BOSTON ( TheStreet) -- St. Patrick's Day, college spring break and the first signs of spring come together in March to result in notable instances of alcohol-fueled revelry. That may prompt investors to ponder the health of the alcoholic-beverage industry.
Suffice it to say, it's in recovery from a 2009 recession-induced hangover.
Spending on alcohol is heavily influenced by consumer-discretionary spending, as evidenced by a decline in alcohol sales in 2009 and into early 2010 and a rising tide over the past year, concurrent with the economy's rebound.
Goldman Sachs (GS) said in a March 9 research report that it sees beer, wine and liquor sales on an upswing, particularly for "top-shelf," or premium, brands of hard liquor. "Consumers who traded down in the downturn are likely to trade up to more premium variants, benefiting companies with a premium portfolio."The nation's economic recovery also bodes well for the beer industry, Goldman said, as it will lead to "positive volume growth in the U.S. beer market in 2011 and 2012, following the declines in 2009 and 2010." The global investment bank estimates increases in the volume of beer sold will rise by 2.5% this year and 1.5% in 2012, "bringing beer volumes back to 2008 levels by the end of 2012." But investors clearly are out of step with industry trends, or at least analysts' opinions, as the "beverages brewers" stock category as tracked by Morningstar is down 22% this year and off 40% over the past 12 months. But, curiously, after the economy's and industry's slump in 2008, beverage brewers gained 209% in 2009 while sales were still in the doldrums. And the "beverages -- wineries and distilleries" index as tracked by Morningstar is down 1.3% this year, but up 27% over the past year, through March 11. The S&P 500 Index is little changed this year and up about 15% over the past 12 months. In addition to Goldman Sachs, Standard & Poor's analysts are also bullish on the liquor and wine industries, saying in a recent research note that "our fundamental outlook for the distillers and vintners sub-industry is positive, reflecting our view of favorable demographics, strong consumption trends that we foresee, and a possible easing of pricing pressures. "With demand for premium beverages expected to rise, we think companies offering high-end products and a selection of imported wines will benefit, allowing these companies to capture market share from domestic brewers," S&P said. On the following pages are seven of the most highly rated alcoholic-beverage companies:
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