The global alcohol industry is facing one of its most dramatic downturns in decades. According to Bloomberg data, the world’s 50 leading beer, wine, and spirits producers have lost a combined USD 830 billion in market value over the past four years.
The Bloomberg Alcoholic Beverages Index, which tracks these companies, now stands 46% below its peak in June 2021, underscoring a profound transformation in global drinking habits.
A Cultural and Health-Driven Shift
The decline is being fuelled by a global reduction in alcohol consumption. A Gallup survey from August revealed that alcohol use in the United States has fallen to its lowest level since 1939, marking a long-term behavioral shift. Health warnings from the World Health Organization and the U.S. Surgeon General have reinforced the perception of alcohol as a public health concern, particularly among Generation X.
Meanwhile, Millennials and Generation Z are increasingly embracing sober-curious lifestyles, inspired by teetotal celebrities, fitness culture, and the rise of non-alcoholic alternatives. The popularity of weight-loss drugs like Ozempic and the growing acceptance of cannabis products have further eroded alcohol’s role in social and leisure activities.
Economic and Political Pressures
Beyond cultural changes, economic headwinds have deepened the crisis. High interest rates have curbed consumer spending, while rising raw material and packaging costs have squeezed producers’ profit margins. In China, alcohol demand has been hurt by weak household confidence and a ban on alcohol consumption at official events, historically a key sales channel for premium spirits.
Additionally, U.S. tariffs have reduced export earnings for European producers, particularly those focused on luxury spirits and wines. These combined pressures have dragged down share prices across the sector, with Diageo, Pernod Ricard, and Rémy Cointreau all reaching their lowest levels in a decade. Brown-Forman (owner of Jack Daniel’s) and Treasury Wine Estates in Australia have suffered similar declines, while China’s Kweichow Moutai—once the most valuable spirits company in the world—has seen its stock drop over 40% from its 2021 high.
Structural Changes and Industry Response
Analysts believe the downturn is more than cyclical. Sarah Simon of Morgan Stanley told Bloomberg that a structural change is underway as people simply consume less alcohol overall. She warned that companies are contending with shrinking revenues, heavy debt burdens, and frequent executive reshuffles.
In response, major producers are pivoting towards innovation and diversification.
- Carlsberg launched a non-alcoholic cider earlier this year.
- Campari introduced its Crodino alcohol-free brand to the U.S. in May.
- Diageo expanded into the zero-proof market by acquiring Ritual Zero Proof in Chicago.
- Moët Hennessy invested in French Bloom, a premium sparkling non-alcoholic brand.
At the same time, companies are undergoing leadership transitions to adapt to changing market realities. New CEOs have been appointed at Diageo, Rémy Cointreau, Campari, Treasury Wine Estates, Molson Coors, and Suntory, while Kweichow Moutai has replaced two chairmen in as many years.
Investment Outlook: Challenges and Opportunities
Despite the sector’s slump, some investors are beginning to see value in depressed stock prices. Alcohol producers are now trading at an average of 15 times forward earnings—less than half their valuation in 2021. U.S. hedge fund Cook & Bynum has increased its stakes in Ambev (Brazil) and Backus y Johnston (Peru), anticipating future growth in premiumization within emerging markets.
However, not all investors have been fortunate. Warren Buffett’s Berkshire Hathaway has seen its investment in Constellation Brands, the maker of Corona, fall by about 40% since last year. Similarly, Artisan Partners increased its Diageo holdings more than fivefold—only to face a 30% drop in share value in 2025.
A Tobacco-Like Future?
For some market observers, the alcohol industry’s current challenges echo the tobacco sector’s trajectory. Andrew Gowen of Bell Asset Management remarked that such a comparison “would have been unthinkable five years ago,” but today, declining volumes are forcing producers to cut costs and shift toward lower-priced segments.
As the global alcohol market continues to evolve, industry leaders are being forced to redefine their strategies—balancing profitability, innovation, and shifting social values in a world where drinking less has become not just a choice, but a movement.
Source: Vinetur