Wall Street Doesn’t Like the Look of Mid-Sized Brewers

By Mike Pomranz |
FWX IPA BEER HOPS_0

Unless you get all your news from TMZ, you’ve probably seen that the stock markets had a turbulent week. Though hopefully Wall Street is already on the mend, investors seem unsure where things are headed next.

But yesterday, financial information services provider Markit suggested there’s one industry that’s evoking a bit more consensus – the brewing industry. Unfortunately it isn’t good news for many of these brewers. Wall Street is betting with confidence that the stocks of mid-sized brewers are going to continue to tumble.

As evidence of their theory, Markit points to a few major statistics. First, short sellers – people who are essentially looking for a stock price to drop – have tripled their positions in brewers Carlsberg and Molson Coors. (Yes, these brewers are huge by most people’s standards, but they’re certainly not as big as companies like Anheuser-Busch InBev or SABMiller.) Yet, despite this, the Boston Beer Company (maker of Sam Adams) is currently the most shorted brewery worldwide. Finally, another mid-sized brewing company, Craft Brew Alliance, owners of brands like Redhook, Widmer and Kona, has seen its stock fall by nearly half in the past year, eliciting plenty of short interest over that time.

Markit believes these mid-sized brewers are being targeted for good reason. The companies in the middle of the market are getting squeezed at both ends: Major brewers are better diversified and have more leverage, while smaller brewers are still finding their niches and grabbing market share.

For beer drinkers, all this investment talk doesn’t mean a ton. Just because people are predicting Sam Adams’ stock price to drop doesn’t mean you suddenly won’t be able to find their Rebel IPA. But it could speak to the possibility of more buyouts or consolidation in the future.

It all seems like a lot to think about, so next time you’re in the bar, go with an easier topic instead, like religion or politics.

[h/t Wall Street Journal

Related: The United States of Beer: Who Really Owns Your Favorite Brewery? 
7 Bizarre Beer Laws You Won't Believe Are on the Books 
List of Top Craft Brewers Sees Some Major Shakeups

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