Beer time? Investors tempted by brewers as spirits sales falter
By Emma Rumney
LONDON (Reuters) -Investors are warming to beer stocks as a relatively cheap way to benefit from growth in alcohol brands, particularly in emerging markets, as easing cost pressures help brewers close the gap on the spirits giants that have outshone them for years.
While spirits companies enjoyed record growth during a post-pandemic boom in expensive liquors, brewers like Anheuser-Busch InBev and Heineken (AS:HEIN) have struggled with huge spikes in costs of everything from energy to barely.
This slashed margins and hurt sales as they hiked prices to cover their bills, and accelerated a shift from wine and beer to spirits in Western markets.
But now brewers are set for a recovery in margins as inflation eases, and are raising growth ambitions. While Heineken, the world's No.2 brewer, recently disappointed markets with its cautious guidance, it still expects to sell more beer in 2024 and could see strong profit growth.
Meanwhile, economic downturns are hurting demand for spirits from companies like Diageo (LON:DGE) and Pernod Ricard (EPA:PERP).
Some investors wonder if they face a more serious challenge than a return to normality after the post-pandemic sales explosion, when many drinkers splashed out on pricey bottles of tequila, whisky and more.
«The big unknown thing for spirits versus beer is how much is in your cabinet at home,» said Tom O'Hara, a Janus Henderson portfolio manager whose fund invests in beer stocks, adding bottles of liquor can sit in cupboards for years.
It was unclear how close drinkers were to running out, or if they would purchase at the same price tag even when they do, he added.
Unsold bottles of spirits are already piling up in some markets, shaking investor confidence in top
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