Focus on the BIG picture.
Monday, Jan 06, 2025
Outside the box.
Alcohol Stocks Tumble After U.S. Surgeon General Calls for Cancer Warnings
Surgeon General Vivek Murthy highlights the cancer risks associated with alcohol consumption, sparking market declines among major brewers and spirits makers.
Shares of leading alcohol producers in Europe and the United States fell sharply on Friday following an advisory from U.S. Surgeon General Vivek Murthy advocating for cancer warnings on alcoholic beverage labels.
The advisory underscores the cancer risks associated with alcohol consumption, including breast, colon, and liver cancers, and calls for increased consumer awareness.
Surgeon General’s Advisory
Murthy’s statement emphasizes that even moderate alcohol consumption carries cancer risks.
'For certain cancers, like breast, mouth, and throat cancers, evidence shows that the risk of developing cancer may start to increase around one or fewer drinks per day,' the advisory stated.
While it remains unclear whether or when these recommendations will translate into regulatory changes, the decision to implement new labeling ultimately lies with Congress.
Market Reactions in the U.S.
Alcohol stocks in the United States saw notable declines:
- Brown-Forman: Shares of the Jack Daniel's parent dropped nearly 3% to their lowest level since April 2017, closing at $37.10.
- Molson Coors: The maker of Coors Light fell 2.7%.
- Constellation Brands: The producer of Corona beer slipped 1.3%.
- Boston Beer: Shares declined 3%, after an intraday drop of as much as 6.4%.
European Market Impact
European alcohol companies also faced significant losses:
- Diageo: Shares of the world’s largest spirits maker fell 3.7%, hitting their lowest level since mid-December.
- Pernod Ricard: The French producer of Martell cognac and Absolut vodka dropped 3%.
- Remy Cointreau and Campari: Both saw declines of at least 4.5%.
- Brewers: Budweiser maker Anheuser-Busch InBev fell 2.7%, while Heineken and Carlsberg each saw declines of more than 1%.
Industry Perspectives
The potential introduction of cancer warnings raises concerns about consumer behavior and industry implications.
Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors, noted that public perception might limit the impact of new warnings.
'Most Americans tend to believe that nearly everything is okay in moderation, thus much as warning labels alone on cigarette packs did little to curb public smoking, I expect warning labels on alcohol to have little effect,' he said.
Broader Context
The Surgeon General’s call for cancer warnings follows growing public health scrutiny over alcohol consumption and its risks.
While many countries have implemented or considered similar measures, the U.S. has yet to adopt widespread labeling changes for alcoholic beverages.
The market reaction reflects the sensitivity of alcohol producers to regulatory and consumer sentiment changes.
As debates over health risks and labeling policies continue, the industry faces mounting pressure to address public health concerns while maintaining profitability.
The advisory underscores the cancer risks associated with alcohol consumption, including breast, colon, and liver cancers, and calls for increased consumer awareness.
Surgeon General’s Advisory
Murthy’s statement emphasizes that even moderate alcohol consumption carries cancer risks.
'For certain cancers, like breast, mouth, and throat cancers, evidence shows that the risk of developing cancer may start to increase around one or fewer drinks per day,' the advisory stated.
While it remains unclear whether or when these recommendations will translate into regulatory changes, the decision to implement new labeling ultimately lies with Congress.
Market Reactions in the U.S.
Alcohol stocks in the United States saw notable declines:
- Brown-Forman: Shares of the Jack Daniel's parent dropped nearly 3% to their lowest level since April 2017, closing at $37.10.
- Molson Coors: The maker of Coors Light fell 2.7%.
- Constellation Brands: The producer of Corona beer slipped 1.3%.
- Boston Beer: Shares declined 3%, after an intraday drop of as much as 6.4%.
European Market Impact
European alcohol companies also faced significant losses:
- Diageo: Shares of the world’s largest spirits maker fell 3.7%, hitting their lowest level since mid-December.
- Pernod Ricard: The French producer of Martell cognac and Absolut vodka dropped 3%.
- Remy Cointreau and Campari: Both saw declines of at least 4.5%.
- Brewers: Budweiser maker Anheuser-Busch InBev fell 2.7%, while Heineken and Carlsberg each saw declines of more than 1%.
Industry Perspectives
The potential introduction of cancer warnings raises concerns about consumer behavior and industry implications.
Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors, noted that public perception might limit the impact of new warnings.
'Most Americans tend to believe that nearly everything is okay in moderation, thus much as warning labels alone on cigarette packs did little to curb public smoking, I expect warning labels on alcohol to have little effect,' he said.
Broader Context
The Surgeon General’s call for cancer warnings follows growing public health scrutiny over alcohol consumption and its risks.
While many countries have implemented or considered similar measures, the U.S. has yet to adopt widespread labeling changes for alcoholic beverages.
The market reaction reflects the sensitivity of alcohol producers to regulatory and consumer sentiment changes.
As debates over health risks and labeling policies continue, the industry faces mounting pressure to address public health concerns while maintaining profitability.
