Wine Stocks

The investment landscape recently is unlike anything investors and economists have seen before. Unemployment is hitting record levels and unprecedented action from the Treasury and Federal Reserve have markets gyrating wildly. Less volatile consumer staples stocks like wine producers could provide the stability your portfolio needs.

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Contributor, Benzinga
June 23, 2024

Diageo (NYSE:DEO)

Diageo is based out of London and employs over 28,000 workers. It is responsible for many of the world’s favorite alcohol brands, including Johnny Walker, Captain Morgan, Bailey’s, Don Julio, Guiness, Tanqueray, Ketel One and more.

DEO has a market cap of $98.34 billion and a 52-week range of $120.12 to $170.39. The company pays a $3.73 dividend, trades an average of 451,724 shares daily and its 2020 revenues were $15.74 billion.

$130.32
-1.11[-0.84%]
Last update: 9:30AM (Delayed 15-Minutes)
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Open129.970Close130.320
Vol / Avg.675.237K / 648.076KMkt Cap72.229B
Day Range129.970 - 131.41052 Wk Range129.110 - 179.780

Brown Forman Inc Class A Common Stock (NYSE:BF/A)

Brown-Forman is the largest U.S.-domiciled producer of distilled spirits. The firm reports only a single operating segment, and whiskey represents its primary business driver at over 80% of revenue, undergirded by the Jack Daniel’s brand as well as bourbons such as Woodford Reserve and Old Forrester. Notable nonwhiskey offerings include vodkas such as Finlandia and tequilas such as el Jimador and Herradura. The firm operates globally, with products sold in more than 170 countries, and adapts its route-to-consumer model depending on regulation as well as the prevailing competitive dynamics in a given market. For example, it sells through distributors in the U.S. but operates its own logistics apparatus in many other countries. The company remains under the control of the Brown family.

$43.55
0.35[0.81%]
Last update: 4:00PM (Delayed 15-Minutes)
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Open43.340Close43.550
Vol / Avg.198.855K / -Mkt Cap-
Day Range43.070 - 43.82052 Wk Range- - -

Pernod Ricard (OTCPK:PRNDY)

Pernod Ricard is the world’s second-largest spirits maker by volume, behind Diageo. The firm’s key markets are Europe, the United States, and Asia. Pernod’s key spirits brands include Absolut vodka, Beefeater gin, Chivas Regal and The Glenlivet scotch whisky, Jameson Irish whiskey, Malibu rum, and Martell cognac. The firm’s strategic wine portfolio, which represented around 5% of fiscal 2021 revenue among the group’s focus brands, includes Jacob’s Creek, Brancott Estate, Campo Viejo, Mumm, and Perrier-Jouet.

$27.95
-0.19[-0.68%]
Open28.040Close27.950
Vol / Avg.232.364K / 270.789KMkt Cap35.209B
Day Range27.890 - 28.25052 Wk Range27.820 - 45.590

Willamette Valley (NASDAQ:WVVI)

Willamette Valley Vineyards Inc produces and sells premium, super-premium, and ultra-premium varietals. The grapes are harvested, fermented, and made into wine at the company’s Turner winery, and the wines are sold principally under its Willamette Valley Vineyards label and also under the Griffin Creek, Tualatin Estate, Pambrun, Maison Bleue, Natoma, Metis, and Elton labels. It operates under two operating segments, direct sales and distributor sales. Direct sales include retail sales in its tasting room and remote sites, wine club sales, online sales, on-site events, kitchen and catering sales, and other sales made directly to the consumer without the use of an intermediary. Distributor sales include all sales through a third party where prices are given at a wholesale rate.

$4.35
0.28[6.88%]
Last update: 4:25PM (Delayed 15-Minutes)
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Open3.950Close4.350
Vol / Avg.18.086K / 4.738KMkt Cap21.588M
Day Range3.940 - 4.35052 Wk Range3.850 - 6.590

Constellation Brands (NYSE:STZ)

Constellation Brands is the largest multi-category alcohol supplier in the U.S. The business is anchored by a portfolio of Mexican beer trademarks, including Corona and Modelo, for which it acquired exclusive and perpetual U.S. ownership from AB InBev. The latter had to divest these rights due to antitrust mandates as it consummated its 2013 acquisition of dominant Mexican brewer, Grupo Modelo. Constellation’s wine/spirits business has been in flux, and it is currently divesting several lower-margin assets, including myriad wine brands and its Ballast Point craft beer brand. The firm imports most products after manufacturing them abroad, going to market through independent wholesalers. It owns 37% of Canopy Growth, a leading provider of medicinal and recreationally legal cannabis products.

$263.50
0.67[0.25%]
Last update: 4:30PM (Delayed 15-Minutes)
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Open263.450Close263.500
Vol / Avg.1.387M / 1.167MMkt Cap48.208B
Day Range260.930 - 263.59052 Wk Range227.500 - 274.870

Have you been drinking wine during the coronavirus lockdowns? Of course you have and so has the rest of America. Alcohol consumption has skyrocketed since the outbreak forced citizens out of their offices and into their homes indefinitely. U.S. alcohol sales increased 55% during the first week of extended lockdowns and wine sales were up 42% on a year-to-year basis. That's a great reason for investors to look at wine stocks.

If you want to invest in companies that make alcoholic beverages like wine, you have no shortage of choices. Many of America’s favorite brands are produced by a handful of large companies that trade on U.S. exchanges. 

Alternatives to Wine Stocks

Overview: Wine Stocks

Companies that produce wine, beer and liquor reside in the consumer staples sector. You’ll sometimes hear market watchers refer to this sector as consumer defensive since they sell products that have relatively flat sales. Demand for food and alcohol doesn’t change much on a daily or yearly basis, so these companies aren’t looking to spend big on research and development or new ventures. 

Wine stocks are usually stable, dividend-paying companies and consumer staples tend to outperform during recessions. 

Wine is just a small sliver of sales from beverage giants, but several stocks on our list make their mark purely from what comes out of the vineyards. If you want to invest in consumer staples stocks that produce alcoholic beverages like wine, a forced recession from nationwide quarantines is as good a time as any.

Best Online Brokers for Wine Stock

A few of the stocks on our list are thinly traded, so you’ll need to make sure you find a broker that has shares available of the companies you want to buy. We didn’t include any OTC stocks or shares on foreign exchanges, but just because a stock trades on the NYSE doesn’t mean shares are abundant at every broker. 

Before opening a new brokerage account, do a little digging and make sure they have shares available of all the stocks you intend on purchasing.

Features to Look for in Wine Stocks

  • Brand diversification: A key component for success in the consumer staples sector is the availability and popularity of name brand items. For wine and alcohol companies, the name brand is crucial. For example, Americans don’t just want whiskey — they want Jack Daniels or Johnny Walker. Strong brands drive sales for companies where product demand is inelastic like consumer staples.
  • Gross margins: For nongrowth-focused stocks like consumer staples, looking at overall revenue doesn’t paint a clear picture. Companies that sell staples should instead be judged by their gross margins, which can be calculated by subtracting the costs of producing goods from net sales revenue. Companies with high gross margins get more bang for their buck when it comes to capital because they keep a higher percentage of the gross profits.
  • Returning cash to shareholders: Alcohol producers aren’t huge innovators and many don’t desire the massive growth found in the tech sector. Instead, these companies make a habit of returning cash to shareholders in the form of dividends or buybacks. The Invesco BuyBack Achievers ETF (NYSE: PKW) is one example. If you’re investing in wine stocks, be sure to look for companies with a history of raising dividends or repurchasing shares.

Top Off Your Portfolio with a Taste of Wine Stocks

With most of the world’s nations locked in quarantine, alcohol consumption has increased significantly. Whether that’s good for society can be debated another day, but beer, liquor and wine sales are up and that’s a boost for beverage producers operating in a usually dull sector. Investing for the long-term means finding quality companies, not just those getting a momentary boost from an untenable global situation.

Beverage producers face inelastic demand for their products. Despite the recent trend, most people consume alcohol at a constant rate. Revenue doesn’t fluctuate in any type of consequential way most quarters, so these firms must focus on margins to improve profits and return cash to shareholders. 

The best companies in this sector will have a diverse selection of brands and a laser-like focus on improving margins. If you’re investing for the long term, look for companies with a history of raising dividends when adding wine stocks to your portfolio.

Frequently Asked Questions

Q

What are wine stocks?

A

Wine stocks are shares in companies that are associated with the wine industry.

Q

Are wine stocks a good investment?

A

Because wine is a consumable that people continue to drink, wine stock is considered a good investment.

Q

Which wine stocks are the best?

A

Benzinga offers a list of the best wine stocks above.

About Dan Schmidt

Dan Schmidt is a finance writer passionate about helping readers understand how assets and markets work. He has over six years of writing experience, focused on stocks. His work has been published by Vanguard, Capital One, PenFed Credit Union, MarketBeat, and Fora Financial. Dan lives in Bucks County, PA with his wife and enjoys summers at Citizens Bank Park cheering on the Phillies.