Top Beer Stocks

The beer industry is made up of companies specializing in the production of beer, although many of them also produce other alcoholic and nonalcoholic beverages. Some of the big names in the industry include Netherlands-based SABMiller International B.V.—which is now part of fellow big name Belgium-based Anheuser-Busch InBev S.A./N.V. — as well as Japan-based Kirin Holdings Co. Ltd. Demand for beer historically has remained stable throughout economic cycles. As a result, the beer industry is part of the much broader consumer staples sector.

According to a report by Technavio, the beer industry in 2022 is seeing increasing demand for premium beers, which continue to drive market growth. The beer industry is expected to continue growing at a steady compound annual growth rate (CAGR) of 2.45% between 2020 and through 2025.

Beer stocks, represented by the broad S&P 500 Consumer Staples Sector Index, have outperformed the broader market. The index has provided a total return of 1.8% over the past 12 months, above the -13.1% total return of the Russell 1000 Index. Note that the consumer staples sector is much broader than beer stocks as a category, so the sector's performance compared with beer stocks specifically may diverge. These market performance numbers and the statistics in the tables below are as of Sept. 15, 2022.

Here are the top three beer stocks with the best value, the fastest growth, and the best performance.

Best Value Beer Stocks

These are the beer stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated.

^{Source: YCharts}

• United Breweries Co. Inc.: United Breweries, also known as Compañía Cervecerías Unidas, is a Chile-based producer and distributor of a wide range of branded beers. The company also produces wines, spirits, and nonalcoholic beverages such as soft drinks, bottled water, and juices.
• Molson Coors Beverage Co.: Molson Coors Beverage makes and sells beers globally, including in the U.S., Europe, and Asia. Besides its multiple beer brands, Molson Coors' portfolio includes canned wine, sparkling cocktails, and cider. On Aug. 8, the company released its Q2 fiscal year (FY) 2022 result. Net income plunged even and net sales were flat on a report basis. Net sales increased by 2.2% in constant currency, year-over-year (YOY), compared to Q2 2021 due to positive pricing, product mix, and other factors. The company said inflationary pressures and a strike at a major Quebec brewery affected results.
• Ambev S.A.: Ambev is a Brazil-based company primarily engaged in the production and distribution of beer. The company also produces and distributes soft drinks and other nonalcoholic beverages, including non-carbonated beverages. On July 28, Q2 2022, Ambev released financial results for Q2 FY 2022. The company posted a modest increase in profit as revenue rose 14.5% on an "as reported" basis.

Fastest Growing Beer Stocks

These are the top beer stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.

^{Source: YCharts; Ambev Q2 2022 report; Anheuser-Busch InBev Q2 2022 report. *Note: ABEV and BUD earnings, revenue numbers above come from company press releases.}

• Ambev SA.: See above for company description.
• Anheuser-Busch InBev SA/NV: Anheuser-Busch InBev is a Belgian-based company that produces, distributes, and sells various alcoholic beverages and soft drinks, including a long list of beer brands such as Budweiser, Beck's, and Corona Extra. The second quarter FY 2022 earnings for Anheuser-Busch was released on July 28. Total revenue increased by 11.3% YOY.
• Boston Beer Co. Inc.: Boston Beer Co. is a leader in craft beer production and sales, and also offers brands of seltzer, tea, and hard cider. On July 21, Boston Beer Co. released an earnings report for the Q2 fiscal year 2022. Net income fell 10% year-over-year (YOY), driven mainly by lower gross margins, even as net revenue rose 2.2%.

Beer Stocks with the Best Performance

These are the beer stocks that had the best returns or smallest declines in total return over the past 12 months out of the companies we looked at.

^{Source: YCharts}

• Molson Coors Beverage Co.: See above for company description.
• Constellation Brands Inc.: Constellation Brands produces and sells beer, wine, and spirits and has operations in the U.S. and in Mexico, New Zealand, and Italy. On June 30, Constellation Brands released its second quarter FY 2022 earnings results. The company's profit performance improved to net income of $389.5 million attributable to CBI in Q2 from an $908.1. million net loss in the prior year quarter. Net sales increased 17% YOY.
• Ambev SA.: See above for company description.

Trends to Watch for in Beer Stocks

Beer continues to enjoy immense popularity in the U.S. and globally. But domestic sales today are expanding at a slow pace. U.S. beer volume sales rose 1% and U.S. craft brewer volume sales increased 8% in 2021. The domestic beer market now is $100 billion annually. The industry faces a number of challenges. Supply chain issues have made it harder for brewers to obtain supplies, including malted barley, equipment, and carbon dioxide, which is used to carbonate beer and clean brewing tanks. This has increased costs for brewers, forcing many of them to raise beer prices for consumers.

Over the longer term, a major trend affecting beer producers will be climate change. U.S. beer producers are heavily dependent on grain products grown in the Pacific Northwest, with about three-quarters of U.S. hops grown in Washington state. As climate change continues to impact this region, Washington may become less viable for growing grains traditionally vital for beer production. Beer producers may have to get hops from other sources, or turn to alternatives.

Advantages of Beer Stocks

Beer has a history extending back thousands of years and across many cultures. Consumers once needed to drink beer in place of water for safety reasons. Today, it remains a highly popular product that many investors regard as "recession-proof." This is no guarantee that any particular beer company will survive through any financial climate. Indeed, in recent years a large number of mergers and acquisitions have dramatically consolidated the industry, making it much harder for smaller beer companies to compete.

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