Wine is becoming more popular among the younger generation, and millennials are consuming more wine than other generations. There are not many wine or distillery companies that trade publicly, although the increased demand could have strong benefits to the sector. Furthermore, many analysts believe that cannabis is likely to eat into beer sales. However, legalized weed should not hit wine or spirit sales.
Alcohol companies in general are considered defensive in times of economic slow-down, as consumers will still buy alcohol in recessions. The industry also just went through consolidation last year, where smaller players were acquired and there were some mergers. Now, in 2019, many publicly traded distillery and winery companies are regaining their footing.
Here are 6 distiller and winery stocks to buy in 2019:
🍷 Distillers & Wineries
Corby Spirit and Wine (A) (CSW.A-T)
A alcohol manufacturing company that is based in Ontario. They paid out a special dividend at the end of 2018. They generate a high cash flow and some expect Corby Spirit and Wine to get into the cannabis space.
It has been a story where he looked at it a year or so ago. It is a bit expensive on a multiple basis but someone will probably come along and take it out in the future. He would hold it if you own it. They try to make acquisitions of smaller brands from time…
Diamond Estates Wines and Spirits Inc. (DWS-X)
A leader in alcohol sold in grocery stores in Ontario. They had some problems and had to re-list their products at the LCBO, but this process is now complete. They acquired a vineyard last year and doubled their retail store capacity there.
The only other publicly traded company other than ADW.A-T in wine. Legislation in Ontario allows wine to be sold in grocery stores. This is going to grow significantly. But DWS-X also sells most of their production to a Chinese exporter. It has higher growth potential than Brick Brewing (BRB-T). (Analysts’ target: $0.40).
Andrew Peller (ADW.A-T)
The second biggest wine company in Canada. Sales in grocery stores are a big prospect for them where grocery stores are being encouraged to carry wine. They have a strong management team and investors should start seeing benefits of investing in brands.
Doesn’t own dual class share companies, but this one has been an amazing growth story. Incredibly successful. If he didn’t have an issue with dual class shares, he might actually buy this. It is unbelievable to him that in an industry which is low growth, they have made some great acquisitions and they cover all…
Diageo PLC (DEO-N)
The world’s larest alcoholic beverage company. A very well run company with strong brands. The U.S. is their most successful market. They are generating a lot of free cash flow. More of a dividend play.
A massive conglomerate. To him, it sits in the sweet spot of what he is looking for. A solid consumer staple and great brand recognition. Pays a decent dividend. It has had a good run, but he likes the prospects going forward. Not cheap, but the predictability of earnings continues to make this a Hold.…
One of the largest American spirits and wine company. Their brands include Jack Daniels and Finlandia. They have shown consistent results and have been chronically undervalued.
A great company. Some of their brands are Jack Daniels and Finlandia. Staples is probably a good place to be at this moment. It has been doing well as long as he can remember. Fantastic Return on Capital at 19% for over 9 years.
Constellation Brands Inc (STZ-N)
A multinational alcohol producer that has major stakes in WEED-T. They are valued fairly and is an excellent defensive stock in consumer staples. They have stable income from a wide range of alcohol brands under them, including Corona.
He has not had a lot of experience with this company. Their investment in Canopy Growth last October, which makes it hard for him to value the company. It is diversified with alcohol, which is very recession proof.