However, the industry also offers meaningful growth opportunities through innovation. Expanding demand for ready-to-drink cocktails, and low and no-alcohol beverages is creating revenue streams, while companies that diversify their portfolios and adapt to changing consumption habits are better positioned to offset volume headwinds. For investors, success will likely depend on companies' ability to balance pricing power, cost discipline and product innovation while capitalizing on evolving consumer preferences. Leading players, including Anheuser-Busch InBev BUD, Diageo Plc DEO, Constellation Brands Inc. STZ, Brown-Forman Corporation BF.B and Molson Coors Beverage Company TAP, look well-placed to capitalize on these trends.
About the Industry
The Zacks Beverages – Alcohol industry mainly comprises producers, importers, exporters, marketers and sellers of alcoholic beverages like beer, craft beer, ciders, wine, rum, whiskey, liqueurs, vodka, tequila, champagnes, brandy, amaretto, ready-to-drink (RTD) cocktails and malt. Some industry players also produce and sell non-alcoholic beverages like carbonated soft drinks, sparkling waters, bottled water, energy drinks, powdered and natural juices, and RTD teas. The companies sell products through wholesalers and retailers like supermarkets, warehouse clubs, grocery stores, convenience stores, package stores, drug stores and other retail outlets. The industry participants also sell beer directly to consumers in cans and bottles at restaurants, pubs, bars and liquor stores. Some brewers operate brewpubs or tasting rooms at breweries, offering consumers the freshest beer.
What's Shaping the Future of Beverages - Alcohol Industry
Moderation Trend Pressure Alcohol Consumption: Moderation is becoming a structural headwind for alcohol companies. Younger consumers, particularly Gen Z, are drinking less, and health-conscious buyers across age groups increasingly favor balanced lifestyles. Consumers are shifting occasions away from traditional alcohol, and low or no-alcohol alternatives are gaining share. For investors, this raises concern over long-term volume growth across beer, wine and spirits. Even if pricing supports revenues, weaker consumption can limit operating leverage and make growth more dependent on innovation. Companies with high exposure to legacy alcohol categories may face slower depletion trends, higher promotional needs and weaker earnings visibility if moderation continues to reshape drinking behavior.
Tariffs Could Squeeze Margins: Tariffs are emerging as a meaningful overhang for U.S. beverage alcohol companies with global sourcing and international supply chains. Higher duties on imported glass bottles, aluminum, packaging materials and select beverage imports can raise input costs, forcing producers to either absorb the increase or pass it on to consumers. While premium brands have greater pricing flexibility, mass-market labels remain more vulnerable to demand erosion from higher shelf prices. Investors should watch for margin pressure, procurement disruptions and slower earnings growth, particularly among companies with significant import exposure or limited domestic sourcing capabilities.
Beyond tariffs, alcohol producers continue to navigate elevated costs across packaging, freight, labor and agricultural inputs. Although inflation has moderated from peak levels, cost volatility remains a key earnings risk, especially if companies are unable to fully offset higher expenses through pricing. Promotional activity may also increase as consumers become more value-conscious, pressuring the gross margin.
Innovation Beyond Traditional Alcohol Creates Growth Runway: Despite softer industry volumes, beverage companies are unlocking growth opportunities through innovation. Demand for ready-to-drink cocktails continues to outpace most traditional alcohol categories as consumers seek convenience, flavor variety and affordability. At the same time, low and no-alcohol beverages are evolving into a meaningful profit pool rather than a niche offering, attracting consumers who want moderation without abandoning social drinking. Leading brewers and spirits companies are expanding product portfolios to address these changing occasions, allowing them to capture incremental demand instead of relying solely on traditional alcohol consumption. Successful innovation could offset category pressures and strengthen long-term market positioning.
Zacks Industry Rank Indicates Dull Prospects
The Zacks Beverages – Alcohol industry is a 17-stock group within the broader Zacks Consumer Staples sector. The industry currently carries a Zacks Industry Rank #189, placing it at the bottom 23% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential.
Before we present a few stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock-market performance and valuation picture.
Industry Underperforms S&P 500
The Zacks Beverages – Alcohol industry has outperformed the broader sector and underperformed the S&P 500 in the past year.
The stocks in the industry have collectively returned 4.1% in the past year, whereas the Zacks Consumer Staples sector has risen 1.6%. Meanwhile, the Zacks S&P 500 composite has rallied 23.9%.
1-Year Price Performance
Beverages - Alcohol Industry's Valuation
Based on the forward 12-month price-to-earnings (P/E) ratio, commonly used to value Consumer Staples stocks, the industry is currently trading at 15.27X compared with the S&P 500’s 21.07X and the sector’s 17.26X.
Over the last five years, the industry traded as high as 24.1X, as low as 13.77X and at the median of 18.39X, as the chart below shows.
Price-to-Earnings Ratio (Past 5 Years)
5 Alcohol Beverages Stocks to Keep a Close Eye on
None of the stocks in the Zacks Beverages – Alcohol space currently sports a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy). However, we have selected five stocks with a Zacks Rank #3 (Hold) to watch from the same industry.
Let us have a look at the companies.
Anheuser-Busch InBev: Also known as AB InBev, this is a global brewing leader with a portfolio of iconic brands spanning diverse geographies. Its leading positions across key markets and expansive global footprint provide meaningful scale advantages, enabling efficient operations and the ability to grow multi-country brands worldwide. The company continues to benefit from resilient consumer demand for its core brands, supported by strong business momentum, driven by disciplined execution, sustained brand investment and an accelerated digital transformation agenda. Premiumization remains a central growth lever, as consumers increasingly trade up within the beer category.
Beyond core beer, AB InBev is steadily expanding its Beyond Beer portfolio, encompassing ready-to-drink offerings, such as canned wines and cocktails, along with hard seltzers, ciders and flavored malt beverages. This diversification strategy is enhancing relevance across occasions and consumer segments, while providing an incremental growth runway and supporting top-line momentum. The Zacks Consensus Estimate for AB InBev’s 2026 sales and earnings suggests growth of 8.4% and 15.8% from the year-ago period’s reported figures. The consensus mark for the company’s 2026 earnings has moved down by a penny in the past seven days. The Zacks Rank #3 stock has gained 15.8% in the past year.
Price & Consensus: BUD
Diageo: The stock of this London-based leading beverage company has declined 22.4% in the past year. DEO operates in approximately 180 countries, and is involved in producing, distilling, brewing, bottling, packaging and distributing spirits, wine and beer. The company continues to place innovation and consumer moderation at the center of its long-term growth strategy, addressing evolving consumption patterns and diversifying its portfolio. Innovation remains a key driver, with strong momentum across tequila, whisky, beer and RTD formats.
Equally important is Diageo’s push into moderation, wherein it has established clear leadership in non-alcoholic spirits. The company is refining its $2-billion productivity program to drive efficiency across the business while ensuring long-term sustainable growth. A key focus is balancing cost savings with strategic reinvestment, particularly in marketing and brand activation. The Zacks Consensus Estimate for Diageo’s fiscal 2027 EPS has edged down 0.3% in the past 30 days. The consensus estimate for fiscal 2027 sales and earnings suggests declines of 1.4% and 1.8%, respectively, from the year-ago period’s reported figures. The company currently has a Zacks Rank #3.
Price & Consensus: DEO
Constellation Brands: The Victor, NY-based third-largest beer company and a leading, high-end wine company in the United States continues to benefit from a sharp focus on brand building and a steady cadence of innovation. The company’s premiumization strategy remains a key growth driver, led by the sustained strength of the Modelo and Corona brand families and continued traction across its Power Brands portfolio. Its beer business is benefiting from premium and above-premium trends, supported by growth in traditional beer and adjacent categories, such as flavored beer, seltzers, RTD spirits and flavored malt beverages.
STZ is actively investing to extend the momentum of its Power Brands, aligning innovation with evolving consumer preferences and delivering successful product launches. Meanwhile, the company’s digital momentum continues to build through platforms, such as Instacart, Drizly and retailer-owned channels, reflecting consumers’ growing preference for convenience-driven purchasing. The Zacks Consensus Estimate for STZ’s fiscal 2027 earnings per share has moved down 0.2% in the past seven days. The consensus estimate for fiscal 2027 earnings suggests a decline of 0.2% from the year-ago period’s reported figure. The Zacks Rank #3 stock has lost 23.4% in the past year.
Price & Consensus: STZ
Brown-Forman: Based in Louisville, KY, this is a global spirits company that manufactures, distills, bottles, imports, exports, markets and sells a broad portfolio of premium alcoholic beverages. The company’s growth strategy is anchored in premiumization, with a clear focus on high-quality, premium and super-premium spirits that support brand equity and margin resilience. The portfolio has been streamlined around core power brands such as Jack Daniel’s and Woodford Reserve, complemented by successful additions like the Jack Daniel’s and Coca-Cola RTD, and the integration of super-premium labels Gin Mare and Diplomático.
Emerging markets continue to provide a strong growth offset, driven by rising middle-class demand and momentum across the Jack Daniel’s family. Disciplined pricing, innovation, distribution evolution and tighter cost-control underpin long-term value creation despite near-term pressures. The Zacks Consensus Estimate for BF.B’s fiscal 2027 sales and earnings suggests growth of 0.4% and 11.8%, respectively, from the year-ago period’s reported figures. The consensus mark for the Zacks Rank #3 company’s fiscal 2026 earnings has moved up 1.8% in the past 30 days. BF.B has declined 9.5% in the past year.
Price & Consensus: BF.B
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Molson Coors: The stock of this Chicago, IL-based leading beverage company has declined 21.3% in the past year. TAP is on track with its revitalization plan, focused on achieving sustainable top-line growth by streamlining its organization and reinvesting resources into its brands and capabilities. Investments, partnerships and product launches, which are part of its revitalization plan, have been aiding the company.
Molson Coors has been committed to increasing its market share through innovation and premiumization. Intending to accelerate portfolio premiumization, TAP has been aggressively growing its above-premium portfolio in the past few years. The Zacks Consensus Estimate for Molson Coors’ 2026 EPS has been unchanged in the past 30 days. The consensus estimate for the Zacks Rank #3 company’s 2026 sales and earnings suggests declines of 0.1% and 11.4%, respectively, from the year-ago period’s reported figures.
Price & Consensus: TAP
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Molson Coors Beverage Company (TAP) : Free Stock Analysis Report
Diageo plc (DEO) : Free Stock Analysis Report
Constellation Brands Inc (STZ) : Free Stock Analysis Report
Anheuser-Busch InBev SA/NV (BUD) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
