LIVE MARKETS-Fancy a drink? Alcohol industry at inflection point

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FANCY A DRINK? ALCOHOL INDUSTRY AT INFLECTION POINT

European beverage companies have fared disappointingly over the last two years, hit by worries about alcohol consumption and, more recently, the impact of U.S. import tariffs.

Jefferies recently commissioned a survey of 3,600 consumers to better understand their attitudes towards alcohol, finding that moderation was becoming increasingly important to the industry's future.

Globally, health and wellness were the top reasons for those aiming to drink less, the survey found. "We think the health & wellness element is a real structural headwind for the global beverage alcohol industry," Jefferies said.

However, money was the biggest impediment for U.S. consumers, rather than health concerns, with nearly 60% of respondents citing finances as a reason for drinking less, compared to 36% in 2021.

"This implies that the biggest consumption headwind for the US beverage alcohol industry is cyclical, NOT structural," Jefferies analysts said.

"A positive macro turn in the US likely presents an inflection point for the industry," Jefferies added.

The brokerage favours companies that are at the forefront of driving premiumisation trends and low-to-zero alcohol alternatives.

Companies fitting this theme are AB InBev ABI.BR, Diageo DGE.L, Heineken HEIN.AS and Constellation Brands STZ.N.

(Samuel Indyk)

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