This Is One Of The Worst Investments You Could Make Right Now
Alcohol is not as cool as it used to be.
My main mission is to grow my personal holdings company to $10M a year.
Because of that, I am always looking for shifts, opportunities, and changes in markets. One of the markets I find most fascinating right now is alcohol.
Out of all the markets I keep an eye on, I am most bearish on the alcohol market. In today’s issue, I will explain why the alcohol business is in big trouble.
LFG. 🔥
The Kids Don’t Drink
I had my last drink on 3/3/2010. At least I think that’s when it was—those few weeks in my life are fuzzy.
Because of this, I’m not surrounded by a lot of drinkers. That being said, I am a fan of alcohol. For all the terrible things that alcohol does to society, one thing it does is bring people together.
So with that context, I’m surprised that so many young people have opted out of the drinking scene. My non-fact-based opinion is that young people isolate and meet their friends online without actually participating in communities, which in my view, is a bigger problem than the ones alcohol creates.
Nevertheless, young people are not drinking. Let’s look at some interesting facts.
Over the past two decades, alcohol consumption among young people in the United States has significantly declined. According to Pew Research:
High School Seniors (12th Graders): In 2001, 73% reported consuming alcohol in the previous year; by 2023, this decreased to 46%.
10th Graders: Alcohol use dropped from 64% in 2001 to 31% in 2023.
8th Graders: Consumption fell from 42% in 2001 to 15% in 2023.
Binge drinking rates have also declined across all grade levels during this period. Among young adults aged 18 to 34, the percentage reporting alcohol consumption decreased from 72% in 2001-2003 to 62% in 2021-2023.
This is insane to me. When I was in high school (more like middle school), I could not wait to walk down the street with my friends and pass around a bottle of Smirnoff.
The Market Reactions
This blows my mind.
The decline in alcohol consumption among young people has significantly impacted several major alcohol companies, leading to decreased sales and stock valuations. Notable examples include:
Anheuser-Busch InBev (AB InBev): The producer of Budweiser and Bud Light has faced declining sales in key markets. In 2024, AB InBev experienced a 21.4% drop in Bud Light sales, with other brands like Budweiser and Grupo Modelo also seeing declines of 11.4% and 4.4%, respectively.
Constellation Brands: Known for brands like Modelo and Corona, Constellation Brands reported disappointing fiscal third-quarter earnings, missing sales estimates, and reducing its fiscal-year outlook. The company saw a 16% drop in stock value following the earnings report.
Diageo: The maker of premium spirits such as Johnnie Walker and Smirnoff has experienced declining sales in key markets. Analysts predict that the company’s organic revenue growth may align with the low growth seen in the tobacco industry by 2027.
Molson Coors: Producer of Coors Light and Miller Lite, Molson Coors has faced challenges due to declining demand and increased competition. Analysts have lowered profit estimates for the company, reflecting concerns about its future performance.
As an investor, it’s wild to see this systematic collapse of the alcohol market. As an American, it’s even more interesting to see alcohol leaving the culture. My family is Scottish immigrants, and if there is one thing I never thought I would see, it’s that alcohol isn’t part of the American way.
But that leads me to think, if kids aren’t drinking, then what are they doing?
The Market Opportunities From the Shrinking Alcohol Market
As always, understand that this isn’t investment advice. If you lose money because you made a bet based on something I said or wrote about, it’s definitely not my fault. The last thing you should do is take investment advice from me.
But this has me curious.
First, I’m going to look at the gaming market again. A few years ago, I took a very keen interest in the gaming and streaming markets, but the market continues to be extremely fractured. There are so many games, creators, developers, esports leagues, and even gamers turned streamers that it’s almost impossible for the industry to condense and create any market leaders.
Another obvious opportunity is non-alcoholic beverages. Many high-end brands like LVMH have created their own non-alcoholic beverage lines.
Additionally, I’m interested in cannabis. The cannabis market is really weird because it is still federally illegal, which is incredibly stupid. All the cannabis stores in Colorado can’t put money in banks, so they have huge safes in the back of their stores with piles of cash.
It’s very stupid.
As someone who doesn’t smoke, I don’t see there being a big future for cannabis. There will always be pot smokers, but cannabis is never going to be the next multi-billion-dollar cultural revolution in the way alcohol was.
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