Alcohol Stocks Dip After U.S. Surgeon General Recommends Cancer Label

Just in time for all those friends who find it necessary to participate in Dry January, U.S. Surgeon General Vivek Murthy dropped a "sobering” market buzz-kill on alcohol manufacturers and booze lovers Friday.

Shares of industry giants Molson-Coors and Anheuser-Busch shed over 1% on breaking news linking alcohol consumption to seven distinct types of cancer, accentuating Wall Street's keenness to public health advisories that could end up affecting future sales in the sector.

U.S. Surgeon General Vivek Murthy's report quantifies alcohol's role as America's third-leading preventable cause of cancer, with approximately 100,000 annual cases and 20,000 deaths – far surpassing alcohol-related traffic fatalities and illustrating substantial healthcare costs for all enjoy a few more drinks than they should have.

Ironically, market dynamics and surveys already show that Gen Z and Millennials have been pivoting away from one too many White Claws, with two-thirds of 18-34-year-olds noting health concerns as one of the primary reasons they don't drink. Advocates suggest material impacts (warning labels) on packaging, marketing, and distribution costs that could pressure margins sector-wide for companies like Anheuser-Busch InBev SA/NV, Diageo, and Asahi Group.

There were over 741,300 alcohol-attributed cancer cases worldwide in 2020. In contrast, in the United States specifically, approximately 96,730 cancer cases were related to alcohol consumption in 2019, with about 100,000 alcohol-related cancer cases reported annually. If these figures continue to rise, expect the Alcohol and Tobacco Tax and Trade Bureau (TTB) and other advocate groups to step in.

According to analyst reports, the global spirits market, valued at $2.3 trillion in 2023, projects a 10.74% CAGR to reach $5.7 trillion by 2032. U.S. spirits alone command a 42% market share, generating $37.7 billion in revenue last year, and continue to maintain a firm hold on the market.