In this article, we are going to discuss the 10 best alcohol stocks to own according to hedge funds.
There is a substantial amount of evidence that suggests that any alcohol consumption, however moderate, can have negative health consequences. Even low levels of drinking can increase the risk of heart disease, high blood pressure, and even certain types of cancer. Understanding that there is no such thing as risk-free drinking, the Centers for Disease Control and Prevention defines moderate drinking as 2 drinks or less per day for men and no more than one drink per day for women. Still, despite the well-publicized health risks, more than two-thirds of adult drinkers regularly exceed those levels.
READ ALSO: 20 Largest Publicly Traded Liquor Companies in the US and 20 Best Wine Brands in the World.
The Global Alcohol Industry:
In 2019, the global alcohol consumption, measured in liters of pure alcohol per person of 15 years of age or older, was 5.5 liters, which is a 4.7% relative decrease from 5.7 liters in 2010. As we mentioned in our article – 20 Countries with the Highest Alcohol Consumption per Capita in 2024 – the global alcoholic beverages market size was valued at $1.62 trillion in 2021 and is projected to reach $2 trillion by 2031, with a CAGR of 2.2% during the forecast period.
The market is likely to be driven by the increasing global young-adult demographic, coupled with high disposable income and consumer demand for premium/super-premium products. Globally, beer drives the market for alcoholic beverages. Regionally, North America and Asia-Pacific are expected to dominate the market during the forecast period.
The American Liquor Market:
The American liquor industry is overcoming economic headwinds to meet changing consumer preferences as it chips away at the dominance of beer. According to the Distilled Spirits Council of the United States, the spirits revenue market share grew from 28.7% in 2000 to 42.1% in 2022, while beer held a 41.9% market share that year. Thus, in 2022, the spirits industry surpassed beer in revenue for the first time ever. The trend continued in 2023 when the spirits market share again totaled more than 42%. The spirits supplier sales in the United States totaled $37.7 billion last year, while volumes rose 1.2% to 308.8 million 9-liter cases.
The rise to the top for spirit-makers is fueled in part by the resurgent cocktail culture, including the growing popularity of ready-to-drink concoctions, as well as strong growth in the tequila and American whiskey segments.
The Financial Impact of Alcohol in America:
As stated in our article – 20 Drunkest States in the US – booze plays an enormous role in the American economy. As of 2021, the total share of the beverage alcohol market in the U.S. represented almost $250 billion and over 3.4 billion cases sold. Beer/FMB/hard seltzer accounted for 43.5% of value share, followed closely by spirits at 39.5%, and wine at a 17% share.
The U.S. alcohol beverage industry is responsible for sustaining more than 4 million jobs and generating almost $70 billion in annual tax revenue. And that doesn’t even scratch the surface of the economic benefits the industry provides to late-night restaurants and pizza shops. According to the Beer Institute, the beer industry alone supports 1.75 million jobs. From the farmers harvesting the barley in your beer, to the beer truck driver, to your local bartender, every aspect of your drink exists because of someone in the alcohol industry working hard behind the scenes.
However, there’s obviously also a downside to the heavy alcohol consumption in America. According to the CDC, excessive drinking costs the country around $249 billion annually, when combining healthcare expenditures, lost earnings and productivity, criminal justice implications, vehicle crashes, property damage, and more. The federal government picks up roughly $100 billion of the tab, largely through Medicare and Medicaid payments. Several evidence-based strategies can help reduce excessive drinking, including increasing alcohol excise taxes, limiting alcohol outlet density, and commercial host liability.
With that said, here are the Top Liquor Socks to Invest in According to Hedge Funds.
Pixabay/Public Domain
Methodology:
To collect data for this article, we scanned Insider Monkey’s database of 912 hedge funds and picked the top 10 companies operating in the alcohol sector with the highest number of hedge fund investors as of Q2, 2024. When two companies had the same number of hedge funds investing in them, we ranked them by the revenue of their last financial year instead. Following are the Alcohol Stocks Held by the Most Hedge Funds.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10. Tilray Brands, Inc. (NASDAQ:TLRY)
Number of Hedge Fund Holders: 15
Tilray Brands, Inc. (NASDAQ:TLRY) ranks tenth in our list of the Best Alcohol Stocks. The company has a highly diversified global portfolio – operating in more than 20 countries across North America, Europe, Australia, and Latin America, with 5 businesses in medical adult-use cannabis, beverages, spirits, wellness products, and 44 consumer-connected lifestyle brands.
The craft beer and cannabis company that was among the first to be licensed for medical marijuana in Canada announced last year that it had agreed to acquire eight beer and beverage brands from Anheuser-Busch InBev for an undisclosed amount. As a result, Tilray is now the 5th largest craft beer business in the U.S. with a 4.5% market share. To further strengthen its craft beer portfolio, the New York-based company announced this month that it had agreed to acquire another four craft beer brands from Molson Coors – Hop Valley Brewing Company, Terrapin Beer Co., Revolver Brewing, and Atwater Brewery. The company has also diversified into spirits and earlier this year, its Breckenridge Distillery celebrated the wins of World’s Best Finished Bourbon, America’s Best Finished Bourbon, and Icons of Whisky Campaign Innovator of the Year: Highly Commended at the 2024 World Whiskies Awards.
For its Q4 ended May 2024, Tilray Brands, Inc. (NASDAQ:TLRY) reported revenue of $229.9 million, up 24.8% over the same period last year and even beating analysts’ estimates by almost 1.9%. The net revenue for the entire fiscal year was also reported at around $789 million, marking a 26% increase from the previous year. The company also managed to strengthen its balance sheet by significantly reducing its net convertible debt by approximately $300 million.
The core business of Tilray Brands, Inc. (NASDAQ:TLRY) is cannabis and it boasts the number one market share in Canada, as well as the leading cannabis market share by revenue in Germany. The company has lately been very active in acquiring other industry players to expand its presence and the strategy seems to be paying off. For example, its acquisition of Redecan in June 2023 has helped it gain a strong footing in categories like pre-rolls, oils, and capsules. As a result, Tilray is now the No. 1 player in the straight-edge pre-rolled category with a 46% market share, as well as a top player in the oils and capsules category combined with a 21.5% market share in the adult-use business in Canada. Another major development that could significantly benefit Tilray is the easing of federal restrictions on cannabis in the U.S.
9. MGP Ingredients, Inc. (NASDAQ:MGPI)
Number of Hedge Fund Holders: 18
If you’re a whisky lover, you’ve almost certainly tried the offerings of MGP Ingredients, Inc. (NASDAQ:MGPI), knowingly or not. This Indiana distillery has fueled the modern American whiskey boom by supplying distillers like High West, Smooth Ambler, WhistlePig, Angel’s Envy, Bulleit, and many others.
MGPI is a pure-play spirits company and has benefited greatly as spirits continue to dominate the American market. The company has boasted a massive increase in revenue over the last few years, from $362.75 million in 2019 to over $836.5 million in 2023 – an increase of over 130%.
For the second quarter of 2024, MGP’s consolidated sales decreased 9% compared to the prior year period to $190.8 million. This is primarily attributed to the closure of its Atchison distillery in December 2023 due to headwinds facing its grain-neutral spirits. However, quarterly gross margins increased to 43.6%, which is an all-time high for the company. The year-to-date cash flow from operations was also recorded at $29.6 million at the end of Q2, up from $20.2 million in the same period last year, mainly due to favorable working capital, including lower barrel put away.
Ariel Investments, an investment management company, stated the following about MGP Ingredients, Inc. (NASDAQ:MGPI) in its Q1 2024 investor letter:
“Also in the quarter, we initiated a new position in leading spirits manufacturer, MGP Ingredients, Inc. (NASDAQ:MGPI). After years of successfully developing products for third parties, MGPI entered the branded spirits business. Leveraging its scale and know-how, MGPI is turning existing relationships into growth stories by acquiring and scaling niche premium brands. A recent strategic decision to shut down a distillery in Kansas and concerns around peak whiskey demand amidst a challenging macro environment have placed pressure on the stock. However, we believe the core business is stable and expect branded spirit acquisitions to drive top-line growth and expand margins longer-term.”
8. Ambev S.A. (NYSE:ABEV)
Number of Hedge Fund Holders: 18
Ambev S.A. (NYSE:ABEV), formally Companhia de Bebidas das Américas, is a Brazilian brewing company that has now merged with Anheuser-Busch InBev. It offers beer under several brand names such as Skol, Brahma, Antarctica, etc. It is the largest beverage firm in Brazil with a well-established presence in the country and also enjoys a footprint in other Latin American nations and non-alcoholic goods.
The São Paulo-based company reported a revenue of around $3.6 billion in Q2 of 2024, up 6.5% from the same quarter last year, thanks to a growth in volume in Brazil and CAC. One of its core premium brands, Spaten, is one of the fastest-growing beers in the Brazilian market, with Corona and Budweiser also gaining significant ground.
Ambev S.A. (NYSE:ABEV) boasts a 60% share in the Brazilian beer market and has almost doubled its revenue in the local currency in the last ten years, from around R$37 billion to almost R$80 billion, despite the intense competition from the likes of Heineken N.V. However, its over-reliance on the Brazilian market and beer losing its share to spirits internationally could also prove to be risky.
The shares of Ambev S.A. (NYSE:ABEV) were held by 18 hedge funds at the end of Q2 2024 in the Insider Monkey database, 4 more than the previous quarter. The largest stake of over 310 million shares was held by First Eagle Investment Management, valued at around $635.8 million.
7. The Boston Beer Company, Inc. (NYSE:SAM)
Number of Hedge Fund Holders: 27
Next up in our list of the Top Alcohol Stocks is The Boston Beer Company, Inc. (NYSE:SAM), one of the largest American-owned brewing companies, best known for its line of all-malt beers under the brand name Samuel Adams.
As the craft beer market continues its decline, the company’s focus has been on diversifying its portfolio of products by also including flavored malt and hard seltzers, etc. One of TBBC’s core brands, Twisted Tea, posted strong growth in the second quarter of 2024 with dollar sales up by 15.1% and increased dollar share of FMBs by 1.6 share points while increasing shelf space by approximately 30% over the prior year period. However, the performance in the hard seltzer category was dismal, down 14.9% in volume with Truly declining 22.8% and losing 2.1 share points. The company has also kept up with the up-and-coming no-lo trend by launching a distinctly American light craft lager called Samuel Adams American Light.
SouthernSun Asset Management LLC also highlighted the growth potential for The Boston Beer Company, Inc. (NYSE:SAM)’s Twisted Tea in its Q1 investment letter:
“In the near term, we believe the company will remain focused on sustaining Twisted Tea’s growth, turning Truly volume trends, improving operations to enhance gross margins, and thus providing more funds to invest in its core assets as a company – its brands and its sales force. Overall, we remain confident management’s efforts and investments are likely to produce profitable growth that will reward investors over time.”
The number of hedge funds in the Insider Monkey database invested in The Boston Beer Company, Inc. (NYSE:SAM) increased from 26 in Q1 to 27 in Q2 of 2024, with their overall stake value exceeding $290.8 million.
6. Diageo plc (NYSE:DEO)
Number of Hedge Fund Holders: 31
Diageo plc (NYSE:DEO) is a British multinational alcoholic beverage company with its headquarters in London, England. With over 200 brands sold in more than 180 countries, Diageo is the Largest Spirits Company in the World. The company’s portfolio has remarkable breadth across spirits and beer, with brands such as Guinness, Captain Morgan, Johnnie Walker, and Smirnoff etc.
Net sales of the company declined by 1.4% in the fiscal year 2024 ending on the 30th of June, largely due to an unfavorable foreign exchange impact and organic net sales decline, partially offset by hyperinflation adjustments. However, good news came from the highly popular Guinness brand, which gained double-digit volume growth and was the primary driver of overall net beer sales growth of 18%. A major reason for this is that the Irish stout has gained popularity among younger consumers in recent years in part due to celebrity endorsements. Also, despite the challenges, the company generated a strong free cash flow of $2.6 billion in FY 2024, up $0.4 billion from the previous year. Overall, Diageo plc (NYSE:DEO) is still a resilient business, benefitting from its global reach and unrivaled brand portfolio. It is also a Great Alcohol Stock for Dividends, as the company stood up to its reputation as a very reliable dividend payer for decades and increased its full-year dividend by 5%, maintaining its track record of dividend increases since fiscal year 2000.
Artisan Value Fund, an investment management company, stated the following regarding Diageo plc (NYSE:DEO) in its Q4 2023 investor letter:
“Diageo is a global leader in alcoholic beverages with an impressive collection of brands across spirits and beers. The company’s portfolio of over 200 brands provides diversification and allows it to meet consumer trends. A key focus for growth has been premiumization, and today, Diageo’s portfolio is now more heavily weighted toward premium segments. Shares are trading at multiyear trough multiples on fears of growth normalizing after a COVID-induced bounce and premiumization headwinds as some markets are showing consumers trading down to value alternatives. In the near term, margin expansion will likely be constrained, but the company generates meaningful free cash flow and returns it to shareholders through dividends and share repurchases. Over the past five years, Diageo generated £12 billion FCF and returned £16 billion to shareholders. Although spirits are more cyclical than other staples, the company’s growth prospects are better long term, and we believe the current situation has provided us an attractive investment opportunity.”
5. Anheuser-Busch InBev Sa/NV (NYSE:BUD)
Number of Hedge Fund Holders: 31
Anheuser-Busch maintained its dominance as the Largest Beer Company in the World in 2023, with a global production volume of 585 million hectoliters and a revenue of $59.38 billion, an increase of over 2.7% from the previous year. This revenue increase was despite the company facing some headwinds in the American market last year after the recent controversy regarding its best-selling brand Bud Light, which resulted in the iconic brand losing its crown as the Top-Selling Beer in America after nearly two decades.
Anheuser-Busch InBev SA/NV (NYSE:BUD) witnessed a slight decrease in volume during the first half of 2024, as it fell by 0.7% to 285.8 million hectoliters. The company’s volume growth in the Middle Americas, South America, Europe, and Africa regions was primarily offset by performance in Argentina and China. However, the Bud Light brewer’s revenue grew 2.7% to $29.9 billion but still fell short of analysts’ estimates. Meanwhile, normalized EBITDA beat Wall Street expectations and rose 7.8% to $10.3 billion.
Anheuser-Busch is a global company with a portfolio of over 500 brands and a strong presence in around 150 markets around the world. The company benefits from its ability to use its scale to expand globally and although its growth has recently remained flat in the US, the Budweiser maker is growing aggressively in countries like Colombia, Mexico, and Brazil.
Michael Doukeris, the CEO of Anheuser-Busch InBev SA/NV (NYSE:BUD), stated the following in the company’s Q2 2024 earnings call transcript:
“Our global momentum continued this quarter with revenue growth in more than 65% of our markets. Bottom line increases in four of our five operating regions and margin expansion in all five regions. Our scale and diverse geographic footprint has been driving consistent results and has us well placed to deliver superior long-term value creation.”
Keeping up with the modern trends, AB InBev is also investing heavily in the non-alcoholic beer category, with its Bud Zero brand being one of the Most Popular Non-Alcoholic Beer Brands in the world. In fact, Anheuser-Busch InBev SA/NV (NYSE:BUD) even managed to score a sponsorship for the recently held Olympic Games, making it the first beer company ever to sponsor the grand event. The IOC specifically highlighted Corona Cero – the non-alcoholic version of the global best-seller Corona – as the beer of choice for the partnership, which will stretch from the Paris 2024 Summer Games to the Los Angeles 2028 Summer Games. Notably, the company has also partnered with brands such as Roland Garros, NBA, NFL, and even UFC to market its core beers, reflecting its broad marketing capabilities. AB InBev has set the ambitious goal of ensuring that low- or no-alcohol beer products make up at least 20% of its global beer volume by 2025.
4. Brown-Forman Corporation (NYSE:BF-B)
Number of Hedge Fund Holders: 32
Brown-Forman Corporation (NYSE:BF-B) is placed at number 4 among the Best Alcohol Stocks to Buy Right Now According to Hedge Funds. The company engages in the production, distillation, bottling, import, export, marketing, and sale of a wide range of alcoholic beverages, with a special emphasis on spirits. This puts the company in a commanding position in the American market where spirits are gaining more and more traction every day.
BF’s Jack Daniel’s brand is included among the Most Popular Whiskey Brands in the World and contributes significantly to its revenue. However, the iconic brand has been facing some headwinds recently due to a hike in prices, as consumers look for cheaper alternatives. Sales of Jack Daniel’s Tennessee Whiskey dropped by 6% in Q4 ending April 30th, 2024, building on the already 6% sales decline in the previous quarter.
As a result, Brown-Forman Corporation (NYSE:BF-B)’s revenue for its fiscal year 2024 declined by over 1% to reach approximately $4.28 billion. This also caused its stock price to plummet by over 20% since the beginning of the year. The company is facing challenges mostly due to a subdued, inflation-driven consumer demand and hence also increasingly cautious retailers and distributors. But this is not something that is unique to BF-B, with CEO Lawson Whiting calling fiscal year 2024 ‘a challenging year within the spirits industry.’
There was good news from the Ready-to-Drink (RTD) category though, with sales going up 2% during the year. Moreover, the declines in the US market were largely offset by growth in emerging markets (up 8%) and travel retail (up 6%).
Brown-Forman Corporation (NYSE:BF-B) paid $404 million to stockholders through its regular quarterly dividend and returned $400 million to stockholders through its share repurchase program in fiscal year 2024. The company is a member of the prestigious S&P 500 Dividend Aristocrats index and its 10-year compound annual dividend growth rate comes in at 7.86%.
3. Molson Coors Beverage Company (NYSE:TAP)
Number of Hedge Fund Holders: 34
Coming in at number 3 in our list of the Top Alcohol Stocks in 2024 is the Molson Coors Beverage Company (NYSE:TAP), a multinational beverage and brewing giant with a diverse portfolio that includes a variety of beer brands, spirits, and non-alcoholic beverages spread across the Americas, Europe, the Middle East, Africa, and the Asia Pacific.
The company produces a wide selection of beers in multiple price categories, going from core brands like Coors Light and Miller Light, premium brands like Madri and Blue Moon, right down to economy brands like Miller Higher Life, Keystone, and Icehouse. However, with beer being its core business and the US being its primary market, TAP also stands to lose quite a bit if the current trends toward spirits continue.
The net income of Molson Coors Beverage Company (NYSE:TAP) rose by around 24.7% in Q2 of 2024, driven by favorable prices and US shipment timing. Over the last year, the company has also greatly benefited from the boycott against Bud Light, one of the largest competitors of its core brands in the American market. However, analysts at Citi stated in April that gains by Molson Coors due to the Bud Light upset are coming to an end. It must also be kept in mind that Molson Coors Beverage Company (NYSE:TAP) has consistently increased its revenue over the last 4 years, from $9.65 billion in 2020 to $11.7 billion in 2023, while the Bud Light controversy only happened last year. Knowing the risks it faces in the current beer market landscape, the company is actively investing in its spirits portfolio and even acquired the cult favorite high-end Bourbon and rye whiskey brand, Blue Run Spirits, last year.
2. Monster Beverage Corporation (NASDAQ:MNST)
Number of Hedge Fund Holders: 37
Monster Energy Beverage Corporation (NASDAQ:MNST) is an American beverage company that manufactures energy drinks including Monster Energy, Relentless, and Burn. It was announced in 2022 that the beverage giant had acquired the CANarchy Craft Brewery Collective in a deal worth $330 million. The acquisition gave Monster ownership of CANarchy’s craft breweries including Cigar City, Oskar Blues, Deep Ellum, Perrin Brewing, Squatters, and Wasatch.
Monster Energy Beverage Corporation (NASDAQ:MNST) also announced on the 31st of January 2024 that effective immediately, CANarchy Craft Brewery Collective would operate under the name Monster Brewing Company. CANarchy’s new alcohol products, The Beast Unleashed™ and Nasty Beast™ Hard Tea, now represent the majority of the California-based company’s alcohol beverage sales. This change will better align the business with Monster’s brand equity, particularly as these products are expected to continue to play an increasingly important role in CANarchy’s future activities.
Monster Beverage Corporation (NASDAQ:MNST) is one of the key players in the energy drinks industry, with a solid market share of 24% in US sales. This puts it in a great position to benefit from the American energy drinks market, which has grown by 73% over the last 5 years. MNST also announced earlier this month that it has authorized a new share repurchase program for the repurchase of up to an additional $500 million of its common stock. This initiative comes after the completion of its previous buyback program and reflects the company’s confidence in its financial strength and commitment to delivering value to its shareholders.
1. Constellation Brands, Inc. (NYSE:STZ)
Number of Hedge Fund Holders: 46
Constellation Brands, Inc. (NYSE:STZ) continues to be the Best Alcohol Stock According to Hedge Funds, with 46 hedge fund holders in Q2 2024 boasting an overall stake value of over $1.2 billion. The New York-based company is involved in the production, import, marketing, and sale of beer, wine, and spirits across the United States, Canada, Mexico, New Zealand, and Italy. STZ also made headlines last summer when its Mexican beer brand, Modelo Especial, became the Best-Selling Beer in America after dethroning Bud Light.
Even after a year, there are no major signs of a slowdown and in Q1 2025, Constellation Brands, Inc. (NYSE:STZ)’s beer business (responsible for raking in the lion’s share of its revenue) attained the second-largest share gain in the total beverage industry, as well as, once again, the top share gain in all beverage alcohol. The company also returned $185 million to shareholders in dividends and executed $200 million in share repurchases, in addition to completing over $40 million more of buybacks in June.
Despite the huge continued success of its beer segment, Constellation Brands, Inc. (NYSE:STZ) remains focused on diversification and announced the purchase of California winery, Sea Smoke, in May to ‘further enhance the company’s higher-end wine focus and portfolio growth strategy with one of the preeminent Pinot Noir producers in the world’. Another factor helping STZ is that America’s Hispanic population (a segment that makes up over 50% of the company’s client mix) is growing almost twice as fast as its general population, so brands like Modelo and Corona are expected to stay in high demand.
While we acknowledge the potential of STZ to grow, our conviction lies in the belief that some AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVDA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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