Booze makers are getting an early hangover after the US surgeon general called for the addition of a warning label to alcoholic drinks.
On Friday, shares of beer and alcohol giants sank across the board. Diageo (DGE.L) is down 4% and Pernod Ricard (PER.HA) is down nearly 3%, while Molson Coors (TAP) and Anheuser-Busch InBev (BUD) are both down 2%. Brown-Forman (BF-B) and Constellation Brands (STZ) are down around 1% each.
Earlier this morning, Surgeon General Vivek Murthy released a 20-plus-page advisory that linked the risk of cancer to drinking alcohol and called for adding a warning label to beer, wine, and spirits like those on cigarette packs.
As of now, South Korea requires a cancer-specific label on alcohol, while Ireland signed a new law to do so starting in 2026, per Murthy.
According to the advisory, nearly 100,000 US cancer cases and 20,000 cancer deaths have been linked to alcohol consumption each year. It noted seven types of cancer were linked, including breast, liver, and colon cancer.
Yahoo Finance reached out to Molson Coors, Anheuser-Busch, and Constellation Brands for comment, but did not hear back.
With President-elect Donald Trump’s administration set to take office in 17 days, the true impact of this advisory is up in the air.
“We’re in the middle of changing administrations … it’s unclear how much leg there is to this into the new administration,” S&P Ratings analyst Christopher Johnson told Yahoo Finance over the phone.
“If you actually end up with … warning labels on the products, then that could have a more lasting impact on the growth outlook for the products.”
Johnson said a drop in alcohol consumption due to health risks is not at the same level as cigarette consumption, which has an “industrywide view of volume declines.”
“We’re not there yet in terms of thinking about some kind of structural pressure on [alcohol] volumes related to health risk concerns,” added Johnson. His team is also looking out for any attempt by the government to curb consumption with taxation (there have been no hints of new taxes so far).
“When those types of taxes do hit products … there tends to be a one-time negative impact that then gets lapped and the consumer gets used to the new price point,” he said.
Bump Williams of Bump Williams Consulting expects “business goes on as usual” following the news.
“From the manufacturing side, distributors have already diversified their portfolio well beyond just servicing the Beverage-Alcohol business and the Retailers will simply do as [they’re] instructed to do by the law and regulations required in packaging,” he told Yahoo Finance in an email.
The advisory is throwing a wrench in an already struggling sector. Challenges up against the industry include a decline in overall US consumption and premium-priced alcoholic beverages under pressure due to weaker consumer discretionary income, Johnson said.
Williams is also keeping an eye on potential tariffs under Trump that may cause price hikes.
All six of the alcohol companies mentioned above clocked negative stock performance in the past year, while the S&P 500 jumped 26%. Brown-Forman and Pernod Ricard led the losses with 34% and 31% drops, respectively.
According to a Gallop Poll, nearly 60% of US adults say they have an occasion to drink alcohol, down from the historical trend of 63%, which dates back to 1939. A drop in consumption compared to 2022 has weighed on revenue growth, per Statista Market Insights, though overall revenue is up due partially to higher prices and inflation.
Meanwhile, nonalcoholic beverages have been on the rise.
“Those factors continue to be much more relevant to our outlook for the sector right now than what the news that came out today might have on further pressure on volumes,” Johnson said, adding that younger generations are “already consuming less alcohol.”
Suntory CEO Takeshi Niinami, whose company is behind brands like Jim Bean and various Japanese whiskeys, said the business has to educate consumers that drinking in moderation is key.
“Heavy drinking is so bad, we have to talk about that,” Niinami told Yahoo Finance’s Opening Bid. “moderate drinking is good for you … you can feel good and bond with your friends … we have to demonstrate that we are contributing [to] society,” he said.
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at [email protected].
