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Investing in beer stocks

Consumer demand tends to be strong in down markets but legalized cannabis may threaten profits.

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Even in a bear market, alcohol stocks tend to do well. But the growing legalization of cannabis poses a serious threat to this industry.

What are beer stocks?

Beer stocks are stocks from beer-producing companies. But companies that exclusively produce beer — also called pure play investments — are rare in the beer category. That’s because most publicly traded companies that offer exposure to the beer market also produce other beverages, like wine, spirits and soft drinks.

Beer stocks are typically considered a sin stock: stocks from companies that produce products that may be considered unethical. Sin stocks usually include the following industries:

  • Adult products and entertainment
  • Alcohol
  • Gambling
  • Tobacco
  • Weapons

What constitutes a sin stock in one country may not qualify as a sin stock in another. And that’s because sin stocks are difficult to define. Whether or not you choose to add sin stocks to your portfolio depends on your risk tolerance and personal investment preferences.

Why invest in beer stocks?

Beer — like most other alcoholic beverages — tends to enjoy consistent consumer demand. For this reason, some experts suggest beer stocks are a recession-proof investment that typically performs well in a down market.

Another benefit of investing in beer stocks is the stable profits many beer companies enjoy. The regulatory risks that dominate this market make it challenging for startups to enter. As a result, low competition lends itself to stable profits for companies and reliable dividends for shareholders.

Risks of investing in beer

An emerging market disruptor has begun to threaten the alcohol industry: cannabis. With more and more states legalizing its medical and recreational use, cannabis consumption is on the rise. Statista reports that in 2018, the global cannabis sector was worth $13.8 billion. But by 2025, the sector is expected to swell to $43 billion.

Now, the growth of one sector doesn’t necessarily detract from another. But alcohol consumption isn’t what it once was — at least not among US millennials. A 2019 Monitoring the Future study found that daily alcohol consumption among college students dropped from 6.6% in 1987 to 3.8% in 2019.

Another concern for investors is the higher tax rates associated with sin stocks. Higher taxes have the potential to dig into a stock’s bottom line, affecting profits for investors.

Beer stocks

You can purchase beer stocks from companies based in the US or internationally. If you’re interested in investing in global beer stocks, you’ll find some listed on US exchanges, while others must be purchased over-the-counter.

Beer stocks on US exchanges

Select a company to learn more about what they do and how their stock performs, including market capitalization, the price-to-earnings (P/E) ratio, price/earnings-to-growth (PEG) ratio and dividend yield. While this list includes a selection of the most well-known and popular stocks, it doesn't include every stock available.

What ETFs track the beer category?

While there are no ETFs dedicated entirely to tracking the beer market, there are some ETFs with limited exposure to alcohol stocks.

  • AdvisorShares Vice ETF (ACT)
  • Consumer Staples Select Sector SPDR Fund (XLP)
  • Fidelity MSCI Consumer Staples Index ETF (FSTA)
  • iShares Global Consumer Staples ETF (KXI)
  • Vanguard Consumer Staples ETF (VDC)

Compare trading platforms

To invest in beer stocks, you’ll need a brokerage account. Compare your options below.

Name Product Available asset types Stock trade fee Option trade fee Annual fee
Vanguard
Stocks,Mutual funds,ETFs,Forex
$0
$1
$20 per year
Get a personal advisor when you open an account with at least $50,000.
Robinhood
Stocks,Options,ETFs,Cryptocurrency
$0
$0
0%
Make unlimited commission-free trades in stocks, funds, and options with Robinhood Financial.
Interactive Brokers
Stocks,Bonds,Options,Mutual funds,Index funds,ETFs,Forex,Futures,Cash
$0
$0 + $0.65/contract, $1 minimum
0%
IBKR Lite offers $0 commissions, and IBKR Pro offers advanced tools for professional traders.
TD Ameritrade
Stocks,Bonds,Options,Mutual funds,ETFs,Forex,Futures
$0
or $25 If it is broker-assisted
$0 + $0.65/contract,
or $25 Broker-assisted
TD Ameritrade features $0 commission for online stock, but watch out for high short-term ETF and broker-assisted trading fees.
Tastyworks
Stocks,Options,ETFs,Futures
$0
Stocks & ETFs: $1/contract to open, $0 to close, $10 max/leg
Futures: $2.50/contract to open, $0 to close
0%
Trade stocks, options, ETFs and futures on mobile or desktop with this advanced platform.
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Compare up to 4 providers

Disclaimer: The value of any investment can go up or down depending on news, trends and market conditions. We are not investment advisers, so do your own due diligence to understand the risks before you invest.

Bottom line

The beer market tends to perform with consistency, even in a down market. But consider the risks posed by the growing legalization of cannabis before you invest in this popular sin stock.

You’ll need a brokerage account before you can invest. Review your account options with multiple trading platforms before you make a decision.

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