Investing in the Alcohol Beverage Industry
The stock market is an investment opportunity that allows individuals to build wealth through the buying and selling of stocks. There is a lot that goes into building out your portfolio, and one of the best ways to achieve success is through diversification. Buying shares across different businesses and sectors are one of the best ways to go about this. The beverage industry provides a lot of opportunities to build out a successful portfolio.
The Fundamentals of the Stock Market
The stock market is an equity investment that represents part ownership of a corporation or entity. Stocks are sold as individual shares on the exchange which is a place that brings buyers and sellers together. The exchange tracks the supply, demand, and pricing of each one to help buyers and sellers make informed decisions about the purchase of their shares. After purchasing a share, the individual becomes a shareholder and therefore profits and losses when the index rises and falls.
There is common stock, which allows shareholders the right to vote on company matters and proceedings, and preferred stocks that have no voting rights. How you make money depends on how your capital is allocated and how long you own the shares. Each will be different, and your broker can make suggestions for you based on your objectives.
Why Are Beverage Stocks a Good Idea?
It's as varied as you can imagine including both alcoholic and non-alcoholic drinks. Bottlers, brewers, distillers, and manufacturers are included under the umbrella term "beverage." One of the biggest allures for investing in the beverage market is the global appeal. The popularity of the market transcends all countries and economic backgrounds. Most first-world citizens don't go longer than 24-hours without purchasing a beverage of some kind. For the most part, the beverage industry is resistant to a recession. While it might not appear to be an exciting market to dive into, there are plenty of options available to make it worth wild.
The Difference Between Non-Alcoholic and Alcoholic Investments
How you invest your stocks in the beverage market depends on the different sector you want to break into. The non-alcoholic beverage isn't as diversified. Yes, it includes tea, coffee, soda, juices, and bottled water but the target consumer remains relatively the same. Unless you choose to invest in the power players such as Coca-Cola, Dr. Pepper Snapple, and PepsiCo you can expect your stock to fluctuate with the economy. Smaller beverage manufacturers have to identify smaller target consumers to remain relevant. Therefore they become more vulnerable if their target consumer stops buying their product.
Alcoholic beverages are broken down into two main categories: beer brewers and distillers. Beer brewers represent with a thin margin at just under 2%, but their price-earnings ratio is better than any other. The reason? The growing popularity. In the early 2000's, many international brewers merged. Combining forces in this way saves cost and improves revenue growth. Both of which increase profit margins for investors.
Distillers also include wineries. If you're looking for a stock that has high margins, this is the one for you. "Distillers" produce both liquor and wine and over the years mergers and acquisitions have taken place to make this sector very profitable. So profitable in fact, some companies own brands that span both the beer and liquor/wine groups.
Diversifying Your Portfolio
Getting the most from your portfolio includes diversification. It is possible long-term growth can fizzle, and loss can be around 100% for some individual stock. Protecting yourself from that kind of setback would include purchasing shares across various markets. Larger beverage companies understand the impact diversification can have which is one of the main reasons they are involved in different brands across the globe.
In today's economy, where technology is unifying and expanding operations both domestically and internationally, the beverage market should be on top of your investing list. The beverage sector has the ability to merge and create profitable opportunities for shareholders.
The goal at Brindiamo Group is to help our clients however we can. Whether they are building enterprises or leading larger alcohol beverage companies, our team of industry experts can help make informed decisions so you achieve the growth you need. Learn more by visiting our website.