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Liquor Sales Get a Boost From E-commerce: 5 Stocks to Watch

Restaurant and bar closures due to the pandemic have been hurting food sales but not liquor! Higher sales at stores and e-commerce have been keeping spirits high for the liquor companies. This saw whisky and other alcohol sales surge during the pandemic.

In fact, e-commerce has been driving alcohol sales like never before in the United States and is likely to overtake China in online liquor sales in 2021, according to the beverage alcohol consultancy IWSR.

Pandemic Boosts U.S. Alcohol Sales in 2020

Although the alcohol industry initially faced a setback as restaurants and bars were closed down due to the pandemic, things started changing soon as more people started ordering online. Moreover, as the economy reopened, sales at liquor stores started surging as more people preferred buying and drinking alcohol at their homes.

According to a USA Today report citing Distilled Spirits Council of the United States, sales of Tennessee Whisky, bourbon and rye whisky jumped 8.2% or $327 million, totaling $4.3 billion last year. Domestic demand also increased to 28.4 million cases or 7% in 2020 as people bought alcohol brands of all price ranges. Overall alcohol sales increased 15% year over year.        

The initial losses following the coronavirus outbreak were somewhat offset by an 18% surge in off-premise sales at liquor stores and other retail outlets given that consumers preferred preparing their own drink at home.

E-commerce Drives Alcohol Sales

Online orders for alcohols have been on the rise during the pandemic. According to IWSR, online alcohol sales in the United States were projected to rise 80% during the pandemic. Prior to that, in 2019, only 1% of the total alcohol sales came from e-commerce. Given the pace of growth following the coronavirus outbreak, the IWSR predicts that the United States will easily surpass China to become the world’s biggest market for online alcohol sales.

One of the primary reasons behind this surge was the innovation introduced by many alcohol companies and retailers. As the pandemic gripped the world, online happy hours got extended, allowing people to buy more. Also, several mixologists started sharing recipes on social that turned many into amateur bartenders at home, thus pushing up sales.

Stocks to Watch

Given that the pandemic has taught people to rely more on shopping online, it is likely that the alcohol market will continue to thrive. Moreover, the pandemic is far from over and people will continue drinking at home thus helping alcohol sales. It would thus be prudent to invest in these five alcohol stocks.

Diageo plc DEO operates in approximately 180 countries and is involved in producing, distilling, brewing, bottling, packaging as well as distributing spirits, wine and beer. 

The company’s expected earnings growth rate for the current year is 11.8%. The Zacks Consensus Estimate for current-year earnings has improved 7% over the past 60 days. The company has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

REMY COINTREAU REMYY is an operator of the Wine & Spirits market. The company's portfolio consists of Rémy Martin and Louis XIII cognacs, the Cointreau liqueur as well as the Metaxa, Mount Gay, St-Rémy, Bruichladdich, Port Charlotte, Octomore and The Botanist spirits.

The company’s expected earnings growth rate for the current year is 18.5%. The company’s shares have gained 7.5% in the past 30 days. REMY COINTREAU carries a Zacks Rank #2.

Pernod Ricard SA PDRDY operates as a manufacturer and seller of a wide range of wines and spirits. It is a holding company, with the structure divided between brand owner subsidiaries, such as The Absolut Company, Havana Club International and Chivas Brothers.

The company’s expected earnings growth rate for the current year is 12.5%. The Zacks Consensus Estimate for current-year earnings has improved 8.9% over the past 60 days. The company has a Zacks Rank #2.

Molson Coors Beverage Company TAP is a global manufacturer and seller of beer and other beverage products. It has an impressive portfolio of owned and partner brands.

The company’s expected earnings growth rate for the current year is 7.9%. The Zacks Consensus Estimate for current-year earnings has improved 1.7% over the past 60 days. The company has a Zacks Rank #3 (Hold).

Constellation Brands Inc STZ produces and markets beer, wine and spirits. It is the third-largest beer company and a leading, high-end wine company in the United States.

The company’s expected earnings growth rate for the current year is 5.9%. The Zacks Consensus Estimate for current-year earnings has improved 2.3% over the past 60 days. Constellation Brands carries a Zacks Rank #3.

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