The beer market is set for strong growth in 2023, broker Jefferies said after three of the world's largest brewers - Carlsberg, Heineken, and Anheuser-Busch InBev - released upbeat results.
“We like beer as it is resilient in a weaker consumer environment and valuations are favourable,” said the US bank.
The analysts believe that beer as a category remains strong when the macro-outlook is tougher, with sales volumes during the global financial crisis only dipping by 1%.
“Brewers also trade at a cheaper rate compared to global staples, offering around a 20% discount,” the bank added.
AB InBev, which owns beers like Corona and Stella Artois, said in its full-year results that revenues were boosted by increased prices and consumers switching to premium brands, mirroring that of Heineken and Carlsberg.
All three of the stocks have rallied recently with both the Danish and Dutch brewers up more than 10% in the year to date, whilst AB InBev shares have risen 5% from a year-to-date low at the end of January, but still sitting 25% lower than at the start of 2020.
AB InBev appears “increasingly assured” and through the rollout of the South African Breweries subsidiary and new technological ventures, the company is well set for strong beer sales in 2023, according to analysts at the bank.
Jefferies added: “However, our preference is with the cheaper names, Heineken, and Carlsberg.
“Heineken is at the start of a multi-year change story where we see the company convert superior top-line growth into bottom-line development.”
Carlsberg is the banks pick however, due to its cost cutting potential in Western Europe, a strong exposure to China and a healthy balance sheet.