CHEAP GAS MEANS MORE BEER Cheap gas could give U.S. drivers about $700 in extra cash this year, analysts say. For some Americans, that money is going directly into beer. Liquor companies are already seeing a sales boost from lower gas prices. Rob Sands, CEO of Constellation Brands (STZ), says more cash in drivers wallets is creating tailwinds for his companys products, which include Corona beer, Robert Mondavi wines and Svedka vodka. Any time the consumer has more money in their pocket, its better for consumer product companies, he said in a quarterly earnings call last week. Now whether we benefit more than other companies, I am not sure, but its certainly better to have more money in consumers pockets, not less. Analysts at investment bank Nomura say they see a relationship between savings at the pump and spending on beer. The analysts are so confident about the connection that it influenced their global beverage outlook for 2015. Lower oil prices are likely to be a boost for some economies (especially beer in the U.S.), they wrote in their report. The analysts specifically pointed to Molson Coors (TAP) as a beneficiary of lower gas prices, and they upgraded the stock to buy. Shares of Molson Coors have soared more than 35 percent in the last year, and shares of Constellation are up 33 percent. Other beer companies have seen less dramatic increases in the last year. Anheuser-Buschs (BUD) stock price has risen 6 percent, while Sam Adams maker Boston Beer (SAM) is up 25 percent. Beer companies arent the only beneficiaries of cheap gas, of course. Walmart (WMT) saw its first quarterly sales increase since 2012 this fall. It amounted to only a 0.5 percent rise in U.S. same-store sales, but it was better than the flat growth executives were expecting. Read more: goo.gl/UkuC2q
Posted on: Mon, 12 Jan 2015 17:30:00 +0000
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