On Friday, shares of Boston Beer, Molson Coors, and LVMH Moet Hennessy experienced a decline.
On Friday, shares of Boston Beer, Molson Coors, and LVMH Moet Hennessy experienced a decline.
Alright, let's dive into the not-so-cheerful news bubbling in the alcohol industry. On a grim Friday, the U.S. Surgeon General dropped a bombshell: they linked booze to an increased risk of seven types of cancer, from breast to liver, with breast cancer holding 16.4% of the blame on alcohol consumption's shoulders. And don't even get me started on the 20,000 annual cancer deaths attributed to the devil's brew internet trolls love to praise.
It's understandable then, that the market had a collective hangover. Stocks like Boston Beer, Molson Coors, and LVMH Moet Hennessy took a tumble, falling 3.6%, 2.2%, and 2.8% respectively. This is clearly a situation that makes investors wish they had a hangover cure stronger than a DNA repair kit.
So, what's the deal with this prolific doctor saying booze and cancer are kissing cousins? In today's announcement, Surgeon General Dr. Vivek Murthy feared that despite decades-old evidence of alcohol's carcinogenic potential, only 45% of Americans have clued in. Dr. Murthy thinks we should slap warning labels on alcoholic beverages to give a less subtle nod to the beverage's ingredient list, mentioning cancer as an unwanted side effect. The doc is aiming to get everyone from beer lovers to wine enthusiasts and spirit connoisseurs to reconsider their butt-chugging habits.
But, hold the phone! Don't toss your stocks in the trash just yet. While legislation to update warning labels is a possibility, the Batman-like figure behind the label-slapping threat could be out of a job in just 17 days. President-elect Trump's pick for the Surgeon General, Dr. Janette Nesheiwat, may not be so keen on the labeling flare-up, which might discourage lawmakers from acting on such a matter.
And if you think folks living in smoke-filled houses can't see the forest for the trees, count on alcohol consumers to keep pouring their chasers without caution. So while this advisory is a jolt, it may not be the career-ender for these stocks that some might be hoping for.
In fact, this cold-hearted sell-off may be the perfect time to play the market's Dr. Jekyll and Mr. Hyde game. Molson Coors, for example, with a P/E ratio under 13 and a 3% dividend, could prove to be a healthy addition to your portfolio, but only time will tell if the cancer labels cause this stock to sink or swim.
Investors might want to consider reallocating their finance towards less risky options due to the potential impact of the warning labels on alcoholic beverages. This situation could present an opportunity for savvy investors to invest in undervalued companies in the alcohol industry, such as Molson Coors, which has a low P/E ratio and a consistent dividend.