Investing in Wine: Record US Wine Exports In 2011

Posted:01/20/12
By:Rebecca Lipman

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Investing in Wine: Record US Wine Exports In 2011

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A growing middle class in emerging economies has placed an increasing demand on a wide spectrum of industries, and alcohol is no exception.

Asian countries have increasingly acquired a taste for U.S. wine. And thanks to the higher consumption, U.S. and California wine exports for the first 11 months of last year have broken the previous record for all of 2010, reports The California Wine Institute.

Growth

Anyone who has seen the movie Bottle Shock, staring Alan Rickman, will know that it wasn’t so long ago that California wine was snubbed as sub-par. But after winning over some renown wine-lovers Californian wine has become something like a luxury item.

The California Wine Institute found that wine export sales from January to November of 2011 is valued at $1.3 billion. That’s a 23% increase from the same period in 2010. (via LA Times)

“Although the countries of the European Union continued to rank first in consumption of U.S. and California wine, exports to the 27-country bloc grew by only 10.1% from 2010 to 2011. Exports to second-ranking Canada increased by 24.4%.” reports the LA Times.

California wine is also poised to meet more market demand. Although the state is the 4th-largest producer of wine, it accounts for only 4% of the global wine market.

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As the taste for American wine and spirits proliferates abroad, these American companies will be compelled to expand its industry at home. Growing demand could quickly translate to growing sales.

Interested in investing on the trend? We list below the three U.S. winery & distillery stocks with market caps over $250 million trading on the U.S. stock exchange. Do you think their value will grow?

Interactive Chart: Use the Compar-O-Matic to compare analyst ratings for all the stocks mentioned below:

1. Beam, Inc. (BEAM, Earnings, Analysts, Financials): Engages in producing and selling branded distilled spirits products worldwide. Market cap of $8.17B. The stock has gained 9.11% over the last year.

2. Central European Distribution Corp. (CEDC, Earnings, Analysts, Financials): Produces, imports, and distributes alcoholic beverages in Poland, Hungary, and the Russian Federation. Market cap of $285.14M. This is a risky stock that is significantly more volatile than the overall market (beta = 2.26). The stock is currently stuck in a downtrend, trading -9.22% below its SMA20, -5.89% below its SMA50, and -50.35% below its SMA200. It’s been a rough couple of days for the stock, losing 14.78% over the last week.

3. Constellation Brands Inc. (STZ, Earnings, Analysts, Financials): Produces and markets alcoholic beverages primarily in the United States, Canada, and New Zealand. Market cap of $4.20B. Might be undervalued at current levels, with a PEG ratio at 0.77, and P/FCF ratio at 5.13. The stock has gained 3.85% over the last year.

(Written by Rebecca Lipman. Data sourced from Finviz.)

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