Idk about alcohol companies. Not only are they politically unpopular, they're becoming socially unpopular. And they don't have the cash flows that cigarette companies do, but do have the financial leverage from acquisitions.
Buffett got it wrong on them in the nineties after his Coke success - and then I thought long and hard about them a year or so ago. I also came to the wrong conclusion.
I wrongly thought Diageo had some franchise value. It does but it's not very strong. They also went down the premiumisation route which is wrong when you're trying to entice a generation of 20-somethings to drink again. Ok, now they have a new CEO who will drive cost cuts to drive price decreases... I think it's too little, too late.
In the UK, people go to university at the age of 18 with the intention of drinking "big" and going on nights out. But it doesn't last and fizzles out as reality (the cost: mentally + financially) kicks in. My brother went to uni last year and in a flat of 7, only two drink (it's not the men).
As for me, I don't drink and few of my friends drink. When I left school all of my friends drank socially. But maturity (maybe?) means that now there's a generation that would rather go to the gym. Media implies gym + drinking are mutually exclusive - Idk for sure. Either way, it's a dramatic change in social behaviour/inclinations. (I'd buy premium gyms if there were a way lol.)
It's too many "coincidences" to not be looked at further. I always thought at some point this "trend" would reverse but it seems to only be gaining momentum. Speak to my friends and they describe drinking as "grim" and "nasty" and "expensive." Getting drunk is now somewhat frowned upon.
FWIW, not just socially but partly because the cost of going on a night out in London is so expensive - due to high labour costs, alcohol taxes, inflationary pressures, business rates ... the govt equally are at fault for the death of these companies. (It's also true people go to supermarkets to get "cheaper" alcohol and then get drunk at home. But that's not where fat margins lie.)
I'd love to know whether the above is similar in the US. But the young people are drinking less narrative - so far - is proving to be true imo. And I didn't take it seriously enough when I first read about it. It's just very, very hard to prove in the data. |
