We recently published a list of 10 Best Alcohol Stocks To Own According to Hedge Funds. In this article, we are going to take a look at where Anheuser-Busch InBev SA/NV (NYSE:BUD) stands against the other alcohol stocks.
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.
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).
A retail point showcasing the alcoholic and soft beverages of the company.
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.
Overall BUD ranks 5th on our list of the best alcohol stocks to own according to hedge funds. While we acknowledge the potential of BUD as an investment, 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 BUD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article is originally published at Insider Monkey.