eToro examines beer market ahead of Oktoberfest
eToro examines beer market ahead of Oktoberfest
A new study conducted by trading and investing platform eToro ahead of the famous Munich Oktoberfest reveals that beer industry stocks are underperforming. Over the past year, the value of major beer companies has declined by 15%, while global stock indices like the S&P 500 and Stoxx 600 have risen by at least 9%.
The eToro study created an equal-weighted basket of nine of the largest beer companies from different countries. Over the last five years, this basket has fallen by 11%, highlighting the struggles within the beer sector, while the S&P 500 surged by 93% over the same period.
One of the most affected stocks in the past year was China's Tsingtao, which saw its value drop by 36%. Other major players like Diageo (Guinness’ parent company) and Carlsberg experienced declines of 23% and 20%, respectively. Very few beer companies posted positive returns, with AB InBev, the world’s largest beer company by market capitalization, showing a modest 6% gain, and Germany’s Kulmbacher Brauerei rising by 3%.
Commenting on the findings, eToro Market Analyst Sam North said: “Oktoberfest may be the world’s largest beer festival, but even with the seasonal boost, the data shows that the beer industry is struggling globally, leaving investors with a financial hangover.”
The decline in beer stocks is driven by various factors, including rising production costs and changing consumer preferences. The war between Russia and Ukraine has disrupted barley supply chains, a key ingredient in beer production, leading to price increases. Simultaneously, there has been a shift in consumer demand away from mass-market beer brands toward premium products like craft beers and cocktails.
Despite these challenges, some beer companies managed to post positive returns over a five-year period. U.S.-based Constellation Brands, which owns Modelo and Corona, saw an 18% increase, while Tsingtao registered a 13% gain despite its recent difficulties.
Sam North also pointed out that the beer industry is adapting to evolving consumer preferences, particularly the growing demand for non-alcoholic beverages. In 2023, non-alcoholic beer production in the EU grew by 13.5%, while traditional beer production fell by 5%. Large companies are investing in alcohol-free options, with AB InBev launching Corona Cero as the official beer of the 2024 Olympics, and Diageo rolling out Guinness 0.0 in the UK.
While the beer industry may not recover overnight, North suggested that investors could benefit from the growing trend of non-alcoholic beverages as beer companies diversify their offerings and prepare for future growth.
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