Shares of the world’s top listed beer, wine and spirits makers have shed a combined $830 billion in a little more than four years as the industry grapples with monumental change.

That’s the total loss in market value, as a Bloomberg gauge of some 50 companies stands 46 percent below its June 2021 record high.

Shifting drinking patterns and rising health concerns have hit earnings, compounded by US tariffs, the impact of buoyant interest rates on consumer spending and even elevated commodity prices. In China, weak household confidence and a booze ban for official functions have added fuel to the downtrend.

The result is a wave of pressure facing companies behind some of the world’s most popular drinks that has left them adrift from the record rally in global equities. Instead, these businesses are struggling to adapt to new commercial dynamics that have caught many by surprise.

“There is a structural change going on — people are drinking less,” said Sarah Simon, an analyst at Morgan Stanley.

This year, shares of European giants Diageo Plc, home to the Johnnie Walker and Smirnoff brands, Pernod Ricard SA and Remy Cointreau SA have all hit the lowest levels in at least a decade. Jack Daniel’s owner Brown-Forman Corp. and Australia’s Treasury Wine Estates Ltd. have similarly slumped. Chinese baijiu titan Kweichow Moutai Co. is trading more than 40 percent below its 2021 high.

Stock price declines may extend further with alcohol producers grappling not just with hits to revenue, but also elevated levels of debt and management churn as they adapt to a sector in flux, according to Simon.

Shifting Patterns

The main challenge facing the industry is a change in behaviour. In August, a Gallup gauge of US alcohol consumption fell to the lowest since records began in 1939. Warnings from the likes of the World Health Organisation and US Surgeon General have sapped demand among Gen-X. At the same time, alcohol has become less fashionable for millennials and Gen-Z.

A teetotaling trend among celebrities has compounded the decline, with Tom Holland and Katy Perry hawking non-alcoholic drinks. The popularity of GLP-1 weight-loss drugs like Ozempic and the emergence of alcohol alternatives like cannabis have also dented booze sales.

“We’ve seen four times the impact of the financial crash on alcohol consumption,” said Laurence Whyatt, an analyst at Barclays Plc. “The market believes there’s been some sort of structural change and that we’re not going back to the growth rates that we had in the past.”

The crunch has led to a flurry of deals and product debuts. Carlsberg A/S unveiled a non-alcoholic cider in February and Davide Campari-Milano NV launched its alcohol-free Crodino in the US in May. Last year, Diageo acquired Chicago-based Ritual Zero Proof Non-Alcoholic Spirits, while Moet Hennessy, the drinks arm of luxury giant LVMH, purchased a stake in French Bloom, which makes a high-end sparkling beverage.

Some corporate moves have been more dramatic, including restructurings and job cuts. Chief executives have been changed this year at Diageo, Remy Cointreau and Campari in Europe, Treasury Wine in Australia, Molson Coors Beverage Co. in the US and Suntory Holdings Ltd. in Japan. Moutai has seen two chairmen depart in less than two years.

“It is notable that in an industry where a lot of changes are occurring, suddenly there is also a lot of management change,” said Morgan Stanley’s Simon. The analyst noted she has more underweight recommendations in beverages than any other category in European consumer staples.

Value Trap

Not all are negative on the sector, however, with some seeing an opportunity to buy after the massive selloff. The Bloomberg gauge of global alcohol stocks is trading at around 15 times forward estimated earnings, less than half its 2021 high.

Cook & Bynum, a value hedge fund in the US, has grown positions in Brazilian beer distributor Ambev SA and Peruvian brewer Backus y Johnston, according to Richard Cook, partner and portfolio manager at the firm. The two stocks have fallen this year, but Cook maintains an upbeat outlook given the dominance in their respective markets and steady earnings, he said.

“We don’t think that humans are going to stop drinking alcohol,” Cook said. Brewers in growing emerging markets will sell more beer and “the beer they sell is going to be more premium and higher margin over time,” Cook said.

Other investors hoping for turnarounds have also seen losses, including the king of value investing Warren Buffett. Shares of Constellation Brands Inc., which owns Corona beer, have slumped roughly 40 percent since Buffett’s Berkshire Hathaway Inc. began building a position last year.

Milwaukee hedge fund Artisan Partners Ltd. has grown its holding in Diageo to more than 50 million shares from less than 9 million as of the end of last year. The stock is down about 30 percent in 2025.

Uncertainty over the alcohol industry is drawing comparisons to tobacco’s trajectory that “would have been inconceivable five years ago,” said Andrew Gowen, head of research for Bell Asset Management Ltd. Negative volume growth will push companies to cut costs and build out cheaper options, he said. His firm is avoiding the sector given lack of clarity over long-term prospects.

“This industry’s been around for 7,000 years, but a lot can change,” Gowen said.

By Richard Henderson

Sign up to The Business of Beauty newsletter, your complimentary, must-read source for the day’s most important beauty and wellness news and analysis.