Battle of the booze: how to benefit from a battered market
The UK alcoholic beverage market is being dragged down by apparent sector-wide challenges. In the US, drinkers are losing their taste for mass-market brands. But could the weakness provide a buying opportunity for one of the sector’s biggest companies, Molson Coors? Or could Irish firm C&C be a more profitable choice for UK investors? Here we assess the investment cases of two well priced companies.
Shares in US brewer Molson Coors (US: TAP) have fallen by 50% since late 2016, when the firm completed a debt-fuelled $12bn deal to take full control of the MillerCoors business. Debt is now starting to fall to less risky levels at the firm, whose UK brands include Coors Light, Sharp's Doom Bar, Staropramen and Carling. But a second concern is keeping pressure on the shares; US drinkers are buying less beer, especially the mass market brands that form Molson's core offering. According to market data, they’re also buying less booze in general, as more young people choose to eschew alcohol.…