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 The Boston Beer Company, Inc. (NYSE:SAM) 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 closeup shot of a beer tap pouring a golden lager.
The Boston Beer Company, Inc. (NYSE:SAM)
Number of Hedge Fund Holders: 28
Next up in our list of the Best Alcohol Stocks is The Boston Beer Company, Inc. (NYSE:SAM), one of the largest American-owned brewing companies, best known for its line of all-malt beers under the brand name Samuel Adams.
The Boston Beer Company, Inc. (NYSE:SAM) declared in its Q3 2024 earnings call transcript that it had generated over $200 million in operating cash flow YTD and maintained a cash balance of $256 million at the end of the third quarter with no debt. The company also continues returning access cash to its shareholders. As such it had repurchased $191 million in shares this year by the end of Q3 and recently even expanded its share repurchase authorization by $400 million, bringing the repurchase agreement total to $1.6 billion.
As the craft beer market continues its decline, The Boston Beer Company, Inc. (NYSE:SAM)’s focus has been on diversifying its portfolio of products by including flavored malt and hard seltzers, among others. The company continues to see hard tea as an attractive category and its Twisted Tea Brand enjoys an 85% market share, with the most successful competitive brand limited to a low single-digit share in the market. However, Boston Beer Company’s hard seltzer category truly underperformed in Q3 as it declined 11% in volume in measured channels. The company has also kept up with the up-and-coming no-lo trend by launching a distinctly American light craft lager called Samuel Adams American Light.
At the end of Q3 2024, The Boston Beer Company, Inc. (NYSE:SAM) was held by 28 hedge funds in the IM database with a total investment value of $361.02 million, an increase of 24.1% from the previous quarter.
SouthernSun Asset Management LLC stated the following about The Boston Beer Company, Inc. (NYSE:SAM) in its Q1 2024 investment letter:
“In the near term, we believe the company will remain focused on sustaining Twisted Tea’s growth, turning Truly volume trends, improving operations to enhance gross margins, and thus providing more funds to invest in its core assets as a company – its brands and its sales force. Overall, we remain confident management’s efforts and investments are likely to produce profitable growth that will reward investors over time.”
Overall, SAM ranks 4th on our list of best beer stocks to buy now. While we acknowledge the potential for SAM 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 SAM 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.
