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Investing in beer stocks
Consumer demand tends to be strong in down markets but legalized cannabis may threaten profits.
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
Sin stocks are difficult to define, because what constitutes a sin stock in one country may not qualify as a sin stock in another. Whether or not you choose to add sin stocks to your portfolio depends on your risk tolerance and personal investment preferences.
How do I buy Beer stocks?
- Choose a stock trading platform. If you’re a beginner, our table below can help you choose.
- Open your account. You’ll need to provide your ID, bank account information and Social Security number.
- Fund your account. Before you can start trading, you’ll need to fund your account with a bank transfer.
- Search for stocks. Use a stock screener to sort and filter stocks.
- Submit your order. Once you’ve found a security you’d like to buy, indicate how many you’d like to purchase and submit your order.
- Monitor your investments. Log in to your brokerage account to track the performance of your portfolio.
You can purchase beer stocks from companies based in Canada, the US and other countries. If you’re interested in investing in global beer stocks, you’ll find some listed on Canadian and US exchanges, while others must be purchased over-the-counter.
- Big Rock Brewery Inc. (TSX: BR)
- Waterloo Brewing Ltd. (TSX: WBR)
- Molson Coors Beverage Company (TSX: TPX-B)(NYSE: TAP)
- Anheuser-Busch InBev SA/NV (NYSE: BUD)
- Constellation Brands, Inc. (NYSE: STZ)
- Diageo plc (NYSE: DEO)
- The Boston Beer Company, Inc. (NYSE: SAM)
- Ambev S.A. (NYSE: ABEV)
- China Resources Beer (Holdings) Company Limited (HKSE: 0291.HK)
- Thai Beverage Public Company Limited (OTC Markets, Pink Sheets: TBVPF)
- Heineken N.V. (OTC Markets, Pink Sheets: HEINY)
- Carlsberg A/S (OTC Markets, Pink Sheets: CABGY)
What ETFs track the beer industry?
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 (NYSEARCA: VICE)
- Fidelity MSCI Consumer Staples Index ETF (NYSEARCA: FSTA)
- iShares Global Consumer Staples ETF (NYSEARCA: KXI)
- Consumer Staples Select Sector SPDR Fund (NYSEARCA: XLP)
- Vanguard Consumer Staples ETF (NYSEARCA: VDC)
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. Cannabis consumption is on the rise since it was legalized in Canada in 2018. Statista reports that the global cannabis sector was worth $13.8 billion in 2018. But by 2025, the sector is expected to swell to $43 billion.
Now, the growth of one sector doesn’t necessarily detract from another. However, a study by Beer Canada found that beer sales went down by 3% in the year following the legalization of cannabis. Another study published in 2020 found that alcohol consumption among US college students is lower in states where cannabis is legal. On the other hand, Statista reports that global alcohol consumption has increased between 2017 and 2021.
Compare trading platforms
To invest in beer stocks, you’ll need a brokerage account. Compare your options below. Bear in mind that not all Canadian trading platforms offer access to US stock exchanges like the NYSE and the NASDAQ. Check out our guide on buying US stocks from Canada to learn more about your options.
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.
Frequently asked questions
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