After Christmas and New Years some experts project Super Bowl Sunday as the third largest event for alcohol sales and consumption. In 2013, 108 million people tuned into watch the Super Bowl and logic would say a good portion of those who are of legal drinking age, had an alcoholic drink in their hand at some point during the game, if not throughout the entire game. It is no secret that alcohol and sports go together like peanut butter and jelly, especially on the Super Bowl. How can you potentially benefit from this madness?
Producers of beer have seen quite the rise in stock value over the last several years and I believe this is just the start of their run. Let us take Craft Brew Alliance, Inc. (BREW) for instance. Since 2009, the stock has returned over 1,250% to its investors. Yes, it is truly unbelievable, but there is reason to believe the returns are not yet over, not even close. Craft Brew Alliance or CBA is headquartered in Oregon and has four main craft brews that it produces. Its specialty brews are: Widmer Brothers, Redhook, Kona, and Omission. I'm almost certain that if you are a beer drinker you have heard of at least one of these four brews. If you haven't, I urge you to go down to your local bar and request one of the four. Yet, having said this, Craft Brew Alliance, is still merely a tiny drop in a very large bucket. As of 1/21/14 CBA had a market cap of just over $325 million. According to the Brewers Association, U.S craft brew revenue in 2012 represented approximately $12 billion. This means CBA represents only 2.5% of the fast growing craft brew industry. Clearly, there is still room for upward mobility.
A brew producer which is better known, has a global presence, and has already done its job carving a serious niche is Molson Coors Brewing Company (TAP). In the last year, Molson Coors has returned an impressive 21% to its shareholders, all the while paying a dividend yield slightly over 2%. Just from the company name alone, we are exposed to two behemoth brands in the brewing industry, Molson and Coors. However, TAP has a whole lot more in its portfolio. Among TAP's ever-growing and extremely impressive lineup of brews that they produce or distribute through special partnerships are: Keystone, Amstel, Corona, Modelo, Killigans Irish Red, Lienenkugel, and Blue Moon. The list continues on but it would be a paragraph on its own. The point here is that Molson Coors has a portfolio much larger than just Molson and Coors. However, Molson Coors finds itself in a very different situation from that of Craft Brew Alliance.
While both BREW and TAP are strong companies in their own respects, they are totally different monsters. Craft Brew Alliance is up and coming in the craft brew industry. Whereas, Molson Coors has already established itself as a major player in the global beer market. Despite their distinct differences, they are both worth tapping into. With Craft Brew Alliance, potential shareholders are playing its ability to penetrate further into the crowded craft brew industry. While the industry is certainly crowded, there is certainly room for growth. As a matter of fact, if CBA was to gain share over the next few years and eventually possessed 5% of the craft brew industry, they would have a market cap of nearly $650 million and on a comparative basis its stock would be double today's price and would trade for somewhere around $35 per share. This is by no means out of the question, as CBA has managed to grow its market cap from under $30 million to over $325 million in just under five years. Molson Coors on the other hand, will look to take a strong hold of the global beer industry. In 2012, total U.S beer sales were approximately $100 billion. It is important to note, that this is only U.S beer sales and does not include the rest of the world. Molson Coors is by no means just a U.S beer company as one of its flagship beers, Molson, is a Canadian produced beer. Molson Coors sells its products worldwide, which means its current $10 billion market cap represents only 1.7% of the $600 billion in worldwide beer revenue. Needless to say, in their respective industries both Craft Brew Alliance and Molson Coors have a lot of possibility for continued future growth.
While both of these brew companies had have impressive runs, there is certainly room for more gains. Unless you're talking about consumption, beer isn't going anywhere, it's here to stay. Beer producers will be the beneficiaries of an ever growing and increasing market and with the Super Bowl around the corner, those shareholders thirsty for the possibility of some serious growth should tap into these brew companies while the timing is ideal.