. The company operates through three segments: Distillery Solutions; Branded Spirits; and Ingredient Solutions.
Read More - Current Price
- $46.62
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 3 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $76.67 (64.5% Upside)
Despite the fact that some of these stocks have underperformed the market in 2024, alcohol stocks are still considered defensive stocks. This means that they tend to perform well even at times when the economy is not firing on all cylinders. That's particularly true of “sin stocks" that cover areas like alcohol, tobacco, and gambling.
However, alcohol stocks can also offer growth opportunities during economic expansions. As the economy accelerates, disposable income typically increases, leading to higher consumer spending on discretionary items like premium alcohol products. This dynamic makes alcohol stocks appealing in both challenging and favorable economic conditions.
Investors interested in this sector ahead of the expected economic acceleration in 2025 will want to focus on individual alcohol stocks as there is no ETF dedicated exclusively to alcohol companies. For those who prefer broader exposure or wish to invest more conservatively, the Consumer Staples Select Sector SPDR Fund (NYSEARCA: XLP) includes several of the largest alcohol companies within the broader consumer staples sector. This provides a balanced way to invest in both stability and growth potential.
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