Cheers! If you’re making the most of the long summer evenings in a pub garden, why not raise a glass to International Beer Day on August 7th?
The annual celebration has been recognising beers from around the world – and the brewers and bartenders behind them – for almost 20 years. But beyond the bar, how important is the brewing industry to investors, and how can you gain exposure to its biggest names?
Beer has been enjoyed for thousands of years, with origins dating back to around 10,000 BC. Today, it remains a global powerhouse. In 2023, the industry contributed $878 billion to global GDP, supported 33 million jobs and generated $376 billion in tax revenues*. In the UK, around a third of a pint’s cost goes towards taxes, so every sip you take makes the Chancellor happier.
So, how do you get exposure to the beer boom?
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Brewers and producers
The obvious starting point is the brewers. While there are thousands of global brewers, only a relative handful are listed on stock exchanges. The biggest names include Belgium’s Anheuser-Busch Inbev, Heineken of the Netherlands, China Resources Beer, Denmark’s Carlsberg and Molson Coors of the United States.
Anheuser-Busch Inbev is an industry giant with more than 500 global and local beer brands. These include Budweiser, Corona Extra, Michelob ULTRA and Stella Artois. It’s held by the CT Global Focus fund**, which is a concentrated, high-conviction portfolio of best ideas run by David Dudding and Alex Lee.
If Heineken’s your tipple, you could opt for the BlackRock European Absolute Alpha fund, which has been a fan of the Dutch company’s shares***. Manager Tom Lemaigre focuses on capital preservation, low volatility and creating positive returns regardless of the market conditions.
China Resources Beer, meanwhile, is a holding in the FSSA Greater China Growth fund****. This portfolio is based in Hong Kong and run by Martin Lau and Helen Chen. The managers favour well-managed businesses with good corporate governance. We see this as an excellent portfolio in a very specialist area of Asian equities.
Finally, there’s the Schroder Income fund. It invests in Diageo^, a familiar industry name whose drinks cabinet includes the hugely popular Guinness. This is a value-driven fund that invests in companies trading below their intrinsic value and then waits for a correction.
Pubs and restaurants
Other beneficiaries of the enthusiasm for beer include pubs and restaurants. The decline of pubs in the UK is no secret, however, the sector’s struggles have created opportunity according to Paul Marriage, manager of the Premier Miton Tellworth UK Smaller Companies fund, who holds Young & Co.’s Brewery^.
Another good example is Mitchells & Butlers, the hospitality group behind All Bar One, Harvester and Toby Carvery. One buyer of this stock has been the Artemis UK Select fund***, which is run by the experienced duo of Ed Leggett and Ambrose Faulks. We like this fund’s ability to short a small number of holdings, which enables it to profit when those holdings’ share prices drop. This sets it apart from its rivals.
One more familiar industry name is Whitbread, whose brands include Brewers Fayre, Beefeater, Cookhouse & Pub, and Premier Inn. It’s a holding in the CT UK Equity Income fund^^, whose manager, Jeremy Smith, looks for unloved companies capable of sustainably growing their dividends.
Property businesses
Brewers and pubs need to own – or rent – locations, which presents opportunities for property companies, especially those with prime city centre locations. In 2024, Heineken UK signed a 10-year lease for office space with Great Portland Estates^^^. This stock is one of the largest holdings in the WS Amati UK Listed Smaller Companies fund^. Dr Paul Jourdan, its lead manager, looks for high-quality, growing businesses with sustainable revenues and margins, strong management teams, and robust fundamentals.
