Investing in Wine: Record U.S. Wine Exports in 2011
A growing middle class in emerging economies has placed an increasing demand on a wide spectrum of industries, and alcohol is no exception.
Asian countries have increasingly acquired a taste for U.S. wine. And thanks to the higher consumption, U.S. and California wine exports for the first 11 months of last year have broken the previous record for all of 2010, reports The California Wine Institute.
Anyone who has seen the movie Bottle Shock, staring Alan Rickman, will know that it wasn't so long ago that California wine was snubbed as sub-par. But after winning over some renown wine-lovers Californian wine has become something of a luxury item.
The California Wine Institute found that wine export sales from January to November of 2011 is valued at $1.3 billion. That's a 23% increase from the same period in 2010 (via LA Times).
"Although the countries of the European Union continued to rank first in consumption of U.S. and California wine, exports to the 27-country bloc grew by only 10.1% from 2010 to 2011. Exports to second-ranking Canada increased by 24.4%," reports the LA Times.
California wine is also poised to meet more market demand. Although the state is the fourth-largest producer of wine, it accounts for only 4% of the global wine market.
Business section: Investing ideas
As the taste for American wine and spirits proliferates abroad, these American companies will be compelled to expand its industry at home. Growing demand could quickly translate to growing sales.
Interested in investing on the trend? We list below the six U.S. winery & distillery stocks trading on the U.S. stock exchange. Do you think their value will grow? (Click here to access free, interactive tools to analyze these ideas.)
1. Beam (NAS: BEAM) : Engages in producing and selling branded distilled spirits products worldwide. Market cap of $8.17B. The stock has gained 9.11% over the last year.
2. Brown-Forman (NAS: BF.B) : Engages in manufacturing, bottling, importing, exporting, and marketing alcoholic beverages. Market cap of $11.64B. The stock has gained 11.28% over the last year.
3. Central European Distribution (NAS: CEDC) : Produces, imports, and distributes alcoholic beverages in Poland, Hungary, and the Russian Federation. Market cap of $285.14M. This is a risky stock that is significantly more volatile than the overall market (beta = 2.26). The stock is currently stuck in a downtrend, trading -9.22% below its SMA20, -5.89% below its SMA50, and -50.35% below its SMA200. It's been a rough couple of days for the stock, losing 14.78% over the last week.
4. Constellation Brands (NYS: STZ) : Produces and markets alcoholic beverages primarily in the United States, Canada, and New Zealand. Market cap of $4.20B. Might be undervalued at current levels, with a PEG ratio at 0.77, and P/FCF ratio at 5.13. The stock has gained 3.85% over the last year.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Rebecca Lipman does not own any of the shares mentioned above. Data sourced from Finviz.
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