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To Beer or Not to Beer

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To Beer or Not to Beer

Part of helping manage a portfolio of global stocks involves staying on top of global trends, and determining whether there are ways to profit from any themes that emerge (either on the long or short side). One interesting theme the global team has observed is how Americans are increasingly drinking alcoholic beverages other than beer.

Following data released by the Beer Institute (yes, such an institute exists), American drinkers opted for beer 49.7 per cent of the time, which is down materially from 60.8 per cent in the mid-90s. What is notable is that the decline in beer consumption is even more pronounced amongst 21- to 27-year-olds. Data from Anheuser-Busch (owner of Budweiser) showed that young drinkers consumed beer just 43 per cent of the time when drinking alcohol, compared to 65 per cent around 10 years ago.

As can be seen from the graph below, the share of beer as a proportion of the total alcohol market has compressed in recent years.

Screen Shot 2018-08-02 at 11.46.31 am

Source: Beer Institute, via WSJ

As beer consumption per capita declines, beer companies have sought to offset this by putting through price increases.

 

Screen Shot 2018-08-02 at 11.47.14 am

Source: Bureau of Labor Statistics, via WSJ

Not only is this declining beer consumption story playing out, but there are also upstart beer brands biting at the heels of big beer companies. These challenger brands are appealing to the sensibilities of millennials, who desire beverages marketed as being healthier, more natural, or brands that have a unique backstory.

While this phenomenon of declining beer drinking has been happening in the U.S., there are some bright spots globally.

Screen Shot 2018-08-02 at 11.48.04 am

Source: IWSR, via WSJ

If you had to guess, what would the annual beer consumption per capita graph look like for Australia?

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George joined MGIM in September 2015 as a Research Analyst. Prior to joining MGIM, George was an investment analyst at Private Portfolio Managers where he covered global equities across various industries, using a value investing framework. George’s prior experiences include equities research and investment banking roles at both Citi and Greenhill & Co.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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2 Comments

  1. dane campbell
    :

    I’m going to say closer to the 80’s… Warmer climate and the current trend of “session” beers being pushed by domestic brewers.

  2. it’s the change in price graph that is interesting and I guess it relates to more drinking of boutique beers.

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