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Investing in Beer

Whether you drink beer or not, investing in beer can be quite profitable. In looking at the different types of stock that do well during recessions and profit during recoveries large brewers typically are on the list. Whether your beer of choice is made by Anheuser-Busch or Inbev, Molson Coors or Carlsberg these companies have the capacity to make money year in and year out. There also have been a series of mergers and acquisitions in the brewing business over the years making for some interesting investments. Picking new winners with new comers to the business as well as each reshuffling of the international brewing business can be profitable when investing in beer.

Breweries can resemble basic consumer stocks in that people use their products during good and bad times. This can make these stocks somewhat recession proof. These stocks are part of how to invest in the stock market during hard economic times. However, like all businesses, breweries need to maintain their markets, compete successfully against competitors, and keep costs of doing business down in order to remain successful. When picking stocks, no matter how promising they seem it is always wise to stick with the basics of stock investing.

The basics start and end with fundamental analysis of the company and its prospects. Look at price to earnings ratios and compare with companies with similar products and of similar size. When investing in beer look at the Molson Coors and Carlsberg’s of the world, especially if you are assessing if Inbev’s most recent acquisition is likely to be profitable or not. Always avoid getting fooled by investing clichés. The old belief that “if you can manage one thing you can manage anything” just does not make sense. Making copiers or providing banking services as little to do with the brewer’s art that relies on taste and smell to reliably produce a beverage that people will enjoy and buy again. A concern when investing in beer is if the growth of companies through repeated acquisitions will take them away from their traditional markets and the subtle differences in taste that make a German beer different from a Bohemian pilsner or a beer brewed in Mexico.

Successful stock investing comes from doing research on the company and market sector into which you are buying and it has to do with an appreciation of market movements. When investing in beer, or any other stock, look at how the stock has done year in and year out with swings in the market. Look at what the company has said about its prospects and its plans and just how accurate those statements turned out to be. No matter how well a company is doing its stock holders are always interested in more money. So, buyout offers that are sweet enough can change the thousand year old ownership of a beer company overnight. When that happens and you are a shareholder you need to decide whether to sell at an inflated stock price when a hostile takeover is in process, wait to see if the price goes higher, or wait for the takeover and take your chances. As Inbev and other growth by making acquisitions this is not just a theoretical exercise. As usual with these discussions we not saying that you should invest in beer stocks and we are not suggesting that you avoid these stocks. The point is that you should thoroughly investigate stocks before buying and stay current with all factors that will affect current and future stock price.





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