https://www.alainguillot.com/stay-away-from-investing-in-alcohol-companies/

People are not drinking as they used to. Ten years ago, it was common to see people going to bars for happy hours, having a few drinks at home after work, or getting wasted on weekends to celebrate. However, this scenario is becoming less frequent, and companies in the alcohol industry are taking a significant hit.

Many cultural and health factors are contributing to the decline in alcohol consumption, which, in turn, has led to a decline in the stock prices of alcohol-producing companies.

In a year where the S&P 500 rose by approximately 25%, most alcohol-producing stocks have shown negative returns.

The world’s largest beer company, known for brands like Budweiser, Corona, Stella Artois, and Michelob Ultra. Its stock price has dropped by 21% over the past 12 months.

A leading spirits producer with a portfolio including Johnnie Walker, Guinness, Smirnoff, Baileys, and Tanqueray. Its stock price has declined by 31% in the past 12 months.

Known for its beer, wine, and spirits, including brands like Corona (in the U.S.), Modelo, and Svedka Vodka. Its stock price has fallen by 28% in the last year.

1. Reduced Social Interactions Many people have become addicted to their cell phones, spending less time socializing face-to-face.
2. Increased Health Consciousness Health-conscious consumers are opting for alternatives like non-alcoholic beverages, craft sodas, and functional drinks (e.g., kombucha, CBD drinks).
3. Rise of Designer Drugs At parties, people are increasingly using alternatives such as cannabis, ecstasy, LSD, ketamine, and other substances. These are often more accessible and cheaper than alcohol.
4. Impact of GLP-1 Drugs A significant portion of alcohol consumption comes from heavy drinkers who consume large amounts daily. The growing use of GLP-1 receptor agonists (such as Ozempic, Wegovy, and Mounjaro) is curbing appetites and potentially reducing alcohol dependence. If these “super consumers” stop drinking, the alcohol industry could face severe challenges.

Investors should carefully consider the declining trends in alcohol consumption before committing to this sector. With cultural shifts, health trends, and alternative substances on the rise, the profitability of alcohol companies may continue to dwindle.

Major Publicly Traded Companies in the Alcohol IndustryAnheuser-Busch InBev (Ticker: BUD)Diageo PLC (Ticker: DEO)Constellation Brands (Ticker: STZ)Reasons for the Decline in Alcohol ConsumptionConclusion