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Celebrations of any kind call for a toast. Rightly, the Alcohol industry seems to be raising a toast to booming trends, albeit the negative promotions on the evils of drinking.

Recent observations reveal that alcohol sales trends have been witnessing a change, with a rise in demand for more flavored products like the honey and cinnamon flavored whiskeys and higher-priced tequilas. The industry has recently witnessed the spirits segment gathering momentum, accounting for about 36% of the total alcohol market, grabbing some share from beer and wine sales.

However, beer still accounts for 47% of the market share as craft beer and Mexican imports remained popular throughout 2016 and into 2017. In the 1990s, beer commanded about 60% of the total alcohol industry’s share. Moreover, wine currently holds nearly 17% market share.

Per the Distilled Spirits Council, the distilled spirits business witnessed 2.4% volumes growth to 220 cases in 2016. Supplier spirits sales were up 4.5% to $25.2 billion for the year.

American Whiskey Gets Popular

American whiskey, which includes Bourbon, Tennessee and Rye, has been getting popular among the U.S. consumers. The reason for this rise in popularity was change in customers’ preference toward new flavors. Volumes for American whiskey grew 9.8% in 2016, with sales improving 7.7% to $3.1 billion. This has been working well for spirit makers like Brown-Forman backing the Jack Daniels and Woodford Reserve brands.

In fact, Brown-Forman’s sales beat in the recently reported first-quarter fiscal 2018 was driven by strength in its premium American whiskey and tequila brands, along with its Jack Daniel’s trademark. Further, growth is likely to come from new product launches including the Jack Daniel's Tennessee Rye and Slane Irish Whiskey.

Craft Spirits Era is Here

Further, a recent trend analysis reveals that the craft beer segment has almost matured and spirits lovers are now looking for the craft essence in spirits. Evidently, the craft experiment of producers with the spirits is working and customers like it. Consequently, there has been a rise of craft distilleries in the industry. Further, big names like Constellation Brands are looking to explore the craft spirits segment.

Evidently, the company recently acquired and integrated High West Distillery, Charles Smith Wines and The Prisoner Wine Company brands, which marked its entry in the premium craft whiskey space. It also made small investments in Catoctin Creek Distilling Company and Bardstown Bourbon Company.

How Well is the Alcohol Industry Positioned?

The industry growth trends since the start of 2017 have been very appeasing. Markedly, the Alcohol industry recorded 18.9% growth year to date, comfortably outpacing the 10.5% upside of the S&P 500 market.



Further, the Zacks Industry Rank is 17 (out of 256) places it at the top 7% of the Zacks Classified industries.

Alcohol Stocks Worth Buying Now

All said, we hand-picked five Alcohol stocks that are positioned to benefit from the ongoing industry trends. These stocks are backed by sound fundamentals, Zacks Rank #1 (Strong Buy) or 2 (Buy), surging share price and a track record of better-than-expected results.

First on the list is The Boston Beer Company Inc. (SAM - Free Report) , the largest craft brewer in the United States producing beer, malt beverages, and cider products at company-owned breweries and under contract. The company currently sports a Zacks Rank #1 and has a Growth Score of A. Earnings estimates have witnessed an uptrend in the last 30 days with estimates for the current fiscal year trending up 4.6%. Also, the stock surpassed estimates by an average of nearly 50% in the trailing four quarters. Moreover, the stock has gained a solid 14.9% quarter to date, outperforming the industry’s 8.6% growth.



Another lucrative option is Craft Brew Alliance, Inc. (BREW - Free Report) . This Portland, OR-based producer and seller of craft beers and ciders, has a Growth Score of B and flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Moreover, the company has recorded an average positive earnings surprise of 222.7% in the preceding four quarters. Estimates for the current fiscal have moved up in the last 30 days. The estimate was revised from a loss of 5 cents per share to earnings of 9 cents. Further, the stock grew 4.4% in the past month, outperforming the industry’s 1.3% upside.



Investors can also count on Brown-Forman Corporation (BF.B - Free Report) , a major producer and distributor of premium alcoholic beverages in the world. This Louisville, Kentucky-based company has delivered an average positive earnings surprise of 2.7% in the trailing four quarters. Moreover, this Zacks Rank #2 stock has gained 4.7% in a month, outperforming the industry’s 1.4% growth.



Next comes Victor, NY-based Constellation Brands Inc. (STZ - Free Report) , which is the largest wine company in the world with a strong portfolio of premium wine brands, complemented by spirits, imported beer and other select alcoholic beverage products. The company has a solid track record of delivering positive earnings surprises with an average beat of 11.7% in the trailing four quarters. Further, this Zacks Rank #2 stock has a long-term earnings growth rate of 18.2%. It has witnessed positive estimate revisions for the current quarter, with estimates trending up 1% in the last 30 days. Additionally, the stock has witnessed a solid 29.4% growth year to date, outperforming the industry’s 18.9% upside.



Last but not the least, investors may consider Compania Cervecerias Unidas, S.A. (CCU - Free Report) , a beverage company principally operating in Chile, Argentina, Bolivia, Colombia, Paraguay, and Uruguay. It produces and sells alcoholic and non-alcoholic beer under proprietary brands and licensed brands; cider and spirits; and wines. The company currently carries a Zacks Rank #2 and a Growth Score of A. Earnings estimates for the current fiscal have witnessed an uptrend in the last 30 days, moving up nearly 1%. Moreover, the stock has gained a 33.8% year to date, outperforming the industry’s 18.9% growth.



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