On Friday, the US Surgeon General issued a pivotal advisory about the cancer risks associated with alcohol consumption. This announcement had immediate ramifications for the beverage industry, with stock prices of major alcohol companies taking a hit. Meanwhile, this advisory also presents new opportunities for companies specializing in non-alcoholic alternatives.
The US Surgeon General’s recent advisory explicitly underscored the link between alcohol and cancer, urging for cancer warnings to be added to alcoholic beverages. Currently, this recommendation does not mandate changes to labels; such action would require Congressional approval. Nevertheless, the markets swiftly reacted, resulting in decreased stock prices for large alcohol manufacturers.
Shares of prominent alcohol producers, including Anheuser-Busch InBev and Diageo, saw significant declines following the advisory. Anheuser-Busch InBev experienced a 2.8% drop in Belgium, while Diageo’s shares fell nearly 4% in London. Despite these market reactions, Kate Bernot, a lead analyst at Sightlines, believes that this advisory alone may not drastically alter alcohol consumption patterns in the US. Historical data suggests stable per-capita alcohol consumption at approximately 2.5 gallons annually since 2012, with little fluctuation in the percentage of Americans who drink.
In contrast, the advisory may serve as a catalyst for growth among makers of non-alcoholic beverages. Over recent years, big producers have been diversifying by introducing alcohol-free options, such as Constellation’s non-alcoholic Corona beer. With public health awareness increasing, experts like Tom Santangelo from Spiritless and Milan Martin of The Free Spirits Company anticipate a broad cultural shift towards alcohol moderation and abstention. These changes, similar to the gradual shift seen with tobacco, are expected to be subtle yet significant over time.
Additionally, the rise of innovative beverages offers alternatives to alcohol. Products like celebrity-endorsed seltzers and kava-based drinks have gained popularity among those seeking healthier choices. Companies within the cannabis industry are similarly positioned to benefit from any decline in alcohol consumption. Already, some states permit the sale of THC-infused drinks alongside traditional alcoholic beverages. With daily cannabis users outpacing drinkers, this trend reflects growing acceptance and potential market expansion for cannabis-based products.
The Surgeon General’s advisory on alcohol and cancer has already influenced the financial markets and may foster a gradual cultural transition towards alcohol-free options and other alternatives. While the immediate impact on consumption is uncertain, increased awareness could drive significant shifts in consumer behavior over time.
Source: Businessinsider
