We recently compiled a list of the 10 Best Beverage Stocks to Buy According to Analysts. In this article, we are going to take a look at where MGP Ingredients, Inc. (NASDAQ:MGPI) stands against the other beverage stocks.
Consumer behavior plays a key role in shaping any industry, and the beverage sector is no exception. The industry is witnessing a noticeable shift in drinking habits, with Americans becoming more conscious about what they consume due to health considerations. There has been an increase in demand for low and no-alcohol beverages, and several companies are jumping on the bandwagon and producing drinks with all of the taste but those that are low on or without alcohol.
READ ALSO: 8 Best Beverage Dividend Stocks To Buy According to Hedge Funds and 50 Drunkest Counties in Every State in the US.
According to a consumer sentiment survey commissioned by NCSolutions (NCS) in early 2024, around 61% of Generation Z intended to cut down on alcohol consumption, representing a 53% year-over-year increase in the share of respondents who said they planned on drinking less alcohol. A little over one-third of the demographic cohort participants said they were interested in trying a beverage that aligns with a sober curious lifestyle.
On the other hand, 49% of millennials responded by saying they plan to reduce their alcohol consumption, an increase of 26% from the survey findings in 2023. Overall, 41% of Americans hoped to drink less in 2024, compared to 34% the year before. These results reflect the gaining popularity of the sober curious movement in the United States, driven by strong interest from the younger generation.
According to Fortune Business Insights, the non-alcoholic beverages market size in the United States was valued at $161 billion in 2023. It is projected to increase to nearly $226 billion by 2030, at a CAGR of 4.91%. The rising popularity of refreshment drinks and mocktails, coupled with innovative marketing and branding strategies of beverage manufacturers are propelling growth in the non-alcoholic beverage market.
Despite consumer behavior shifts within the beverage industry, the overall outlook for the sector is promising. According to a report by Research and Markets, its market size is expected to reach $2.29 trillion by 2030. The industry continues to see robust demand amid rising disposable incomes globally and rapid expansion in developing economies.
However, Trump’s announcement of a 25% tariff on all imported steel and aluminum is a looming threat to the American beverage industry, as about 75% of all new beverage launches in North America now appear in aluminum cans. The tariffs are expected to increase input costs and lead to a rise in prices for end consumers, which could adversely impact struggling categories in the beverage industry.
Methodology
For this article, we sifted through screeners to identify stocks in the beverage industry that had an average share price upside potential of 20% or higher as of the close of day on February 20, 2025. Then we listed the top 10 stocks in ascending order of their average share price upside potential. We have only considered stocks that had at least three analyst ratings.
Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up of an iconic bottle of branded spirit produced by the distillery.
MGP Ingredients, Inc. (NASDAQ:MGPI)
Average Share Price Upside Potential as of February 20: 119.20%
MGP Ingredients, Inc. (NASDAQ:MGPI) is a leading producer and supplier of distilled spirits, branded spirits, and food solutions. The company’s offerings include bourbon, gins, vodkas, and rye whiskeys. It is the best beverage stock to buy according to analysts.
MGP Ingredients, Inc. (NASDAQ:MGPI) announced mixed results for the third quarter of fiscal 2024. It reported a 24% year-over-year decline in consolidated sales, driven by lower sales across all operating segments. Distilling Solutions sales were down by 36%, while the Branded Spirits segment’s sales dropped 6% from last year. The Ingredient Solutions segment recorded an 18% dip in sales.
After a decade of robust demand, with a boom during the pandemic, the American whiskey market is transitioning from a supercycle toward a downturn, with declining prices, lower demand, and reduced visibility. The company expects the challenging environment to persist, and continue through 2025.
Despite ongoing headwinds, MGP Ingredients, Inc. (NASDAQ:MGPI) reported an 82% increase in net income for the quarter compared to last year. Adjusted EPS was logged at $1.29, which was down from $1.36 per share last year, but beat analysts’ estimates by two cents. It ended the quarter with $20.8 million in cash.
MGP Ingredients, Inc. (NASDAQ:MGPI) has highlighted a strategic action plan to stabilize the business amid softening trends in the market. The company will optimize its cost structure, reduce whiskey production and aging whiskey put-aways, and focus on international expansion to leverage the strong growth potential outside the U.S.
Overall MGPI ranks 1st on our list of the best beverage stocks to buy according to analysts. While we acknowledge the potential of MGPI as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MGPI 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.
