This has also impacted investors, as the MSCI Europe Beverage index rose 8% over the past two months. Christophe Barraud, the Chief Economist, Strategist, and Bloomberg top forecaster, explained on August 11 that the beverage sector, usually highly valued, reached its most expensive level in 17 years as prices increased relative to the broader market.
Beverage market growth
Like all global beverage markets, the European one was also heavily impacted by the onset of Covid-19 and lockdowns, hurling multiple obstacles at the industry. Moreover, beer consumption has been trending down primarily due to the aging population in the EU and younger generations drinking less; as per Mordor Intelligence, beer sales in Europe plunged by 42% in 2020. On the other hand, there is an increasing demand for craft beer. Overall, the beverage industry is projected to grow at a 3.5% compound annual growth rate (CAGR), with Germany dominating the beverage market. As retail prices have not fully adjusted to the rising inflationary shocks across Europe, buyers can expect that producers will pass on higher raw materials costs to the end consumers. This could indicate that the beverage producers have more room to run, but investors looking to enter need to be cautious as lofty valuations frequently don’t last for long. Buy stocks now with Interactive Brokers – the most advanced investment platform Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
