We recently published a list of 8 Best Beer Stocks to Buy Now. In this article, we are going to take a look at where Constellation Brands, Inc. (NYSE:STZ) stands against other best beer stocks to buy now.
The first solid proof of brewed beer dates back to the Sumerians, around 6,000 years ago. Beer consumption was an important marker of societal and civilized virtues in Sumerian society and archaeologists even unearthed an ode to Ninkasi, the Mesopotamian patron goddess of beer. Later, the ancient Egyptians perfected the art of brewing and worshiped Tjenenet, the Egyptian goddess of brewing. Although these ancient deities are no longer revered in the modern world, their legacy has withstood the sands of time. Today, beer is widely cherished all around the globe and is, in fact, the third-most popular drink overall, right after water and tea.
READ ALSO: 25 Countries with the Highest Alcohol Consumption per Capita
Global Beer Market:
If your idea of relaxing at the end of the day involves cracking open a cold one, you’re not alone. Beer is the Most Consumed Alcohol in the World. As we mentioned in our article – Top 20 Beer Brands in the World – the global beer market is projected to grow from $821.39 billion in 2023 to $1.07 trillion by 2030, with a CAGR of 3.88% during the forecast period. The overall demand for premium and low-calorie beers, the rising popularity of craft brews, and the expansion of distribution networks in emerging markets are expected to continue driving growth in the global beer market over the next few years.
World Beer Output:
The global brewing industry was impacted by the generally difficult economic situation in 2023, so beer production worldwide fell to 1.88 billion hectoliters, representing a YoY decline of 0.9 %.
Peter Hintermeier, Managing Director of BarthHaas, commented:
“After we had managed to post modest growth in 2022 despite unfavorable conditions, we were expecting another small increase in 2023. However, energy, raw materials, packaging, logistics, and labor costs remained at a high level, which put pressure on the brewing business in many countries.”
The overall beer production in the US also fell by 5.6% to 193 million hl, making it the only beer-producing country in the Americas to witness a downturn in production volume.
Thomas Raiser, Managing Director of BarthHaas, stated the following about the future outlook of the global beer industry:
“The brewing industry is still feeling the effects of the war in Ukraine; companies throughout the entire supply chain are laboring under sustained high costs. Consumers in many countries are groaning under the burden of high inflation. We therefore only expect beer output to remain stable for the current year, but are unable to identify a clear trend for the future.”
State of the American Beer Industry:
Americans seem to be shifting away from the brew as beer consumption in the US in 2023 fell to its lowest level since the 1970s, according to the Brewers’ Association. The popularity of hard seltzers, the decline in demand for domestic ‘premium’ brands such as Coors Light, and the overall decrease in alcohol consumption are believed to be the major reasons behind the downturn. In fact, in 2022, the American spirits industry surpassed beer in revenue for the first time ever. The trend then continued in 2023, driven primarily by the spirits ready-to-drink (RTD) category. Nevertheless, the country’s major brewers were still in good financial health, thanks to rising prices and a consumer shift towards more expensive, often imported beers.
Moreover, there was some positive news from the increasingly popular non-alcoholic (NA) beer category, where the market continues to explode with more and more options every day. For the 52 weeks ending May 19, 2024, Circana data shows dollar sales of NA beers in the US totaled $400.8 million, a 29.1% increase from the previous year, with case sales also up 21.8%. In the past few years, brands such as Athletic, WellBeing, and Partake – all dedicated exclusively to non-alcoholic beer – have come onto the scene, while several brewing giants have also kept up with the trend and introduced NA options.
Methodology:
To collect data for this article, we scanned Insider Monkey’s database of 900 hedge funds and picked the top 8 companies operating in the brewing sector with the highest number of hedge fund investors. When two or more 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 Beer 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).
A winemaker examining a glass of red wine from a barrel in a cellar.
Constellation Brands, Inc. (NYSE:STZ)
Number of Hedge Fund Holders: 36
Constellation Brands, Inc. (NYSE:STZ) continues to be the Best Alcohol Stock According to Hedge Funds, with 36 hedge fund holders in Q3 2024 boasting an overall stake value of over $1.14 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 more than a year, there are no major signs of a slowdown. In Q2 2025, Constellation Brands, Inc. (NYSE:STZ)’s beer business (responsible for raking in the lion’s share of its revenue) continued to deliver strong financial performance with net sales and operating income growth of nearly 6% and 13%, respectively. Although the wine and spirits segment declined by 12% in net sales during the second quarter, it accounts for less than 10% of overall earnings. The company also returned almost $250 million of cash to shareholders through share repurchases during the quarter, bringing its total YTD cash returns through repurchases to approximately $450 million. Moreover, for the first half of FY 2025, CB generated free cash flow of $1.2 billion, a 12% increase from the prior period.
Another factor helping Constellation Brands, Inc. (NYSE: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, Pacifico, and Corona are expected to stay in high demand.
Coho Partners said the following about Constellation Brands, Inc. (NYSE:STZ) in its Q2 2024 investment letter:
“We are encouraged by the Constellation Board’s decision to eliminate the dual voting share class and reprioritize capital allocation away from acquisitions and towards returns to shareholders. With capital spending expected to decline and leverage near the company’s target, more cash flow should be available for shareholders. STZ is now focused on the higher growth and the higher margin premium beer category, which they dominate with Corona Extra, Modelo Especial, and Pacifico. Additionally, the Wine and Spirits business, which has been disappointing is no longer a meaningful part of STZ’s business as it now accounts for less than 10% of overall earnings. We expect STZ to deliver low double-digit growth in both earnings and dividends for many years to come, which is consistent with the Board’s recent approval of a 13.5% dividend hike.”
Overall, STZ ranks 1st on our list of best beer stocks to buy now. While we acknowledge the potential for STZ to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than STZ 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.
