Will Oktoberfest help beer stocks froth? Global beer brands down 15% over past year

• Basket of beer stocks including AB Inbev and Heineken is down 15% over the past year
• Biggest fallers include Tsingtao (-36%), Diageo (-23%) and Carlsberg (-20%)
• Beer industry losing beverage market share as consumers favour premium drinks and zero-alcohol alternatives

As beer lovers around the world prepare to raise their glasses for Oktoberfest, new research from trading and investing platform eToro offers a sobering outlook for the global beer industry, which is in urgent need of a share price top-up.

Ahead of the iconic Munich beer festival, eToro created an equal-weighted basket of nine of the largest global beer stocks, each from a different country. The analysis shows that the value of these companies has dropped 15% over the past year while major indices are up at least 9% (see table 1). The global beer industry has been flat for some time, with the basket down 11% over the past five years.

Table 1: Performance of beer basket versus major indices

Past performance is not an indication of future results.

The biggest faller over the past year is China’s Tsingtao, which lost 36% of its stock price (see table 2). Guinness’ parent company Diageo fell 23%, while Danish brewery group Carlsberg dropped 20% in the same period.

Very few beer stocks have made positive returns over the past year, and those which did only inched up slightly. By far the largest beer company in the world by market capitalisation, AB Inbev rose by 6%, while Germany’s Kulbacher Brauerei climbed 3%, yet both have already reversed those gains so far this year. Only one company has seen positive share price movement in 2024 – Japan’s Asahi Group Holdings – with a meagre 1% gain.

Commenting on the data, eToro Market Analyst Sam North said: “Oktoberfest is the world’s largest beer festival, but even with the seasonal boost from two weeks of beer-fuelled celebrations every year, the data shows a picture of an industry that is declining worldwide and leaving investors with a bad hangover.

“On the supply side, the cost of production is increasing due to a shortage of raw materials and supply chain disruptions, including the Russia-Ukraine war as the region is a key producer of barley, so brewers are raising prices. On the demand side, however, drinkers are shifting away from mass-market beer labels towards premium beverages like craft beer and cocktails.”

Some beer stocks were able to generate modest returns for investors who held onto them for five years. Constellation Brands, the American drinks company behind Modelo and Corona, saw an 18% increase over this period. Despite falling the most over the past year, in second place over a five-year period is Tsingtao which rose 13%. Yet all of this pales in comparison to the performance of major indices over the same five-year period, with the S&P 500 up 93% and even the sluggish FTSE 100 up 16%.

Sam North adds: “Most beer stocks have not been able to retrace their pre-pandemic highs. When Covid hit, the value of these firms plunged as lockdowns meant beer sales from bars and restaurants were wiped out. Since then, with the increasing cost of living and growing health consciousness, more people are reducing their alcohol consumption or going teetotal. Even Munich, the home of Oktoberfest, recently opened its first zero-alcohol beer garden in the city centre.

“This presents a new growth opportunity. In 2023, non-alcoholic beer production in the EU jumped by 13.5% whilst traditional beer fell by 5% compared to 2022.¹ Large drinks conglomerates are diversifying into their alcohol-free ranges. AB Inbev chose Corona Cero as the official beer of the 2024 Olympics as part of their sponsorship deal, while Diageo is rolling out draught Guinness 0.0 in Britain after a successful trial in Ireland. This won’t translate into a rally overnight, but by tapping into this growing trend while share prices are in retreat, investors can potentially capture some upside in the long term.”

Table 2: performance of stocks included in global beer basket 

Past performance is not an indication of future results.

eToro’s beer basket was constructed with equal-weight stocks of nine global beer stocks. One stock was chosen per country. Share price performance data rounded up to the nearest whole number. Data taken from Refinitiv on 1 September 2024.

1. EU beer production data taken from Eurostat (published on 2 August 2024).