As the cigarette owners were transported to the American Congress in 1994 and gave their sad testimony that they did not believe that nicotine was addictive, smoking has been declining for more than two decades.
A decrease in alcohol consumption arouses the fears of investors that alcohol faces its own “tobacco moment” because the health authorities call for cigarette -style warning labels and moderation becomes common.
In the United States, the largest market in the sector, alcohol consumption per person dropped by 3% last year in the greatest drop from the ban a century ago, according to research from Bernstein. Alcohol consumption now languished at its lowest level since 1962, down 20% on its peak in the 80s.
The World Health Organization said last month that drinks should transport significant labels warning consumers of the link between alcohol and cancer, which Ireland will become the first country to do in May of next year. Spirits Stocks made a hammer in January after the outgoing US surgeon made a similar recommendation.
Warnings are declining in alcohol consumption, raising awareness of increasing health and effects of weight loss drugs on cement consumption habits A negative narrative around the industry.
“I spend all my time talking to investors of this subject: is alcohol the new tobacco?” said Bernstein analyst Trevor Stirling.
Smoke rates began to fall in the 1970s when evidence emerged that tobacco was very addictive and made millions of sick people. While the decline in alcohol has been more progressive, consumption in the developed markets decreased regularly since the 1960s, according to WHO, a higher drop in the past three years has sounded alarm for investors.
Global drinking stocks sank almost 8% in the 12 months for February. Alcohol actions are now negotiated with a significant discount compared to the rest of consumer goods.
During their semi -annual negotiation updates last month, companies declared other disappointing results, sales on the American market did not develop as investors hoped. The prices of American President Donald Trump, who could strike imports of Canadian whiskey and Mexico tequila, exacerbated gloom.
The Diageo spirits giant last month eliminated a long -standing sales growth objective, blaming uncertainty on American prices as well as low demand from consumers.
But Debra Crew, CEO, also considers changes in change of exchange as a key challenge in the face of industry, telling a recent conference that moderation was the “biggest disruptor” in the industry, while weak and non -alcoholic drinks were “one of our greatest opportunities”.
Terry Smith, director of veteran investments, abandoned The participation of his fund in Diageo in January after almost 15 years on doubts about the new company management team and the request for request made by obesity treatments called GLP-1.
Studies show that weight loss and diabetes drugs, such as Wegovy and Ozempic, could cut The abuse of opioids and alcohol up to half.
“It seems likely that drugs will ultimately be used to treat alcoholism such is their effect on consumption,” wrote Smith. Diageo refused to comment on Smith's divestment.
The evaluation gap between alcohol and tobacco stocks has shrunk. Spiritual actions are sunk from a advanced price at the price of multiple prices of 30 times during COVVI -19 – when alcohol consumption has skyrocketed during locking – at 16 times today, according to Jefferies Analysis, against a coherent multiple of 10 in the tobacco industry.
“During my 20 years of cover in the drinks sector, the degree of questioning of alcohol investors has never been so important,” wrote Jefferies analyst Ed Mundy, in a research note entitled “Is alcohol the next tobacco?”
Edward Kevis, director of funds at Aviva Investors, said young people drinking less alcohol also had “structural uncertainty” in the sector.
“What is clear is that demographic trends and consumption habits point to a drop in consumption of young consumers who only live a healthier lifestyle,” he said.
He added that social media made young people more concentrated on their appearance and behavior, which acted as another means of deterrence to excessive alcohol consumption due to its weight gain effects.
Gallup has questioned people aged 18 to 34 every decades since 2001 track The number that says they have drunk alcohol in the previous week. The results increased from 49% in 2001 to 38% in 2023.
“The youngest drink less alcohol … But no one could say how much Trevor Stirling, who estimated that the GLP-1, cannabis and young people who drink the more than 1%, estimated the GLP-1, cannabis and young people who drink from Bernstein, estimated that cannabis and young people who drink.
Laurence Whyatt, analyst at Barclays, noted that the data showing that young people drinking less come largely from the surveys, therefore not entirely reliable. Research from the bank has revealed that generation Z spent a similar or higher proportion of alcohol income compared to other generations.
“We suspect that the relatively low absolute expenses of Gen Z alcohol have more to do with the group's lower gains profile,” he said. “As income increases, we think it is reasonable to expect alcohol expenditure to increase with it.”
The industry has countered the fears of a structural change by arguing that the drop in consumption is mainly due to cyclical factors and that it is too early for GLP-1 to weighing on sales.
“Most of the moderation we are currently seeing … is a moderation focused on the economy,” said Alexandre Ricard, managing director of the French spirits group Pernod Ricard, after the half -yearly results of the company last month.
High inflation since 2021 has removed generally resilient American expenses. Drinkers and retailers crossed bottles that they built during the covid-19 alcohol boom, when many drinkers had their locking savings on high-end spirits.
Roseanna Ivory, head of investments at Aberdeen, said that the “extraordinary” level of alcohol consumption in 2021 had led companies to increase advice because they thought it would last.
“What we are talking about is a normalization-there is always an overhang,” she said. “It will take a little more time to return to the same growth rate.”
The industry, on the other hand, has recognized the tendency of moderation, especially among Gen-Z drinkers.
The Diageo crew, previously Managing Director of Reynolds Tobacco, said that it was not possible to separate the impact of GLP1 and other threats from “global moderation trends that we have seen and follow for decades, it is that people want to drink better, no more”.
Like the bosses of tobacco before them, who have pivoted for smoke -free alternatives to compensate for the reduction in sales, drinking managers have formulated moderation as an opportunity for growth, pouring investments in non -low and low alcohol drinks to keep abstinent consumers.
Ed Mundy de Jefferies said that unlike the tobacco industry, which has hidden his knowledge of how his products were harmful, the alcohol sector was actively committed to regulators to promote responsible alcohol consumption.
“Alcohol cannot have its great moment of tobacco,” said Aberdeen's ivory, “because we have always known his bad for us”.
Additional Gregory Meyer reports in New York
