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 Molson Coors Beverage Company (NYSE:TAP) 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.
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A wide-angled shot of a brewery showing the large machinery used for producing malt beverages.
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.
Overall TAP ranks 3rd on our list of the best alcohol stocks to own according to hedge funds. While we acknowledge the potential of TAP 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 TAP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
