Big Alcohol Stocks Experience a Hangover After Surgeon General's Cancer Warning

Remember when your mom told you that if it’s fun, it’s probably bad for you? Well, she might’ve been onto something. The U.S. Surgeon General just went full “lifeguard blowing the whistle at a pool party” on the alcohol industry, proposing cancer warning labels that left Wall Street staggering like it had one too many at happy hour.

European and American booze makers got absolutely hammered on Friday (pun absolutely intended). Jack Daniel's parent company Brown-Forman fell 3%… to levels not seen since 2017. At the same time, Diageo (the folks behind everything from Captain Morgan to fancy Scotch) watched their stock tumble 3.7%.

But wait, it gets worse… The alcohol industry’s already nursing a hangover from a brutal year. Total sales are down 6%, so this cancer warning hits like a bad Yelp review for a restaurant on its last legs. Wine sales have dropped 8%, and spirits are down 3.9%. I guess Gen Z woke up one day and swapped happy hour for kombucha and yoga retreats.

The Surgeon General (Vivek Murthy, aka the nation's designated driver) dropped this sobering bomb: drinking as little as one drink per day might increase your risk of certain cancers. You know it's bad when even your "glass of red wine a day keeps the doctor away" excuse gets canceled. 

Our nation's top doc is talking a huge increase in risk – we're looking at some serious numbers here. Alcohol is apparently the third-leading preventable cause of cancer, right behind tobacco and obesity. We're talking about 100,000 cancer cases annually that are alcohol-related, with 16.4% of breast cancer cases linked to alcohol. Someone might want to tell that to all the "wine mom" Instagram accounts.

The market reaction wasn’t smooth at all. Constellation Brands (Corona's parent company) lost $450M in market cap in a blink of an eye. Molson Coors dropped 2.7% and Anheuser Busch fell 2% and is still recovering from that whole Bud Light situation. Even fancy European brands like Pernod Ricard and Remy got kicked in the balls, down 3% and 4.5%.

But before you pour one out for Big Alcohol, remember this: Congress still needs to approve these warning labels. As Michael Ashley Schulman from Running Point Capital Advisors pointed out (in what I assume was his "I've seen this movie before" voice): "Most Americans tend to believe that nearly everything is okay in moderation, thus much as warning labels alone on cigarette packs did little to curb public smoking, I expect warning labels on alcohol to have little effect."

Bottom line: Wall Street's treating this news like a surprise intervention, but whether it leads to actual change or just becomes another thing we all pretend to read on the label remains to be seen. (You know the answer).

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Stock.News has positions in Diageo, Constellation Brands, Yelp, Molson Coors, Anheuser Busch, and Meta mentioned in article.