In this article, we are going to discuss the best wine stocks to buy now.
Over the last few decades, winemaking has become immensely popular in America as both a business venture and a hobby. When prohibition passed in 1920, the popularity of winemaking plummeted and would stay relatively obscure for half a century. However, the turning point for American wine occurred on May 24, 1976, when some California producers entered their vino in a blind tasting, comparing California wines with French. The judging panel was exclusively French, so it was a shock when Californian wines were ranked the highest in both of the competition categories – Chardonnays and Reds. The results of what became known as the Judgment of Paris were reported in Time Magazine, thus attracting international attention towards premier wines from the Golden State. That year marked the beginning of an American wine renaissance, and today there are over 11,600 wineries in the U.S. that offer an incredibly diverse selection of wines.
READ ALSO: 20 Largest Publicly Traded Liquor Companies in the US
Global Wine Market:
Wine is one of the Most Consumed Alcohols in the World. It is also gaining huge popularity among millennials and youngsters, owing to its refreshing appeal and low ABV offerings. The rising demand for premium and luxury wines, increasing consumer awareness about the health benefits of wine, and the growing popularity of wine tourism are some of the key factors driving the growth of the wine market.
As we mentioned in our article – 15 Biggest Wine Companies in the US – the global wine market size was valued at $441.6 billion in 2022 and is projected to reach a value of $698.54 billion by 2030, with a CAGR of 5.9% over the forecast period.
According to the 2024 BMO Wine Market Report, the actual dollar sales of all wine sold in the U.S. market reached $107 billion in 2023 – an all-time high. Considering that wine dollar sales in the country were just over $73 billion in 2018, the market has witnessed a staggering increase of 46% in the last few years. The report also indicates that the largest U.S. wine companies account for more than 80% of the overall wine production in the country. Here are the U.S. States that Drink the Most Wine.
State of the American Wine Industry:
The American wine industry has always assumed that younger generations would naturally increase their consumption of wine as they grew older, but the truth is that it’s not happening. A report by the Silicon Valley Bank shows how wine hasn’t gained the same traction among those under 60 as it has for baby boomers. Of survey respondents aged 35 to 44, 29% said they were more likely to bring beer to a party, while 28% said they would bring wine. Even younger drinkers, aged 21 to 34, were more likely to bring beer, spirits, a flavored malt beverage, or hard seltzer over wine. But ask a 65-year-old what he or she plans to bring to a party and 49% are likely to grab a bottle of wine.
Winemakers and advertisers are missing out on younger consumers by failing to produce wines that fit their budgets and neglecting to reach out to them with targeted marketing campaigns. The notions of health, sustainability, and responsibility are essential to buying decisions for Gen Z and millennials, and although many wineries are already addressing this, their messaging is only sometimes connecting to these young drinkers. In order to appeal to these whole new demographics of consumers, the wine industry as a whole has to take steps to inspire curiosity and intrigue about wine and to highlight the aspects that would appeal to them.
Trends of Global Wine Consumption:
The global wine consumption in 2023 was estimated to be 221 million hectoliters, marking a decrease of 2.6% compared to the previous year. Since 2018, wine consumed around the world has decreased at a regular rate and 2023 marked the lowest volume recorded since 1996. This negative trend can be mainly attributed to the decline in consumption in China, which has lost an average of 2 million hectoliters per year since 2018. It was further accentuated in 2020 by the Covid-19 pandemic, which negatively affected many large wine markets.
The war in Ukraine and the associated energy crisis, together with the global supply chain disruptions, have led to a spike in costs in production and distribution. This has resulted in significant increases in wine prices for consumers.
With that said, here are the Top Wine Stocks to Buy According to Hedge Funds.
Methodology:
To collect data for this article, we scanned Insider Monkey’s database of 912 hedge funds and picked the top 7 companies operating in the wine sector with the highest number of hedge fund investors as of Q2, 2024. When two or more companies had the same number of hedge fund investors, we ranked them by the revenue of their last fiscal year. Following are the Wine 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).
7. Willamette Valley Vineyards, Inc. (NASDAQ:WVVI)
No. of Hedge Fund Holders: 1
Named after Oregon’s iconic Willamette Valley, Willamette Valley Vineyards, Inc. (NASDAQ:WVVI) offers sustainably made classic Oregon wines including Pinot Noir, Chardonnay, and many more. The company has consistently increased its revenue over the last few years, from $27.31 million in 2020 to $39.13 million last year. However, its net income has been consistently decreasing in the aforementioned period, from a net profit of $2.28 million in 2020 to a net loss of around $3.25 million in 2023. This has been due to the continuously rising operating costs, which have more than doubled in the last three years, with the associated annual revenue not being able to keep up. The trend slightly changed in the Q2 of 2024, when the WVVI reported a YoY decrease of almost 9%. However, its revenue also dropped by 3.7% due to a setback in sales through distributors. The direct sales to consumers, on the other hand, increased primarily because of the opening of a new tasting room late last year. Another worrying factor for investors could be Willamette’s debt situation. At the end of Q2, the company had liabilities totaling $22.8 million more than its cash and receivables, combined. This is a significant deficit, considering that the winery had a total market cap of just over $18.6 million as of the writing of this article.
Although Willamette Valley Vineyards, Inc. (NASDAQ:WVVI) has been struggling financially and hasn’t seen any uptick in its stock price for a long time now, it has consistently increased its wine output over the last two decades, from 72,297 cases produced in 2005 to 206,954 in 2021. Moreover, the winery hasn’t been blind to modern trends and pays special attention to sustainability. All of Willamette’s producing vineyards are certified LIVE (Low Input Viticulture and Enology) and the company furthered its sustainability efforts this year when it introduced a new reusable bottle from Revino to its production line.
Jim Bernau, Founder and CEO of Willamette Valley Vineyards, Inc. (NASDAQ:WVVI), said:
“The Company is facing a rapidly changing market that we believe is influenced by interest costs, inflation and consumer trends. We have seen wholesalers and retailers reducing their wine inventories and reallocating their shelf space for alternative alcoholic beverages. We are also seeing retailers emphasize contract house wine brands in an effort to capture greater retail margins. We are hoping to address these challenges by increasing our direct contact with wine consumers, offering wine, culinary and hospitality experiences through our ten locations and increasing our interaction with our diverse wine enthusiast ownership. We believe our efforts will produce positive financial results in both our wholesale and retail parts of our business.”
6. Splash Beverage Group, Inc. (NYSE:SBEV)
No. of Hedge Fund Holders: 2
Next up in our list of the Best Wine Stocks in 2024 is Splash Beverage Group, Inc. (NYSE:SBEV), an innovator in the beverage industry with a growing portfolio of alcoholic and non-alcohol brands including Copa di Vino wine by the glass, SALT flavored tequilas, and Pulpoloco sangria etc.
SBEV has experienced a significant revenue decline in the last twelve months as of Q2 2024, with revenues falling by nearly 49.61%. This decline is echoed in the quarterly figures, where revenue dropped by 79.85%. The decrease in sales has been due to liquidity restraints, which prevented them from procuring enough wine to get all of their orders out the door and carry $250,000 of backlog from June into July, indicating that there is still a demand for the brand.
In fact, the company announced that the demand for its products was measured by orders coming into the system, and that was 20.1% higher than the same quarter last year. This demand is expected to increase even further as some of its most popular products, Copa di Vino and Pulpoloco, have received multiple chain authorizations recently, including Chevron’s ExtraMile convenience stores, Sea World Parks & Entertainment venues, and even 28 Walmart stores in Tampa, Florida. Another major growth driving factor is that Splash Beverage Group, Inc. (NYSE:SBEV) is on track to finalize the acquisition of Western Son Vodka by the end of 2024, a move that could help immediately enhance financial performance and stability.
To address its immediate liquidity issues, Splash entered into a financing agreement with a wealth management firm in May. In fact, the Florida-based company has already received the first tranche of just over $4 million and expects to complete the second tranche of the same amount soon. Another thing to keep in mind is that the $2.4 million financing that SBEV received last year has already been retired and will no longer apply any downward pressure on the stock.
In another recent news, Splash Beverage Group, Inc. (NYSE:SBEV) received approval from its shareholders to issue new shares amounting to more than 20% of the company’s current common stock, reflecting their confidence in the company’s strategic decisions and their willingness to dilute their holdings for potential future growth.
5. Compañía Cervecerías Unidas S.A. (NYSE:CCU)
No. of Hedge Fund Holders: 3
Compañía Cervecerías Unidas S.A. (NYSE:CCU) is a beverage giant that operates in Chile, Peru, Argentina, Bolivia, Colombia, Paraguay, and Uruguay. The company is one of the biggest brewers in its home country of Chile and also exports wine to over 80 countries around the world.
CCU produces and distributes market-leading brands in a number of markets and has owners with deep pockets and a robust balance sheet. However, the company had a dismal Q2 2024 as its revenue declined by 8.6%, primarily due to external factors such as currency depreciation and the tough demand conditions in Chile and Argentina. Despite these setbacks, it has managed to maintain its strong market share in both markets.
Compañía Cervecerías Unidas S.A. (NYSE:CCU) is also the majority owner of Viña Concha y Toro, one of the Largest Wine Producers in the World. The company’s wine operating segment showed a revenue increase of 12% in Q2, attributed to higher prices and a strong recovery of exports from Chile.
Another thing to note is that Compañía Cervecerías Unidas S.A. (NYSE:CCU) has a high three-year median payout ratio of 67%, meaning that it is retaining only 33% of its profits. This suggests that the company is paying most of its profits as dividends to its shareholders and reinvesting little into the business, so growth in earnings is expected to be low. That said, industry analysts are still optimistic about CCU and expect to see earnings and revenue increase by 17.2% and 6% per annum respectively.
The number of hedge funds in the IM database holding a stake in CCU decreased from 7 in Q1 2024 to 3 in Q2, with the total stake value also declining by 42.8%.
4. The Duckhorn Portolio, Inc. (NYSE:NAPA)
Number of Hedge Fund Holders: 12
One of the Largest Publicly Traded Liquor Companies in the US, The Duckhorn Portfolio, Inc. (NYSE:NAPA) is a ‘one-stop luxury wine shop’ and the largest pure-play luxury wine company in the U.S. The California-based winemaker posted a revenue of $93.53 million in its Q3 ending April 30th 2024, an increase of 1.4% from the same quarter last year and surpassing analysts’ estimates by 0.37%. This marked the first time that NAPA has surpassed consensus revenue estimates in the last four quarters. On the 30th of April 2024, Duckhorn announced the completion of its acquisition of Sonoma-Cutrer Vineyards, one of the largest and fastest-growing luxury Chardonnay brands in America, from the Brown-Forman Corporation. Moreover, the company is also investing in revamping its distribution network by focusing on wholesale distributors.
However, NAPA’s dependence on luxury wines is proving to be a problem in current times as consumers are watching their wallets. As a result, the company witnessed a volume decline of 4.6% in the last quarter, and now the revamped distribution channel also leaves it vulnerable to a significant channel glut in case of demand slowdown.
Merion Road Capital Management stated the following regarding The Duckhorn Portfolio, Inc. (NYSE:NAPA) in its Q2 2024 investor letter:
“During the quarter I exited our position in The Duckhorn Portfolio, Inc. (NYSE:NAPA) at a loss. Fundamentals came in worse than I expected and I ultimately realized that because the upside was less than my prior expectations, it did not justify current uncertainty.”
3. SNDL Inc. (NASDAQ:SNDL)
Number of Hedge Fund Holders: 12
SNDL Inc. (NASDAQ:SNDL) is the largest private-sector liquor and cannabis retailer in Canada, with retail banners that include Ace Liquor, Wine and Beyond, Liquor Depot, Value Buds, and Spiritleaf. The company prides itself on having a selection of over 6,000 wines, 2,500 spirits, and 2,200 beers, with its liquor retail segment being its largest revenue generator.
SNDL has shown massive growth over the last few years, with its revenue skyrocketing from $60.9 million in 2020 to just over $909 million last year. That said, the Calgary-based firm still hasn’t managed to turn a profit in its last four financial years. To help improve its profitability, the liquor and cannabis retailer announced a restructuring plan in July that would help slash its annual expenses by $20 million. The plan also includes a one-time $11 million investment spread over a year and a half and is vital for the company’s improved capital deployment, agility, focus, and profitability.
SNDL Inc. (NASDAQ:SNDL) reported an all-time record gross margin of 25.5% in Q2 2024 and remains debt-free and cash-rich. Moreover, the company also has a robust business strategy consisting of cultivation/product manufacture, retail cannabis, retail liquor, and cannabis investments.
SNDL Inc. (NASDAQ:SNDL) is also now positioned to fully benefit from the US cannabis markets and soon directly participate, as the company has recently announced the completion of NASDAQ’s review of its SunStream USA structure, marking a major milestone. The financial industry seems optimistic about SNDL’s growth, as the number of hedge funds in the Insider Monkey database holding a stake in the stock increased from 7 in Q1 to 12 in Q2, with the total stake value also rising by just over 55%.
2. Brown-Forman Corporation (NYSE:BF-B)
Number of Hedge Fund Holders: 32
One of the Best Alcohol Stocks According to Hedge Funds, Brown-Forman Corporation (NYSE:BF-B) 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.
Brown-Forman announced in May that it had completed the sale of Sonoma‑Cutrer Vineyards and related brand trademarks to The Duckhorn Portfolio, in exchange for an ownership percentage of approximately 21.5% in the premium winemaker and $50 million in cash. When the deal was first announced last year, Lawson Whiting, president and CEO of BF-B, stated:
“Adding Sonoma-Cutrer to The Duckhorn portfolio will enhance one of the most respected wine portfolios in the industry. Moreover, we believe an equity stake in The Duckhorn Portfolio will be a valuable investment for Brown-Forman, allowing us to maintain a presence in the wine category while focusing resources on building our premium and super-premium spirits brands.”
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’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 Brown-Forman Corporation (NYSE: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) is a great wine stock for dividends and the company 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. BF 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%.
1. Constellation Brands, Inc. (NYSE:STZ)
Number of Hedge Fund Holders: 46
Constellation Brands, Inc. (NYSE:STZ) continues to be the Best Wine 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 is a leading premium winemaker with a widely admired portfolio that includes Woodbridge by Robert Mondavi, Clos du Bois, Blackstone, Estancia, Ravenswood, and more.
Constellation Brands made headlines last summer when its Mexican beer brand, Modelo Especial, became the Top-Selling Beer in America after dethroning Bud Light. Even after a year, there are no major signs of a slowdown and in Q1 2025, 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 during the quarter, 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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