Canada is the sixth “drunkest” country in the world, according to this recent study. However, it ranks significantly lower in per capita alcohol consumption (a few steps below the US).
It’s a significant market, the bulk of which is served by local breweries and producers, with few significant publicly traded players.
And it’s among those players that you have to delve into to find the best alcohol stocks in Canada.
Investing In Alcohol Stocks – What Do You Need To Know?
The stocks of alcohol companies are classified as sin stocks – businesses considered immoral or unethical. It’s a diverse class of assets that includes tobacco, gambling, and even weapon companies.
However, even among sin stocks, alcohol is a bit different. Based on the consumption numbers and trends (Evergreen or cyclical sales), alcohol can be classified as both consumer discretionary and consumer staples.
One classification offers shelter from market headwinds, while the other does not. Another theory is that alcohol sales take off during the economic crisis, supposedly because people start consuming more alcohol to cope with the additional strength.
The latest example would be the sales numbers overshooting estimates during the pandemic.
However, there are some other factors to consider, like market presence, brand loyalty, price ranges, penetration of foreign brands, etc.
Canadian alcohol companies might seem a bit lightweight compared to some foreign giants because, apart from one or two exceptions, most companies have a local consumer base.
In contrast, there is a significant presence of foreign alcohol products in the Canadian markets.
Best Alcohol Stocks In Canada
Alcohol is one area where small businesses dominate in North America. However, there are still a few prominent players, enough to make a decent-sized pool of some of the best alcohol stocks in Canada.
The stocks below are arranged by market capitalization.
- Molson Coors Canada Stock (TPX-A.TO)
- Corby Spirit and Wine Stock (CSW-A.TO)
- Andrew Peller Stock (ADW-A.TO)
- Big Rock Brewery Stock (BR.TO)
- Diamond Estates Wines & Spirit Stock TSXV (DWS.V)
- Constellation Brands Stock NYSE (STZ)
- Boston Beer Stock NYSE (SAM)
1. Molson Coors Canada Stock
- Ticker: TPX-A.TO
- Industry Niche: Brewing/North American Beer Giant
- Forward Dividend Yield: 2.50%
- Dividend Payout Ratio: 819.27%
- Dividend Yield (12-Month Trailing): 1.12%
- Upcoming Dividend Date: Dec 15, 2023
- Market Cap: $17.97 Billion
The Molson Coors, in its current form, is the result of a 2005 merger of the US-based Coors, known for its light beer and Canadian Molson. The resulting Molson Coors is headquartered in the US and listed in both countries.
It’s also the fifth-largest beer company globally and the largest in North America. There are 15 brand families under the new consolidated banner and 42 breweries.
Molson Coors is a local giant with enormous local and impressive international market penetration (about a hundred countries), including Europe, which is impressive for a North American brewer.
The stock saw little growth after the merger, and its best bull phase was between 2012 and Oct 2016, between which the stock grew well over 250%.
2. Corby Spirit and Wine Stock
- Ticker: CSW-A.TO
- Industry Niche: Producer, Marketer, And Distributor Of Spirits And Wines
- Forward Dividend Yield: 5.77%
- Dividend Payout Ratio: 114.29%
- Dividend Yield (12-Month Trailing): 6.67%
- Upcoming Dividend Date: Dec 08, 2023
- Market Cap: $360.84 Million
- Forward P/E Ratio: 12.93
Corby was established in 1859 as a single distillery operation and was named after the owner/founder, Henry Corby.
The company grew organically and through several acquisitions and mergers, including McGuinness Distilling (which controls Canada’s largest mixable liqueur family).
It changed gears in 2005 through a long-term agreement with French Pernod Ricard and started focusing on representation and marketing as well. The most well-known name in its representation portfolio is Absolut.
The company has a decent portfolio of alcohol products/brands it owns, including JP Wiser Whisky and Polar Ice Vodka. Its representation portfolio is also decent enough. The financials of the company seems healthy.
3. Andrew Peller Stock
- Ticker: ADW-A.TO
- Industry Niche: Wine Production
- Forward Dividend Yield: 5.99%
- Dividend Payout Ratio: N/A
- Dividend Yield (12-Month Trailing): 5.62%
- Upcoming Dividend Date: Jan 12, 2024
- Market Cap: $199.83 Million
- Forward P/E Ratio: 15.21
Andrew Peller is one of the largest wine companies in Canada (that produce locally). It started in 1961, with one winery in BC. Now, the company owns wineries in three provinces.
It also has fifteen brands under its banner and has products for almost all price segments, which is key to its strength.
The company has a decent network of retail outlets, and many of its brands have an impressive local presence and are widely available in most local stores.
Andrew Peller’s stock saw an excellent bullish phase between March 2009 and March 2018 and grew over 750%.
4. Big Rock Brewery Stock
It’s the first micro-cap stock on this list. It’s a small company with around 130 employees and has been around since 1985. It got the inspiration for the name from a 16,000-ton boulder in the Canadian Prairies.
The company owns three breweries, one each in Calgary, Vancouver, and Toronto. The original line was also composed of just three brews: an ale, a pilsner, and a grasshopper.
Now Big Rock boasts a decent-sized product line, all under the Big Rock brand. Big Rock is slowly growing its sales numbers, and the finances reflect this growth.
5. Diamond Estates Wines & Spirit Stock (TSXV)
The last Canadian alcohol stock on this list is Diamond Estates Wines and Spirit, which now comes under the umbrella of Lakeview Wine.
It has two core businesses: Wine production (mostly to domestic customers) and its agency business, under which the company imports and distributes wines and spirits.
The company has five brands to its name, from a low to mid-tier price range. Despite its small size, the company does own a decent size of the Ontario market pie when it comes to wines.
The penny stock of this micro-cap company has remained well under $5 since its inception, but that’s not necessarily a bad thing for the investors.
6. Constellation Brands Stock (NYSE)
- Ticker: STZ
- Industry Niche: Brewing, Winemaking, and Other Spirits
- Forward Dividend Yield: 1.50%
- Dividend Payout Ratio: 39.72%
- Dividend Yield (12-Month Trailing): 1.41%
- Upcoming Dividend Date: Nov 17, 2023
- Market Cap: $43.79 Billion
- Forward P/E Ratio: 17.74
Constellation Brands is a giant in North America in two domains: Beer and Wine/Spirits. It started out as a wine producer in 1945 and grew organically as well as through acquisitions.
By 1994, it was already controlling four out of five major wine brands sold and consumed in the US. It acquired whisky businesses in Canada in 1999.
Currently, it’s the second-largest wine company in the world and the largest in Canada. And though its position is not as impressive in the world of beers, it’s still the twelfth-largest beer company globally and the second-largest in North America.
Its leadership position in the market is reflected in the stock as well, which has performed quite differently from its Canadian counterparts.
7. Boston Beer Stock (NYSE)
Boston Beer is another promising alcohol stock from the US. Jim Koch started the company in 1984 from his kitchen, which has now grown into a major business empire.
It has four main breweries and five smaller local breweries to its name and brews 60 different styles of beer. It also has nine brands under its banner, including Samuel Adams and Twisted Tea.
The company has an impressive local presence and well-loved brands, and the stock has seen relatively consistent growth.
Its first major growth phase was between 2009 and 2015, when it grew by around 1,500%.
Are there any Canadian alcohol ETFs available for investment?
There isn’t a dedicated Canadian alcohol-specific ETF that solely focuses on the alcohol industry. However, investors interested in tapping into the sector might consider broader consumer discretionary or consumer staples ETFs, as these often hold significant positions in prominent alcohol companies.
There are international ETFs focused on the global alcohol industry, which might include Canadian companies in their portfolios.
How To Buy Alcohol Stocks In Canada
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One common trend among the best alcohol stocks in Canada is inconsistent and sometimes cyclical growth. Few stocks make up for this flaw with their dividends, but not all.
However, inconsistent growth is still growth, and with right-timed buys, you can turn a neat profit from your investment in these companies.
If alcohol is not the right kind of consumer staple for you, evergreen food stocks are always a steady alternative.