Home » alcohol sin stocks » Is Anheuser-Busch InBev (BUD) Pulling Ahead?

Recently we reported on the growing trend of big beer companies, like Anheuser-Busch InBev (BUD), Constellation Brands (STZ), and Molson Coors (TAP), who are trying to compete in the craft beer space. (Check out our article here.)

Well, I guess this post is an “I told you so” post. Because in Fortune just reported that Anheuser-Busch InBev has purchased its TENTH craft brewery.

That’s a lot of craft beer being “lovingly made” by “artisan craftsmen” in “small batches”. (Quotation marks used to indicate irony.)

Seriously, though, 10 craft breweries is a lot of small batch beer. But there’s a reason why the big alcohol sin stocks are getting involved: Simply put, consumer tastes are changing and fewer buyers are looking for the “same-as” experience that everyone else seems to be drinking.

So, how can you play these sin stocks?

  • See if you can acquire shares in a craft brewery that is ripe for takeover. This is harder to do if craft breweries are not publicly traded but some breweries have a craft approach, much like the Boston Beer Company (SAM).
  • Watch for moves that the big companies are making — is there a few popular craft beer companies that are about to be picked up? If so, who is likely to buy?
  • Once these big companies have their craft breweries, what are they going to do with them? They’ll probably focus on some of the best recipes, expand, and then put their marketing muscle behind the small brand to achieve scale. Consider which ones will do it best with the most potentially popular craft brews.
  • Think about what happens in industries that do a lot of acquisition. They buy and buy and buy… and then what? They consolidate. How does that impact the share price? Chances are, the consolidators will win in the short-term with improved balance sheets. So watch for hints of consolidation.

DISCLAIMER

Nothing on this site is a recommendation because, hey, I can't read your mind and I don't know what you have in your portfolio, and I'm not a licensed financial advisor. So never EVER trade without doing your due diligence. If you want more information about this fascinating topic, please check out the Sin Stocks Disclaimer page which basically says the same thing but more emphatically.