The S&P 500 index is broken down into 11 different sectors. One of those sectors is known as Consumer Staples. The Consumer Staples sector is considered to be defensive in nature, because consumers will spend money on necessities like food and beverages regardless of what the economy is doing.
Within the Consumer Staples sector there are 13 separate industries. There are three distinct sub-industries for beverages; brewers, soft drinks, and wineries and distillers.
Globally, liquor consumption has been falling in the last few years, but that trend is expected to reverse in the near future. According to IWSR, in 2016 beer consumption was down 1.8 percent, wine consumption dropped by 0.5 percent, while liquor consumption rose by 0.3 percent. Vodka consumption fell by 4.3 percent, while tequila consumption rose 5.2 percent and gin consumption increased 3.7 percent.
Stocks in the brewers’ sub-industry include AB InBev, their symbol is BUD, their products include Budweiser beer. They have a $183 billion market cap and the stock is up over 10 percent in the last six months.
Heineken is another popular brewer, their symbol is HEINE, they have a $56 billion market cap and the stock has had an impressive return of +34.5 percent in the last six months. Coors is another popular American beer, their symbol is TAP, and their market cap is $18 billion. TAP is down 9.2 percent over the last six months.
Some of the leading stocks in the Wineries and Distillers industry are Diageo and Constellation Brands. Diageo’s symbol is DEO, they have a $76 billion market cap and have a six-month gain of 14 percent. Their products include several leading brands like Johnny Walker, Ketel One, Crown Royal, Smirnoff, Guinness, and Bailey’s. The symbol for Constellation Brands is STZ, they have a $38 billion market cap and have posted an impressive 33.5 percent return over the last six months. Even though they’re in the Wineries and Distillers sub-industry, they have several leading beers in their lineup, including Corona, Modelo, and Pacifico. They also have Black Velvet and Svedka.
If you invest in index funds, you’ll have exposure to the leading Consumer Staples stocks. There are several sector exchange-traded funds (ETFs) that represent Consumer Staples. The most liquid one is the XLP, which includes some of these beverage stocks and is up over 7 percent year to date. There are several other ETFs in the Consumer Staples sector and some that focus on the Beverage industry. Please remember, if you do consume alcohol, enjoy it in moderation.
Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information is at his blog at http://www.sellacalloption.com or 775-657-8065. The mention of securities should not be considered an offer to sell or solicitation to buy investments mentioned. Consult your investment professional to understand the risks and/or how the purchase or sale of these investments may be implemented to meet your investment goals. Past performance is no guarantee of future results.
