As America’s growing obsession with wine blossoms into a full-blown love affair, the two of the top wine stocks are raking in fistfuls of dough…
For you beer drinkers out there, you might not want to read this.
According to Gallup polls, the number of Americans who prefer beer have declined over the last twenty years.
Wine drinkers, on the other hand, have seen a steady increase in the same time span.
When Gallup tallied its first Consumption Habits poll back in 1992, 47% of respondents said they drank beer most often, while wine was at a paltry 27%.
When the 2013 poll was conducted in mid-July, Beer drinkers fell to 36% while wine drinkers climbed to 35%.
The most dramatic change in beverage preference has been in young adults.
According to Gallup, 71% of adults under the age of 30 drank beer in the early nineties. That number has now fallen to 41%.
As for wine, just 14% of young adults said they drank wine back in 1992. Fast-forward 21 years, 24% of them now consider themselves wine drinkers.
Perhaps the younger generation is becoming more sophisticated with their palate. Or that wine is perceived to be the healthier alternative to beer or liquor.
Regardless, America’s love of alcohol continues to grow… and wine is steadily gaining ground as the alcoholic drink of choice.
The Wine Institute has tracked wine consumption in the US since 1934, and over the last 78 years, the total amount of wine consumed in the country has exploded.
Between 1934 and 2012, total wine gallons has risen from 33 million to 856 million… a staggering 259% growth.
Although the amount of vino consumed per person in the United States pales in comparison to the French or Italians, the amount has also climbed steadily through the years.
Between 2008 and 2012, the total amount of wine drank per person rose every year from 2.45 gallons to 2.73 gallons.
For investors, a three-prong catalyst of: a growing preference for wine, a declining preference for beer, and a growing rate of wine consumption, certainly gives wine stocks a very bullish outlook for many years ahead.
Two of the Top Wine Stocks to Buy Today:
The long-term outlook right now is looking very positive for Chile-based Vina Concha Y Toro S.A. (NYSE:VCO).
Over the past couple years, the world’s second largest winery experienced a drop in European demand, which has traditionally been their biggest market. Economic uncertainty has been a drag on demand, which has impacted their overall revenues.
However, VCO’s growth areas are going to be in the US and Asia. US, for the reasons mentioned above, and Asia with a growing middle class in China, are both helping to pick up the demand slack.
Furthermore, with a portfolio of products ranging from $5 to $135, they are able to offer wines at every consumer price point, which is very ideal for the growing popularity of wine in America.
Speaking of varieties and price points, Constellation Brands, Inc. (NYSE:STZ) has also been successful in casting a wide net for its market share.
While STZ isn’t a pure-play wine stock (it has over 100 brands in its portfolio), wines do make up roughly 20% of the company’s net sales, with such heavy-hitters as Robert Mondavi and Ravenswood in its lineup.
In the last few years, the company has seen significant growth in demand for brands that are sold in Tetra Pak cartons. As such, they recently unveiled a new Tetra Pak bottling line for one of its biggest sellers, Vendange wines.
STZ was the first in the US to package domestic wines in Tetra Pak containers back in 2004.
Benefits of Tetra Pak packaging includes resealability, transportability, freshness, and environmental sustainability, which the company sees as major selling points for American consumers.
And even though beer is losing its buzz somewhat, investors will likely benefit from the company’s recent acquisition of Grupo Modelo’s US beer business, as it includes the ever-popular Corona brands of beer.
Let it be known, America’s thirst for wine is on the rise…
Savvy investors will want to raise a glass to that.