CITI: Long Bourbon, Short Beer

Citi beverage analyst Vivien Azer is out with a big call: Long bourbon, short beer.

Says Azer:

While we like the pockets of growth that remain in the U.S. beer category, overall we continue to believe that the U.S. spirits segment offers a more attractive return profile for investors, given the less impressive trends that we expect to continue to see for the U.S. beer category, generally. As such, our favourite name within our alcoholic beverage coverage remains Brown-Forman, where we have an $80 target price, which represents 28% ETR from current levels.

A few charts from the report really help underscore the thesis.

First of all, Beer’s “throat” share is huge, but on the decline.

beer consumption alcohol

Photo: Citi

The chart looks really ugly for beer on a consumption per-capita basis.

beer consumption alcohol

Photo: Citi

Year-over-year grown in bourbon consumption is WAY faster than other spirits categories.

bourbon alcohol growth

Photo: Citi

And in these troubled times, beer just isn’t that cheap, especially considering how little alcohol you’re getting.

alcohol value

Photo: Citi

According to the report, it’s not a total catastrophe for beer. Imported and craft beers are doing better, but the big trends for big brand don’t look great.

SEE ALSO: 14 facts you should know about whiskey >

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.