On January 3rd, U.S. Surgeon General Dr. Vivek Murthy released an advisory highlighting the link between alcohol consumption and cancer. As most major news, this had a notable impact on the market, specifically on the performance of major alcohol companies. The announcement has led to a decline in stock prices for several big name alcohol companies.
Since the end of 2024, Anheuser-Busch, the maker of Budweiser and Bud Light, is down about 8%, Molson Coors has dropped 9%, Brown-Forman, the maker of Jack Daniel’s whiskey has fallen 11%. Diageo, which manufactures Guinness beer, has slipped 4%, and Boston Beer Company, known for Samuel Adams and Truly Hard Seltzer, felt the effects the worst of the bunch, dropping 14.6%.The market’s reaction reflects investor concerns about potential future regulations and a decrease in alcohol consumption due to heightened public health awareness.
On January 10th, Constellation, known for Corona and Modelo saw its shares fall 17% to close at $182 on Friday. This was a mixing pot of Murthy’s comments, potential tariff implications as Constellation relies heavily on its Mexican lagers, as well as the company reporting net sales for its quarter ended Nov. 30 that missed consensus estimates. The company also cut its fiscal-year outlook to reflect “reduced growth expectations for net sales and operating income".
Murthy highlighted that Alcohol is a well-established, preventable cause of cancer responsible for about 100,000 cases of cancer and 20,000 cancer deaths annually in the United States and at least 16% of total breast cancer cases are attributable to alcohol consumption.
Analysts believe the explicit link of alcohol to cancer by a public health official may cause consumers to reconsider their drinking habits, decreasing demand. In response, companies may increase spending on marketing to counteract negative perceptions or invest in the development of non-alcoholic drinks, which have been gaining market share even before this announcement.
Lastly, the advisory has sparked a discussion among investors about the ethics of investing in alcohol stocks. The ESG (Environmental, Social, and Governance) criteria, which many investment funds use to screen potential investments, might now place a heavier weight on the effects of alcohol production and consumption. This could lead to a reevaluation of investment strategies concerning the alcohol industry from established firms.
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