Anheuser-Busch (BUD) has been soaring on recent news that the Belgian brewer InBev may acquire the American icon. However, BUD has been on the uptick since the end of March, and several other alcohol stocks are weathering the economic downturn. In addition to BUD, Molson Coors (TAP), and Jack Daniels maker Brown-Forman (BFB) are all up year-to-date. Small-cap booze stocks like Sam Adams’ Boston Brewer (SAM) and winery Willamette Valley Vineyards (WVVI) are also up.
Why are these stocks thriving while consumers cut back? Because booze is an addictive drug! And because, as Paul La Monica points out, it’s a consumer staple:
Simply put, alcoholic beverage makers, like some other consumer staples firms like Coca-Cola and Procter & Gamble, tend to hold up reasonably well during times of a slowdown.
People may pull back on discretionary spending when they’re wallet is feeling light but they’re unlikely to cut back as substantially on basics like food, drinks and household products.