Investing in Alcohol Stocks
Investing in alcohol stocks is highly unlikely to yield the dizzying, quick returns that many investors dream of. However, due to the relatively constant demand from consumers, many alcohol producers tend to generate steady revenue, regardless of the prevailing economic climate.
In this article, we will examine investing in this industry, highlight 2 top alcohol stocks for investors to watch in 2024 and demonstrate how to invest in alcohol stocks in 4 steps.
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Investing in Alcohol Stocks
Whilst alcohol is by no means an essential good, it enjoys the status of being a consumer staple, due to the fact that people tend to continue demanding and consuming it regardless of the health of the overall economy.
This means that alcohol stocks tend to perform fairly consistently throughout all stages of the economic cycle. For some investors, this consistency and the stable growth it provides is desirable for their portfolio. This becomes particularly true during times of economic uncertainty, when investors tend to gravitate towards stocks which have this quality.
Furthermore, many of the top alcohol stocks are also reliable dividend payers, making them a potentially attractive option for income investors.
Nevertheless, a risk of investing in the alcohol industry is that, as the population becomes more health conscious, alcohol consumption will fall in the same way as demand for tobacco has fallen over the years.
Indeed, in recent years, demand for alcohol has started to wane, particularly amongst the younger generation. Naturally, falling demand could at some point translate into a drop in revenue for alcohol stocks.
Best Alcohol Stocks to Watch
So, which are the top alcohol stocks to watch in 2024? In the following sections, we will take a closer look at 2 such stocks.
LVMH
LVMH Moet Hennessy Louis Vuitton is probably the stock for those seeking exposure to the world of luxury goods. Amongst its stable of exclusive brands, it counts a number of champagne houses and high-end spirits – such as Moët & Chandon, Dom Pérignon and Hennessy.
Although luxury goods are classified as consumer discretionary (i.e. non-essential) and, generally, the companies which produce and sell these goods tend to perform better in times of economic expansion, they are also considered by many to be relatively defensive in nature.
The reason luxury goods are often insulated from economic turmoil is due to the fact that their sales are mostly generated from the wealthiest in society, who themselves are less affected by wider economic issues. Thus, many luxury stocks can count on a relatively steady stream of demand regardless of the health of the overall economy.
This quality was evident for LVMH in 2022. As many companies underperformed amidst high inflation, rising interest rates and a climate of economic uncertainty, LVMH reported robust results. Total revenue and profit both increased 23% year on year, with the Wines & Spirits division, reporting a 19% and 16% increase in revenue and profit respectively.
The long-term growth of LVMH has been impressive, with the company’s share price growing more than 1,000% since 2010. The stock also pays a modest dividend, which currently yields at around 1.4%.
Diageo
Whilst it may lack the elite status of LVMH, UK-based alcohol stock Diageo has a vast portfolio of globally renowned alcohol brands, making it one of the most popular alcohol stocks on the market.
Amongst its products it counts Johnnie Walker and Smirnoff, two of the four largest international spirits brands by retail sales value. Other notable brands include Guinness, Baileys and Tanqueray.
This impressive and constantly growing portfolio has allowed Diageo to perform well over the years, even throughout the challenging economic period of last year. In the six months ended 31 December 2022, net sales and operating profit both rose 18% and 15% respectively.
Long-term Diageo shareholders have also been rewarded by impressive growth, with share price increasing more than 200% since 2010. Like LVMH, Diageo is also a dividend stock, which currently has a dividend yield of 2.3%.
How to Invest in Alcohol Stocks in 4 Steps
With Admirals, you can invest in both alcohol dividend stocks highlighted in this article as well as over 4,500 other stocks and more than 200 Exchange-Traded Funds (ETFs) from around the world.
In order to invest in alcohol stocks, follow these 4 steps:
- Open an Invest.MT5 account.
- Log in to the Admirals Dashboard, find your account details and click ‘Invest’ to open Admirals Platform.
- Search for the stock you wish to purchase and open the instrument page.
- Enter the number of shares you wish to purchase and click ‘Buy’ to send your order to the market.
Investing with Admirals
Besides a wide array of stocks and ETFs to choose from, other benefits of investing with Admirals include:
- Competitive commissions and no account maintenance fees.
- The ability to buy fractional shares in over 700 of the world’s most exciting companies.
- Exclusive access to our Premium Analytics portal at no extra cost.
To start enjoying these benefits and many more, click the banner below to register for an account today:
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