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Bud Light sales are declining and the impact extends beyond the beer brand.
Global glassmaker Ardagh Group recently announced it will close two glass bottling plants: one in North Carolina and one in Louisiana.
WRAL-TV reported that the closure of these two plants would result in the layoff of approximately 645 workers.
According to an internal memo obtained by WRAL, the decision was “due to slow sales at Anheuser InBev,” the multinational brewery behind Bud Light.
In April, Bud Light teamed up with transgender social media influencer Dylan Mulvaney, who has 10.7 million followers on TikTok. The collaboration caused a backlash on social media and led to a boycott by some beer drinkers.
Bud Light sales in the US fell 28% in the week ending June 24 compared to the prior year, according to consulting firm Bump Williams based on data from NielsenIQ.
Anheuser-Busch InBev‘s (NYSE:BUD) stock price has also taken a hit. Since April 1, when Mulvaney first promoted the beer on social media, BUD stock has plummeted 16%, leading to the loss of billions of dollars in market cap.
Checking out:
As Bud Light struggles with declining sales, competitors seize the opportunity to sneak in and take market share. Here’s a look at two beverage stocks that Wall Street finds particularly attractive.
Constellation Brands Inc. (NYSE:STZ)
Bud Light is no longer America’s best-selling beer, according to data from NielsonIQ. First place now belongs to Modelo Especial, brewed by Constellation Brands.
Constellation Brands is a leading international producer and marketer of beer, wine and spirits. In addition to Modelo Especial, the company has many other popular brands, such as Corona beer, Robert Mondavi wines and High West whiskey.
In the first quarter, Constellation Brands generated $2.51 billion in net sales, up 6% from a year ago.
In April, the company announced an 11% increase in its quarterly cash dividend to 89 cents per share. At the current share price, Constellation Brands offers an annual return of 1.4%.
The stock is up about 11% year to date, and Morgan Stanley analyst Dara Mohsenian sees further upside potential on the horizon. The analyst has an Overweight rating on Constellation Brands and a price target of $290, about 14% above where the stock currently stands.
Molson Coors Beverage Co. (NYSE: TAP)
Another company that could benefit from the Bud Light fiasco is Molson Coors.
Molson Coors was created by the merger of Molson Inc. from Canada and Adolph Coors Co. from the US in 2005. Today it has a portfolio of iconic beer brands, including Coors Light, Miller Lite, Molson Canadian, Blue Moon and many others.
As consumers move away from Bud Light, they can choose Coors Light or Miller Lite instead.
Molson Coors is already enjoying increasing attention from investors, with the stock up 34% since the start of the year. The company pays quarterly dividends of 41 cents per share, which translates into an annual return of 2.5%.
Jefferies analyst Kevin Grundy has a buy rating on Molson Coors and a price target of $75. Since shares are trading around $66.30, the price target implies a potential upside of 13%.
Beer companies have the potential to be solid dividend investments because of the resilience of beer sales across economic cycles. As with all stocks, brewers can see their share prices fluctuate unpredictably – and even top analysts aren’t right 100% of the time.
If you don’t like such volatility, you may want to look into reliable income plays outside of the stock market, such as investing in rental properties with as little as $100 while remaining completely hands-off.
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This article Glass bottling plants close after sales suppressed by Bud Light boycott — 600 employees now out of work; 2 Other great liquor stocks to check out now originally appeared on Benzinga.com
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