Bud Light sales have plummeted and the impact extends beyond the beer brand.
Global glass producer Ardagh Group recently announced the closure of two glass bottling plants, one in North Carolina and one in Louisiana.
WRAL-TV reported that the closure of these two factories would result in the layoff of approximately 645 employees.
According to an internal memo obtained by WRAL, the decision was “due to slow sales with Anheuser InBev,” the multinational brewing company 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 sparked a backlash on social media and led to a boycott from some beer drinkers.
Sales of Bud Light in the United States fell 28% in the week ending June 24 from a year earlier, according to consulting firm Bump Williams using data from NielsenIQ.
Anheuser-Busch InBevThe stock price of (NYSE:BUD) also took a hit. Since April 1, when Mulvaney first promoted the beer on social media, BUD stock has fallen 16%, resulting in the loss of billions of dollars in market capitalization.
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As Bud Light struggles with declining sales, competitors are seizing the opportunity to jump in and take market share. Here’s a look at two beverage stocks that Wall Street finds particularly attractive.
Constellation Brands Inc. (NYSE: STZ)
According to data from NielsonIQ, Bud Light is no longer the top-selling beer in the United States. The top spot now belongs to Modelo Especial, brewed by Constellation Brands.
Constellation Brands is a leading international producer and marketer of beer, wine and spirits. Besides Modelo Especial, the company owns 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, an increase of 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 on the horizon. The analyst has an overweight rating on Constellation Brands and a price target of $290, about 14% above the stock’s current position.
Molson Coors Beverage Co. (NYSE: TAP)
Another company that could benefit from the Bud Light fiasco is Molson Coors.
Molson Coors was formed by the merger of Molson Inc. of Canada and Adolph Coors Co. of the United States in 2005. Today it has a portfolio of iconic beer brands including Coors Light, Miller Lite, Molson Canadian, Blue Moon and many more. .
If consumers move away from Bud Light, they could opt for Coors Light or Miller Lite instead.
Molson Coors has already benefited from growing investor attention, with its shares jumping 34% year-to-date. The company pays quarterly dividends of 41 cents per share, which translates to an annual return of 2.5%.
Jefferies analyst Kevin Grundy has a buy rating on Molson Coors and a price target of $75. Since the shares are trading at around $66.30, the price target implies a potential upside of 13%.
Brewing companies have the potential to be strong dividend-paying investments due to the resilience of beer sales through economic cycles. As with all stocks, brewers can see their stock prices fluctuate unpredictably – and even the best analysts aren’t right 100% of the time.
If you don’t like such volatility, you might want to look into reliable income games outside of the stock market, such as investing in rental properties with as little as $100 while remaining completely indifferent.
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This article Glass bottling plants close after Bud Light boycott slams sales – 600 workers now out of work; 2 other great beverage stocks to watch now originally appeared on Benzinga.com
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