It’s been a tumultuous week for some Big Beer corporations: This past Monday, Goldman Sachs downgraded two brew companies: the already beleaguered Boston Beer Company (SAM) (parent company of Samuel Adams and others), and Constellation Brands (STZ) (parent company of Pacifico, Modelo, Corona, Ballast Point, and more). Analysts cited younger audiences’ growing preference for wine and spirits as the main cause of concern. Earlier this year, investment analysts had cited the growing legal marijuana industry as a major cause of concern for beer stocks.
Constellation Brands’ stock has soared almost 600% in the past five years, owing in part to growing popularity of Mexican canned beers, and their diversified portfolio, including wines like Ruffino and Kim Crawford, and spirit brands Svedka, High West whiskies, and Casa Noble tequila. Its stock managed to hang tough in the week after the downgrade, and has been largely unaffected (up 0.7% on the week).
Boston Beer Company has had a tougher road recently, which was down about 25% year-to-date, and almost 5% post- downgrade, but jumped over 13% on Friday after it delivered a pleasant surprise for shareholders in the form of a quarterly earnings beat to end the week, delivered just days after the Goldman Sachs downgrade. But SAM’s rosy reception wasn’t due to improvements in its flagship Samuel Adams beer brand, but rather growth in sales and distribution for brands like Twisted Tea and the newly introduced Truly Spiked & Sparkling seltzer beverage, which is staking a leadership claim in the new segment.