12 Best Liquor Stocks to Buy Now

Published on August 16, 2022 at 9:08 am by Aima Zaheer in Hedge Funds, News

In this article, we will look at the 12 best liquor stocks to buy now.

While most industries were negatively impacted by the COVID-19 pandemic, the liquor industry saw an increase in demand for various products. According to the Distilled Spirits Council, demand for luxury spirits experienced an increase of over 43% YoY in 2021. The growth rate of 2021 was twice as high as the five-year average of the industry.

As per research by marketing analytics firm IWSR, 54% of people bought alcohol for the first time through an online channel during the pandemic. Furthermore, the premixed or ready-to-drink cocktails and drinks segment also observed a significant spike in demand during the last year. The sale of premixed cocktails grew by 42% YoY to $1.6 billion in 2021. Ready-to-drink products have become all the rage in the liquor industry as they saw the second highest consumption in terms of volume in 2021. Leading companies like Anheuser-Busch InBev SA/NV (NYSE:BUD) and Diageo plc (NYSE:DEO) are heavily investing in this segment by making acquisitions as the companies expect the growth trend to continue.

Although the restrictions and lockdowns have eased now, the increase in demand for liquor is expected to sustain. According to Technavio, the market for alcoholic drinks is predicted to increase in value by $393.26 billion between 2021 and 2026, reflecting a compound annual growth rate of 3.23%. Some of the top players in the alcoholic beverage industry are Constellation Brands, Inc. (NYSE:STZ), Brown-Forman Corporation (NYSE:BF-B), and The Boston Beer Company, Inc. (NYSE:SAM).

Pixabay/Public Domain

Our Methodology

We have looked at the companies’ current standing in the liquor industry, their expansion plans, and the business fundamentals before including them in our list of the 12 best liquor stocks to buy now. The historical financial performances have also been discussed to understand the companies’ strength of operations and develop reasonable future expectations on the basis of that. Furthermore, the analyst ratings have been included to provide support to the investment thesis.

Best Liquor Stocks to Buy Now

12. LVMH Moët Hennessy – Louis Vuitton, Société Européenne (OTC:LVMUY)

Number of Hedge Fund Holders: N/A

LVMH Moët Hennessy – Louis Vuitton, Société Européenne (OTC:LVMUY) is a French holding company for luxury goods. Wines and Spirits is one of the segments of the company that has leading brands in its portfolio. The segment is the second biggest contributor to the bottom line of the company as it enjoys healthy operating margins. Hennessy is the crown jewel in LVMH’s portfolio. The cognac brand established in 1765 is sold in over 160 countries.

During the first half of this year, the revenue of the company’s Wines & Spirits segment increased by 23% YoY to $3.39 billion. Meanwhile, profit increased by 25% YoY to $1.18 billion. The growth in company margins has been supported by higher demand and price increases in 2022.

LVMH Moët Hennessy – Louis Vuitton, Société Européenne (OTC:LVMUY) is considered a solid stock to own in recessionary times as the company’s primary target market is affluent customers. The elite segment of society is unlikely to drastically cut down on its spending during periods of economic downturn. Furthermore, the diversified nature of the business model allows the company to sustain its overall growth, despite financial setbacks. LVMH saw its annual revenue increase at a CAGR of 10.5% between 2011 to 2021.

11. Willamette Valley Vineyards, Inc. (NASDAQ:WVVI)

Number of Hedge Fund Holders: 2

Willamette Valley Vineyards, Inc. (NASDAQ:WVVI) is a Turner, Oregon-based producer of Pinot Noir along with Chardonnay and Pinot Gris.

The company is diversifying its operations by opening Tasting Rooms with Restaurants. On April 25, Willamette Valley Vineyards, Inc. (NASDAQ:WVVI) opened its first tasting room and restaurant on Lake Oswego. The company has lined up Vancouver, Washington, and Happy Valley, Oregon as the second and third locations for its tasting room and restaurant. Willamette Valley Vineyards, Inc. (NASDAQ:WVVI) is termed “One of America’s Great Pinot Noir Producers,” according to Wine Enthusiast.

Willamette Valley Vineyards, Inc. (NASDAQ:WVVI) posted its Q2 2022 results on August 12. Revenue was recorded at $8.7 million, increasing from $6.24 million in the preceding quarter. To support the execution of its expansion plans, the company announced the appointment of Joe Padilla as the Chief Operating Officer in June 2022. Padilla brings over 30 years of experience in management and is expected to increase the efficiency of operations within the company.

10. Compañía Cervecerías Unidas S.A. (NYSE:CCU)

Number of Hedge Fund Holders: 8

Compañía Cervecerías Unidas S.A. (NYSE:CCU) is Las Condes, Chile-based diversified beverage manufacturer. The company produces alcoholic and non-alcoholic beverages.

Compañía Cervecerías Unidas S.A. (NYSE:CCU) controls nearly 60% of the beer market in Chile and is the bottler for PepsiCo, Inc. (NYSE:PEP) in the country. The company also exports low-price Gato Negro wine to other Latin American countries. Compañía Cervecerías Unidas S.A. (NYSE:CCU) is working towards expanding its operations. The company’s international joint ventures in Columbia recorded double-digit growth in terms of volume during the second quarter of the year. The increase in growth was fueled by higher demand for beer and malt.

Furthermore, Compañía Cervecerías Unidas S.A. (NYSE:CCU) reported an 18% increase in revenue in Q2 2022. Analysts are bullish on the stock’s long-term outlook owing to the management’s strong growth initiatives. Compañía Cervecerías Unidas S.A. (NYSE:CCU) is a high-yield dividend stock and is a great bet on the Chilean brewing industry.

9. Vintage Wine Estates, Inc. (NASDAQ:VWE)

Number of Hedge Fund Holders: 12

Vintage Wine Estates, Inc. (NASDAQ:VWE) is a Santa Rosa, California-based fast-growing family of wineries that went public in June 2021 through a special purpose acquisition company (SPAC) deal.

Vintage Wine Estates, Inc.’s (NASDAQ:VWE) multi-brand portfolio has helped the company gain a competitive edge over its peers. The company’s collaboration with travel and leisure wine is one of its most recent examples of broadening the consumer base. Vintage Wine Estates, Inc.’s (NASDAQ:VWE) omnichannel marketing strategy has also helped increase the company’s wine club memberships in the recent past.

On August 1, Alexandra Davis at Citi maintained a Buy rating on Vintage Wine Estates, Inc. (NASDAQ:VWE) stock with a target price of $9. The analyst believes that the company can balance the successful acquisition strategy with its existing portfolio’s sales growth. Davis added that Vintage Wine Estates, Inc.’s (NASDAQ:VWE) margins would expand further through accretive acquisitions and capital improvements. The company is expected to report Q4 FY22 results on September 28. Analysts anticipate Vintage Wine Estates, Inc. (NASDAQ:VWE) to report revenue and adjusted EPS of $74.23 million and 14 cents, respectively.

Vintage Wine Estates, Inc. (NASDAQ:VWE) was held by 12 hedge funds at the end of Q1 2022.

8. MGP Ingredients, Inc. (NASDAQ:MGPI)

Number of Hedge Fund Holders: 18

MGP Ingredients, Inc. (NASDAQ:MGPI) is an Atchison, Kansas-based producer of bourbon, gin, rye whiskeys, and vodkas.

On August 15, Wells Fargo appreciated MGP Ingredients, Inc.’s (NASDAQ:MGPI) diversified portfolio and the consistent growth in revenue. The investment firm believes MGP Ingredients, Inc. (NASDAQ:MGPI) is in a strong position to exceed guidance this year due to its premiumization strategy.

In a report issued to investors on August 5, Ben Klieve at Lake Street increased the target price for MGP Ingredients, Inc. (NASDAQ:MGPI) from $115 to $125 and reiterated a Buy rating on the stock. The analyst highlighted that the company reported another strong quarterly result that was aided by the strength of the Distillery and Ingredients division. Klieve anticipates that a favorable mix shift towards higher margin offerings along with improved pricing power will aid MGP Ingredients, Inc. (NASDAQ:MGPI) in countering the impact of higher input costs.

In Q2 2022, MGP Ingredients, Inc. (NASDAQ:MGPI) reported revenue and adjusted EPS of $195 million and $1.15, respectively, outperforming the analysts’ forecast of $173 million and 94 cents.

Driehaus Capital was the leading hedge fund investor in MGP Ingredients, Inc. (NASDAQ:MGPI) during Q2 2022.

7. Ambev S.A. (NYSE:ABEV)

Number of Hedge Fund Holders: 18

Ambev S.A. (NYSE:ABEV) is a Sao Paulo, Brazil-based brewing company. The company has operations in 18 countries in South America and the Caribbean.

Ambev S.A. (NYSE:ABEV) is expected to sustain its strong position in the industry during the second half of the year due to a rise in cash transfers to the masses, an increase in travel, and improved weather.

Lucas Ferreira at JPMorgan upgraded Ambev S.A. (NYSE:ABEV) stock from a Neutral to an Overweight rating on July 13 and increased the target price from $2.96 to $3.35. Despite the increase in commodity prices, Ambev S.A. (NYSE:ABEV) has been able to improve its margins due to the company’s strong pricing power. In times of economic uncertainty, analysts are considering Ambev S.A. (NYSE:ABEV) a high-quality stock that can weather inflationary pressures.

Here’s what Broyhill Asset Management said about Ambev S.A. (NYSE:ABEV) in its Q4 2021 investor letter:

“Shares of Ambev struggled to buck the double-digit decline in emerging market indices in the second half of the year. Consensus concerns around commodity cost headwinds certainly didn’t help matters, but beyond short term margin pressures, te business continue to grow their profits as well as their economic moats.

Ambev, its publicly traded subsidiary, enjoys an even stronger local competitive advantage, with nearly two-thirds market share in Brazil, its largest market, and a number one or number two position in each of its other markets. Shares are currently trading more than 50% below the highs reached in 2018 as weak local currencies have weighed on margins (the majority of Ambev’s cost of goods are denominated in dollars) and macro concerns have weighed on the region, which has suffered years of capital outflows. Despite these headwinds, Ambev reported record volume in every quarter last year, months after reporting its lowest volume in history during the pandemic. Should capital decide to return to Brazil and emerging markets (more on this later), we’d expect Ambev to be a primary beneficiary as the stock remains one of the largest, most profitable, and most liquid names in the index, operating in one of the consumer industry’s largest and most relevant sectors.”

As of Q1 2022, Ambev S.A. (NYSE:ABEV) was held by 18 hedge funds.

6. Anheuser-Busch InBev SA/NV (NYSE:BUD)

Number of Hedge Fund Holders: 20

Anheuser-Busch InBev SA/NV (NYSE:BUD) is a Belgian-American brewing and drink company with a global footprint. The company has the distinction of being the biggest brewer of alcoholic products in the world and has over 500 beer brands under its portfolio.

According to analysts, Anheuser-Busch InBev SA/NV (NYSE:BUD) controls nearly one-third of the global beer market and is nearly double the size of its nearest competitor. In a report issued to investors on August 1, Laurence Whyatt at Barclays increased the target price for Anheuser-Busch InBev SA/NV (NYSE:BUD) from $78.95 to $79.97 and maintained an Overweight rating on the stock.

The broad product portfolio gives Anheuser-Busch InBev SA/NV (NYSE:BUD) a competitive advantage against its peers as it caters to every market and uses cost synergies to stay ahead of its competitors. Citadel Investment Group increased its stake in Anheuser-Busch InBev SA/NV (NYSE:BUD) by over 2000% in Q2 2022.

Broyhill Asset Management shared its outlook on Anheuser-Busch InBev SA/NV (NYSE:BUD) in its Q4 2021 investor letter. Here’s what the firm said:

“Shares of ABI struggled to buck the double-digit decline in emerging market indices in the second half of the year. Consensus concerns around commodity cost headwinds certainly didn’t help matters, but beyond short term margin pressures, both businesses continue to grow their profits as well as their economic moats. ABI controls over a quarter of the nearly $600 billion global beer market, based on Euromonitor data, and remains well positioned for a rebound in post-pandemic industry sales.”

In addition to Anheuser-Busch InBev SA/NV (NYSE:BUD), Constellation Brands, Inc. (NYSE:STZ), Brown-Forman Corporation (NYSE:BF-B), and The Boston Beer Company, Inc. (NYSE:SAM) are also amongst our list of the 12 best liquor stocks to buy now.

5. Diageo plc (NYSE:DEO)

Number of Hedge Fund Holders: 21

Diageo plc (NYSE:DEO) is a London, England-based manufacturer of alcoholic beverages with 200 brands under its coverage and a presence in over 180 countries.

For the year ended June 30, 2022, Diageo plc (NYSE:DEO) observed a 21.4% annual increase in net sales to $18.78 billion. Meanwhile, the net income grew by 18.2% to $5.34 billion. The maker of Johnnie Walker saw a decline of 9% in net sales during the peak of the pandemic in FY20. However, the company bounced back in FY21 and reported an increase in net sales of over 8%. Diageo plc (NYSE:DEO) is a beneficiary of the premiumization movement as consumers are moving towards brands with higher price points. This was evident by the fact that the super-premium segment experienced an increase of over 31% YoY during FY22.

Here’s what ClearBridge Investments said about Diageo plc (NYSE:DEO) in its Q2 2022 investor letter:

“Diageo is a leading global distiller and brewer which addresses the large ($500 billion-plus) and fragmented market for spirits. With its portfolio of premium products, we see Diageo as a steady compounder poised for sustained, above industry growth. The company’s margins remain below pre-COVID levels in a number of geographies and should continue to recover as channels reopen, though we also see opportunities for consistent margin expansion beyond this period of rebound. The spirits category is not immune to weaker consumer spending nor inflation; however the majority of Diageo’s profits are from the U.S. market, which has historically been more resilient. Additionally, the company has a number of margin levers to help combat rising input costs.”

4. The Boston Beer Company, Inc. (NYSE:SAM)

Number of Hedge Fund Holders: 22

The Boston Beer Company, Inc. (NYSE:SAM) is a fast-growing beer brewing company with a headcount of over 2,500 employees.

In Q2 2022 results, Chairman and Founder Jim Koch highlighted that The Boston Beer Company, Inc. (NYSE:SAM) has a strong balance sheet, the ability to grow brands, and innovation capabilities to sustain long-term growth. Following the quarterly results, Kaumil Gajrawala at Credit Suisse gave The Boston Beer Company, Inc. (NYSE:SAM) stock an Outperform rating with a target price of $385 on July 22. The analyst highlighted that the company is recovering from the weakness of the hard seltzer market and boosting efforts in other segments.

Over 50% of The Boston Beer Company, Inc.’s (NYSE:SAM) outstanding shares are owned by institutional investors. Analysts believe this is indicative of the company’s credibility and the investors’ belief in the long-term outperformance of the stock.

Here’s what Artisan Partners said about The Boston Beer Company, Inc. (NYSE:SAM) in its Q3 2021 investor letter:

“We ended our campaigns in Boston Beer Company. Boston Beer Company sells a focused portfolio of alcoholic beverage brands. In recent years, the company has emerged as one of the leaders in the hard seltzer category, which has grown over 150% in each of the past three years (2018-2020). Boston Beer’s Truly brand, the second-largest seller of hard seltzer, has benefited from this growth and was core to our investment thesis. However, the hard seltzer category’s growth has recently slowed to single digits, falling short of high investor expectations and pressuring Boston Beer’s earnings upside. Truly’s growth was core to our investment thesis, and a recovery is uncertain; thus, we ended our investment campaign.”

3. Brown-Forman Corporation (NYSE:BF-B)

Number of Hedge Fund Holders: 33

Brown-Forman Corporation (NYSE:BF-B) is a Louisville, Kentucky-based spirits and wine company.

Brown-Forman Corporation (NYSE:BF-B) has a bright future outlook due to its strong growth strategies. The maker of Jack Daniel’s has partnered with the Coca-Cola Company (NYSE:KO) in expanding its footprint in the ready-to-drink alcohol market. Both corporations will join efforts to launch the “Jack & Coke” canned cocktail later this year. It is a widely known bar cocktail that will come in regular and zero-sugar versions. Mexico will be the debut market for the product. The drink would have an alcohol by volume (ABV) of 5%.

Furthermore, Brown-Forman Corporation (NYSE:BF-B) has highlighted India as an emerging market and is focused on expanding its footprint in tier two cities by investing actively in brand building.

Lindsell Train presented its insights on Brown-Forman Corporation (NYSE:BF-B) in its Q4 2021 investor letter:

“Such growth indicates that it’s not mass market tequila shots driving the boom but rather exquisitely crafted Palomas and complex fine sipping tequilas served over ice or even neat. The global rise of interest in cocktails – itself another indicator of consumer tastes turning towards quality over quantity – has been kind to tequila, with the 2021 Bacardi Global Brand Ambassador Survey placing it as the top trending spirit for 62% of global bartenders (rising to 76% in the US) and tequila-based cocktails now ranking 4 of 30 in popularity. We recognise that trends and “booms” have long been a feature of the spirits market, but arguably the combination of demographic behavioural changes and the increased emphasis on truly differentiated flavours as well as heritage and provenance might make shifts like this more durable than in previous years. So we were impressed with our Global portfolio holding Brown-Forman’s 20% growth in tequila volumes in 2021; and despite raised eyebrows at the 2017 Casamigos purchase price of $1bn, we’re pleased that Diageo owns this superpremium tequila and has managed to grow case sales from just 170,000 in 2017 to 1m in 2020. And even more importantly, I did happen to notice in the course of my, er, extensive research that Casamigos has now been immortalised by Claridge’s in a new cocktail named – what else? – “The George”.”

Overall, 33 funds held a stake in Brown-Forman Corporation (NYSE:BF-B) as of Q1 2022.

2. Molson Coors Beverage Company (NYSE:TAP)

Number of Hedge Fund Holders: 36

Molson Coors Beverage Company (NYSE:TAP) is a Chicago, Illinois-based developer, producer, and distributor of beer and other beverage products.

During Q2 2022, Molson Coors Beverage Company (NYSE:TAP) was able to outperform the broader industry in the Canada, UK, and US region. The company observed sales growth in the premium and the cheaper beer category. Furthermore, Molson Coors Beverage Company (NYSE:TAP) reported that its sales had reached 93% of the pre-pandemic levels due to the company’s “above-premium” brands. Molson Coors Beverage Company (NYSE:TAP) believes that it has the right mix of brands under its portfolio to compete and win across multiple segments in the future.

Of the 912 hedge funds being tracked by Insider Monkey, Molson Coors Beverage Company (NYSE:TAP) was held by 36 funds as of Q1 2022.

1. Constellation Brands, Inc. (NYSE:STZ)

Number of Hedge Fund Holders: 41

Constellation Brands, Inc. (NYSE:STZ) is a New York-based producer of beer, wine, and spirits.

On August 2, Andrew Strelzik at BMO Capital initiated coverage on Constellation Brands, Inc. (NYSE:STZ) with an Outperform rating and a target price of $290. The target price offers a potential upside of nearly 19% from the closing price as of August 15. The analyst believes that Constellation Brands, Inc. (NYSE:STZ) offers investors an attractive risk and reward profile and a multi-year growth story.

Furthermore, Constellation Brands, Inc. (NYSE:STZ) stock is trading at a discount compared to its competitors. Analysts think there is a potential upside to the company’s beer revenue forecast for FY23, and earnings growth is expected to continue the upward momentum in FY24 as well. Experts believe the company is well-positioned across the beer, wine, and spirits segments.

ClearBridge Investments shared its bullish outlook on Constellation Brands, Inc. (NYSE:STZ) in its Q2 2022 investor letter. Here’s what the firm said:

”Our investment philosophy is to lean into growth, owning companies that control their own destinies, are taking market and mind share and are levered to secular tailwinds such as elevating efficiency and implementing data-driven decisions. At the same time, we have been tactically pivoting the portfolio to favor companies with less risk to near-term earnings and revenue numbers. Monster Beverage (MNST) and Constellation Brands, Inc. (NYSE:STZ), two beverage makers we added at advantageous prices in 2021, are examples of steady compounders that have held up well through the equity downturn.”

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