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  • Jamie O'Donoghue

Our 3 Favorite Alcohol Stocks

Consumer trends may be changing, but our bet is that good alcohol will never go out of style. Here are three alcohol stocks that are poised to age like a fine wine.

Photo by Wil Stewart on Unsplash

1. The Boston Beer Company 

One of the largest breweries in the U.S., The Boston Beer Company (NYSE: SAM) is best known for its flagship brand, Samuel Adams. However, with a portfolio of over 60 beverages, the company is one of the most diverse and innovative in the space.

Boston Beer’s diversification strategy has resulted in some inspired initiatives, most notably its $300 million merger with craft brewery Dogfish Head completed earlier this year. In recent years, the company has seen a decline in sales for its core Samuel Adams lineup, so this deeper push into the growing craft beer market represents a clever bid to get on board with the oft-mentioned premiumization of tastes.

To top it all off, the company’s financials are as strong as ever. At the end of October, Boston Beer reported its sixth consecutive quarter of double-digit growth, with its hard seltzer brands driving much of the quarter’s success.

2. Diageo

An investment in Diageo (EPA: DGE) is an investment in quality and tradition. Counting the likes of Johnnie Walker and Guinness among its core brands, the company doesn’t just make alcohol — it makes national treasures.

Diageo is the world’s largest spirits company, counting two of the five highest-selling premium brands as its own, and producing on the order of 240 million units each year across its immense global network of manufacturing sites.

Though its position in the world of alcohol is certainly secure for now, Diageo has been expanding into new avenues, or what management calls “new-world brands”. In August, the company acquired a majority share in Seedlip, a boutique drinks firm famous for producing the world’s first distilled non-alcoholic beverage. Together with its recently opened $8 million research center, Diageo is keeping apace with changing habits of alcohol consumers around the world.

3. Brown-Forman

As with the stocks mentioned above, Brown-Forman’s (NYSE: BF.B) top brand — Jack Daniel’s, in this case —  is nothing short of iconic. It’s also the world’s biggest-selling whiskey.

Founded almost 150 years ago in Louisville, Kentucky, the company has built a veritable drinks empire with a global distribution system and a massive portfolio that includes vodka, wine, liquor, and tequila. The core Jack Daniels brand, which accounts for roughly half of sales, has been reinvented for the 21st century, with flavored variations adorning good bar shelves everywhere.

One does not immediately put ethical business practices and alcohol manufacturers in the same category, but Brown-Forman has proved impeccable on this score, racking up accolades throughout the years for everything from employee satisfaction to environmental sustainability. But these haven’t got in the way of the company’s financial performance. In its most recent quarter, Brown-Forman reported strong growth across many of its segments, notably its growing tequila business, which includes such favorites as Herradura and Jimador. 

A dark cloud still hangs over the Brown-Forman as a result of tariffs placed against the EU in the context of the ongoing global trade dispute. But with a century and a half behind it, and a timeless brand like Jack Daniel’s in its hands, the company will surely make it to the other side of the current volatility.

MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Brown -Forman, Diageo, and The Boston Beer Company. Read our full disclosure policy here.

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