Beer makers face tough times as teens drink less, Cowen says - The Columbian

Cowen is keeping a cautious view on the prospects for more beer consumption, particularly domestic beer, as drinkers turn to spirits and seltzer and as a new study indicates teenagers are rejecting alcohol and cigarettes.

Data show that schoolchildren in eighth, 10th and 12th grades are continuing to make trade-offs between vaping and cigarettes and between cannabis and alcohol, with teens “increasingly shifting away from legacy consumption offerings,” analysts led by Vivien Azer wrote in a note. Signals are mixed for companies, with Constellation Brands and Brown-Forman potentially gaining and Altria Group missing out.

“Given the declines in youth incidence of alcohol, the shifts in underlying sub-category trends will ultimately be increasingly important,” Azer said, noting that “pockets of beer, including imports, continue to expand at healthy rates.” Meanwhile, alcohol and cannabis use is converging, as are “perceived risks and disapproval,” she said. There are also declines in lifetime alcohol use, perhaps linked with an “increasingly health conscious consumer,” she said.

Here are some of the implications for stocks, according to Cowen:

– Constellation Brands: Has gained share as it leads in imported beer in the U.S., with Modelo Especial and its Corona Family delivering growth and “attractive demographic attributes.” Outperform.

– Brown-Forman: “Firmly positioned” as distilled spirits category continues to gain market share and the company keeps growing in premium bourbon and tequila. “The domestic spirits business is healthy and should be supplemented by the recent launch of Jack Daniel’s Tennessee Apple,” even as tariff-related costs have recently pressured margins. Outperform.

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Beer makers face tough times as teens drink less, Cowen says - The Columbian
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