We recently published a list of 10 Best Alcohol Stocks to Buy According to Billionaires. In this article, we are going to take a look at where Ambev S.A. (NYSE:ABEV), stands against other best alcohol stocks to buy according to billionaires.
The alcohol industry has found itself on the frontlines of a global trade war, sparked by President Donald Trump imposing increased tariffs on America’s neighbors and friends across the pond. The European Union responded to Trump’s 25% tariff on all steel and aluminum imports by announcing countermeasures on up to $28 billion worth of American goods, including a 50% tariff on American alcohol. The move could be devastating for the US spirits industry, as over the last two years, American whiskey exports to the EU have surged by more than 60%. Around 40% of US spirits are exported to the European Union, totaling $883 million in 2023, making it America’s largest export market.
Chris Swonger, CEO of the Distilled Spirits Council of the United States, stated:
“The reimposition of these tariffs at a 50% rate would gut this growth and do irreparable harm to distillers large and small. It would be a catastrophic blow that will force many distillers out of our largest export market.”
READ ALSO: 10 Best Alcohol Stocks To Buy According to Analysts
In return, President Trump took it up a notch and threatened to slap a 200% tariff on wine, cognac, and other alcohol imports from Europe, causing panic also on the other side of the Atlantic. The United States imported wine worth around $5 billion from the EU last year and accounts for 31% of the overall wine and spirits exports from the bloc. A 200% tariff would push these European offerings outside the reach of most Americans, who would then prefer their local alternatives.
The tariffs on Mexico and Canada are set to have a significant impact as well. Sales of tequila and mezcal in the US rose 2.9% to total $6.7 billion last year and these numbers are expected to take a hit if the current 25% tariffs remain in place. Moreover, the extreme popularity of Mexican beers in the US could also be threatened as their prices are pushed higher compared to the local brews. In the province of Ontario in Canada, liquor stores have gone even as far as to remove American whiskey and wine from their shelves and replace them with domestic offerings.
And if that wasn’t enough, it seems like America’s much-celebrated Bourbon boom is finally over as the US whiskey industry shows signs of slowdown. According to industry tracker IWSR, sales volumes of American whiskey dropped 1.2% in 2023, marking the first decline since 2002. The downward trend continued last year and domestic sales of American whiskeys fell 1.8% in 2024 to total $5.2 billion, according to DISCUS. The sharp surge in demand that the sector witnessed during the pandemic is softening down as consumers cut back, plowing through bottles they accumulated in recent years and trading down to cheaper options.
Despite the current difficulties, some billionaire investors remain bullish on the American alcohol sector. Warren Buffett’s Berkshire Hathaway invested over $1.2 billion in an American alcohol giant in Q4 2024, signaling the Oracle of Omaha’s confidence in the alcoholic beverage market’s long-term prospects. The continued tilt towards premiumization, the rising popularity of low- and no-alcohol options, and the ballooning Ready-to-Drink segment represent only some of many opportunities that the industry can capitalize on, if it manages to muscle through the heating political landscape.
Methodology
To collect data for this article, we scanned Insider Monkey’s database of billionaires’ stock holdings and picked the top 10 companies operating in the alcohol sector with the highest number of billionaire investors in Q4 of 2024. When two or more companies had the same number of billionaire investors, we ranked them by the revenue of their last financial year.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up on several cans of freshly brewed beer in a commercial brewery.
Ambev S.A. (NYSE:ABEV)
Number of Billionaire Holders: 9
Ambev S.A. (NYSE:ABEV), formally Companhia de Bebidas das Américas, is a Brazilian brewing company that has now merged with Anheuser-Busch InBev. It offers beer under several brand names such as Skol and Brahma and claims to be the largest brewer in Latin America in terms of sales volume.
Total volumes of Ambev S.A. (NYSE:ABEV) declined by 3.2% YoY in Q4 of 2024 due to softer market conditions in Argentina and adverse weather in Brazil. However, the company’s net revenue was still up 4.2% YoY to 27.04 billion reals ($4.66 billion), with growth in most business units. Ambev also posted an adjusted net profit of around $874.63 million during the quarter, up 7.5% YoY, driven by higher core earnings and better financial results. Cash flow from operating activities came in at around $2.4 billion in Q4 and the company announced the distribution of intermediary dividends of approximately $340 million to be paid in April.
Ambev S.A. (NYSE:ABEV) has displayed strong stability over the last few years. The company’s consolidated EBITDA grew by 37% over the last five years and it generated nearly $11.2 billion in free cash flow. The company also remains committed to its shareholders and has returned approximately $7 billion to them since 2020, demonstrating its financial health and its disciplined approach to capital allocation.
Overall, ABEV ranks 7th on our list of best alcohol stocks to buy according to billionaires. While we acknowledge the potential for ABEV to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than ABEV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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