Making bucks from booze

If you’ve ever wandered around a town in the UK after 5 pm, you’ve likely noticed something; British people like to drink.

In fact, a recent study by the Organisation for Economic Co-operation and Development (OECD) found that the average Brit consumes 9.7 litres of pure alcohol a year.

That translates to 427 pints of beer every twelve months.

As fun as it might be, all that drinking is costly.

Buying a pint in the UK is likely to set you back around £4. Multiply that by 427 and it’s easy to see how so many of us are spending more than £1,300 a year at the pub.

We get it. There’s nothing better than having a pint after work on Friday. But what if you could get a little something in return for all that drinking?

Investing in pubs and beverage companies could allow you to do that.

Here are five firms, all accessible on the Freetrade app, that work in the booze business.

Diageo

You may not have heard of Diageo but if you’ve had a shot of Smirnoff or sipped a pint of Guinness, then you’ve consumed one of the company’s products.

The London-based firm is one of the biggest producers of alcoholic beverages in the world and is currently listed on the London Stock Exchange.

Diageo is also having a bumper year, with its share price up 12.41% so far in 2019.

That means a £500 investment at the beginning of January would have netted you £62.05 in returns.

Fullers

People have been brewing beer at Fullers’ west London headquarters for over 300 years but it wasn’t until 1845 that the company took on its famous name.

Originally a brewer and pub operator, the company sold its eponymous beer business to Japanese firm Asahi in January of 2019.

That means Fullers has now been left to run close to 400 pubs and, if this year is anything to go by, they haven’t been doing a bad job.

The pub operator’s shares have increased in value by just under 10% this year.

That means a £500 investment could have left you with around £50 in your pocket — that’s enough for a bottle of fancy wine and a bus ride home. :wine_glass:

Mitchells and Butlers

Like Diageo, Mitchells and Butlers is a business that many people aren’t familiar with but whose coffers they regularly contribute to.

The company operates O’Neill’s, Vintage Inns and, the bane of every office worker’s existence, All Bar One.

Mitchells and Butlers’ origins can be traced back to the late 19th century. In 1898, two brewers — William Butler and Henry Mitchell — decided to merge their businesses.

The company sold off its brewing business in 1961 but it continues to operate around 1,700 pubs and restaurants across the UK.

And this year investors were very upbeat about the company’s performance.

The firm’s shares are up a whopping 71.69% in 2019.

That means a £500 investment on the first of January would have seen your shares increase in value by £358.42.

For those of you that don’t want to do the maths, that translates into about 90 pints. :beers:

That high level of growth appears to have been driven by speculation that the pub operator may soon be acquired by another company — so if you do decide to invest, be aware that your returns may not be as high as they could have been this year.

Wetherspoons

Who doesn’t love Wetherspoons? From builders to bankers, you can find a host of characters sipping beers at the company’s budget pubs on a Friday night.

The chain was founded in 1979 by Tim Martin and the Watford-based business now operates close to a thousand pubs across the UK.

Martin, a mullet-wearing Brexiteer, is still the company’s CEO. He also makes regular visits to his pubs across the UK to make sure that all is in order.

You may not like his politics but investors love his company. Wetherspoon stock is up 6.50% this year.

Had you put £500 into the firm at the start of 2019, you’d be £32.50 better off. That’s more than enough for a night out at one of Mr Martin’s establishments.

Young & Co’s.

As with some of its competitors, Young’s started out as a brewery. It’s thought that people were brewing beer at the company’s south-west London headquarters as far back as 1550.

But the firm also sold off its brewing business in 2006, with the final batch of beer being served at the funeral of a former company chairman.

Since then the company has focused its efforts on running more than 200 pubs across Britain.

Young’s hasn’t seen any drastic increases in its share price in 2019 but the pub operator’s stock is still 4.82% more valuable than it was at the beginning of the year.

So if you’d put £500 into Young’s shares at the start of this year, you’d be £24.10 better off.

Not too shabby at all.

Invest with care!

It goes without saying that not all investments are destined to make you money.

Fortunately for them, the companies we’ve discussed in this post have all seen solid increases in their stock prices over the past year.

But that doesn’t mean they’re dead set to do the same in the months ahead.

So before you buy any stocks, make sure you do some research and that you’re aware of the risks involved.

And if you do manage to make some money, remember to have a cold one for us.

Cheers! :beers:

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While their share price has been up and down the last two years, the biggest winner in the booze-adjacent space in the last five have been Fever Tree. Why make a fancy gin like everyone else when you can make the only fancy tonic?

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Why couldn’t this have been a weekend email instead of retiring it :cry:

I also learned about Diageo just under a week a go! Was speaking to my grandad and turns out he has a few shares in them that were passed on to him. Not too shabby :slightly_smiling_face:

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That’s insane, more than a pint a day on average. I thought i drink more than the average person, but i don’t drink that much.

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We are starting to publish similar articles more often, and it may be in the very near future, but I’ve already said too much. :face_with_hand_over_mouth:

There must be a story there!

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I know!

9.7 litres of pure alcohol a year is 108 bottles of wine or 427 pints of 4% strength beer.

This is an average that masks segments, a low number of people are teetotalers like yours truly, and there must be segments of various consumption levels.

There are different cohorts based on age as well, at least by looking at one data point, the number of people starting treatment for alcohol problems:

The number of over 65s beginning NHS treatment for alcohol problems has doubled in the past decade, with 4,328 cases in 2018/19, up from 2,134 cases in 2008/9. Meanwhile a fall in drinking among younger generations has seen the number of 18 to 24 year olds starting treatment fall by 76 per cent, the Public Health England figures show.

Source: Boozy Britons are drinking 108 bottles of wine a year - far more than the rest of the western world

Let us know what you think of the various data points and trends. Are you investing in drinks companies?

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iirc he said a relative of my grandma’s invested into a few companies, so when he passed away she inherited them. When we lost her to cancer naturally the shares were transferred to him.

I can’t remember much more than that or what other shares he has, but Diageo stood out to me for some reason.

Edit. I’ll try asking him more when I next see or speak with him, but that might not be for a while due to distance :pensive:

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Green king used to give shareholder reward vouchers every year if you held X number of shares.

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Interesting numbers there, also quite scary to see how many people get ill because of the stuff.

I don’t drink either, and have seen first hand (aligning with the data) that a lot more people-especially younger generation who feel that (based on greater awareness?) alcohol is detrimental to themselves so they never start. I don’t know if this means that at least the UK market for alcohol will start to shrink, and go the way of tobacco and try and diversify with some sort of synthehol.

Anyway, I’ve stayed away from booze/tobacco heavy stocks as I don’t see them as a long term investment for myself. Although I do have other stocks such as restaurants and entertainment that do rely on alcohol for a part of their income.

I guess that’s just my view, and seeing the numbers from 2019 that these companies are doing moderately to very well, I could be very wrong :sweat_smile: (although, the market in general was very deflated at the start of the year)

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I’m not really a big alcohilic drinks connoisseur, so that area isn’t that exciting to me. And it’s also at risk these days of more regulation, i think.

Stuff like maccy d’s is more attractive to me, i eat there, i know where they’re about. I probably wouldn’t invest in alcohol or tobabco, nor fossil fuels.

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Forgot about those guys. They were publicly traded until being acquired by Li Ka Shing’s CK Asset Holdings earlier this year for £4.6B. Shares went up 50%.

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From a quick look at my favoured fundamentals, Fullers looks the best value. One I’ll look into futher. Perhaps some on the ground research is needed…

Name ISIN ukSymbol ukDividendYield Market Cap (£m) Profit Before Tax (£m) MCAP / PBT Net Current Assets (£m) Net Assets (£m) (MCAP - NCA) / PBT
Wetherspoons GB0001638955 JDW 0.75 1,668.57 95.42 17.49 -238.1 316.81 19.98
Diageo GB0002374006 DGE 2.15 74,849.67 3923 19.08 2370 8361 18.48
Fullers GB00B1YPC344 FSTA 2.08 313.95 26.1 12.03 -1.5 338.5 12.09
Mitchells & Butlers GB00B1FP6H53 MAB 0.16 1,969.75 130 15.15 -302 1769 17.48
Young & Co’s GB00B2NDK989 YNGN 1.79 727.8 39.5 18.43 -29.9 593.4 19.18

Divdiend yield from Welcome to FinKi
Other figures from https://www.londonstockexchange.com

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It would be nice to have it here then Shareholder Perks

Thanks Greene King are no longer listed.

Me. For me you can’t beat a traditional pub. Especially if you live / work in London with the finest selection of taverns on the planet - no need to step into a Spoons.

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Which ones are your favourites?

Tough one :thinking:

Local / traditional :
Birkbeck Tavern E11 ( handy for Orient matches, if you want food best pop up the road to The Northcote … )
Hipster : Euston Tap ( anything you can think of it’s here )
Tourist : Red Lion, Parliament St ( used to see a lot of famous faces here back in the day )

Remember: drink in moderation :wink:

( I remember doing a ‘Monopoly’ pub crawl in the mists of time which would leave me bedridden for a month these days )

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Haha Jim, the classic pub crawls. I went as the dice to the monopoly pub crawl and got pushed around a lot… It’s always fun at the beginning!

I definitely like my drinking establishments to have extra activities, used to be just pool and darts and occasionally live acts, now they are getting really elaborate with games- board games, arcades, electronic darts, table tennis, shuffle board etc etc.

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