Beer stocks are getting absolutely crushed right now. The whole alcoholic beverage sector is down 16% while everything else rallied. Normally I’d say “when there’s blood in the streets,” but honestly, some of these companies probably deserve to die.
I’ve been trading this sector since 2013 and I’ve never seen it this ugly. Craft breweries closing left and right, young people drinking less, and now Trump’s tariffs are making everything more expensive. But here’s the thing – when an entire industry implodes, the survivors usually do pretty well.
September feels like we might be near a bottom. Not because fundamentals suddenly got better, but because expectations are so low that decent earnings are moving stocks 10%. I started nibbling on a few names last month.
What’s Actually Happening vs. What People Think
Everyone’s panicking about “declining beer consumption” and “generational shifts.” Yeah, young people drink less beer than their parents. They also can’t afford houses and live with roommates until they’re 30. Maybe there’s a connection?
The real story is market share consolidation. All those craft breweries that opened during the 2010s boom? Half of them are broke. The Brewers Association says craft held 13.3% market share in 2024, which sounds impressive until you realize it’s down from peak hype levels.
Meanwhile, AB InBev just reported 6.5% EBITDA growth and 8.7% EPS growth in Q2. Not because they’re selling more beer, but because they’re charging more for it and the competition is dying off. That’s how oligopolies work.
Trump’s aluminum tariffs hit in April – 25% on imports. Sounds terrible for beer companies, right? Actually helps the big guys who make everything domestically while crushing small breweries that import specialty ingredients. Sometimes regulation accidentally picks winners.
The Stocks I’m Actually Buying
Anheuser-Busch InBev (BUD) – Look, I avoided this thing for two years after the Bud Light fiasco. But Q2 numbers made me swallow my pride. They’re basically printing money now.
Revenue per hectoliter up 4.9% through pure pricing power. Their premium brands like Michelob Ultra keep stealing share from craft beer. When millennials want to feel fancy but can’t afford $18 cocktails, they buy Mich Ultra instead of local IPAs.
The BEES platform thing grew 63% to $785 million. That’s their B2B marketplace. Most people don’t get it, but controlling distribution is more valuable than owning brands. Try launching a beer without AB InBev’s distribution network – good luck getting shelf space.
Stock trades at 16.7X forward earnings with a 1.5% dividend. In a market where Tesla trades at 60X+ with no dividend, that’s almost insulting how cheap it is.
Constellation Brands (STZ) – This has been my best position since 2022. They own Corona and Modelo, which are basically the iPhone of Mexican imports in the US.
Young people love Mexican beer. It’s hoppy without being pretentious, goes with tacos, and doesn’t make you look like a craft beer snob. STZ has bulletproof distribution and pricing power.
Company guides for 6-8% sales growth when the overall beer market is shrinking. That’s what happens when you own the right brands during consolidation.
Plus they’ve got cannabis exposure through Canopy Growth. I’m not counting on federal legalization, but if it happens, that optionality is worth billions. Meanwhile you get paid to wait.
Molson Coors (TAP) – This one hurts to look at. Down 50% from 2016 highs and still falling. But sometimes the best trades hide in the ugliest charts.
They own Coors, Miller, Blue Moon – brands that aren’t going anywhere despite declining volumes. Company took a massive goodwill writedown in 2022, basically admitting they overpaid during the craft boom. That’s old news now.
Current management is cutting costs and partnering with Coca-Cola on Topo Chico hard seltzer. If North American beer consumption ever stabilizes, TAP will benefit from massive operating leverage.
This is a deep value play, not a growth story. Could be a multi-bagger from here or could go to zero. That’s why it’s a small position.
Boston Beer (SAM) – Down 80% from peaks after hard seltzer imploded. White Claw and Truly were supposed to grow forever. Narrator: they didn’t.
But SAM is still profitable and owns the largest craft operation in the US. Samuel Adams isn’t disappearing, and their Beyond Beer stuff keeps outpacing traditional categories.
At these prices, they don’t need to hit home runs. Just stabilize volumes and cut costs. Operating leverage could drive big returns if they execute.
Diageo (DEO) – Not really a beer company, but they’re expanding into beer and RTDs while everyone else is panicking. Premium focus means higher margins.
This is my hedge against pure beer plays. If beer keeps declining, they’ve got spirits. If RTDs explode, they’re positioned. Portfolio construction, not speculation.
What Everyone’s Missing
Non-alcoholic beer sales up 32% while total alcohol grew 1%. That’s not a fad – millennials want the social experience without feeling like garbage the next day. Companies with strong NA portfolios will dominate this trend.
The technology angle is huge. AB InBev’s digital platform generated $785 million in transactions, but nobody talks about it. Direct-to-consumer and supply chain optimization create moats that craft breweries can’t replicate.
Major sporting events coming up – FIFA 2026, Winter Olympics. Global brands like Budweiser and Corona always benefit from these. Easy category activation when people are already drinking and watching TV.
Timing and Positioning
I started buying in August after earnings season. Not because anything fundamental changed, but because expectations were so low that any decent news moved stocks 5-10%.
Got about 3% of my portfolio in beer stocks – mostly BUD and STZ, smaller positions in TAP and SAM. DEO is in my spirits bucket.
This isn’t a sector where you swing for the fences. These are cash flow machines navigating cyclical headwinds. Upside is moderate but probable, downside limited by asset values and dividends.
Keeping some cash for when the craft shakeout accelerates. Quality brands will become available at distressed prices, and the big players have balance sheets to acquire them.
The Reality Check
Will young people suddenly start drinking more beer? Probably not. Will the industry consolidate around fewer, stronger players? Definitely happening already.
Consumer preferences are shifting, not disappearing. People still want to relax with a drink – they’re just pickier about brands. That selectivity benefits companies with distribution muscle and century-old brand equity.
Sometimes the best strategy is betting on oligopolies during industry downturns. The survivors get pricing power and market share. That’s what’s happening in beer right now.
The numbers don’t lie – these companies generate billions in free cash flow that has to go somewhere. Share buybacks, dividend increases, strategic acquisitions. All good for shareholders who can stomach the volatility.
The usual disclaimer stuff: Not a financial advisor, this isn’t advice, you could lose money, do your own research, consult professionals, etc. Beer stocks are cyclical and face real headwinds. But sometimes real problems create real opportunities.