Shares of European and American spirits makers and brewers fell on Friday after the US surgeon general called for cancer warnings on the labels of alcoholic drinks.
The consumption of alcoholic drinks increases the risk of developing breast, colon, liver and other cancers, US Surgeon General Vivek Murthy said in an advisory.
“For certain cancers, like breast, mouth, and throat cancers, evidence shows that the risk of developing cancer may start to increase around one or fewer drinks per day,” according to the advisory.
Shares of Jack Daniel’s parent Brown-Forman slipped nearly 3% to $37.10 in morning trading, hitting their lowest since April 2017, while Coors Light beer maker Molson Coors fell 4%.
Constellation Brands, the maker of Corona beer, was down 1.3% while Boston Beer slumped nearly 6%, its biggest drop since last February.
It is unclear when or if the surgeon general’s suggestions will be implemented. The decision to update the label will ultimately be made by Congress.
“Most Americans tend to believe that nearly everything is okay in moderation, thus much as warning labels alone on cigarette packs did little to curb public smoking, I expect warning labels on alcohol to have little effect,” said Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors.
In Europe, shares in the world’s top spirits maker Diageo were down some 3% to their lowest since mid-December, after falling as much as 4.1% earlier.
French spirits maker Pernod Ricard, which owns Martell cognac, Mumm champagne and Absolut vodka, was down around 3.2%, while its peer Remy and Italian spirits group Campari were both down around 3.8%.
Brewers were also hit, with Budweiser maker Anheuser-Busch InBev down around 2%, and Heineken and Carlsberg down between 1% and 1.5%.
Alcohol stocks take a hit as US surgeon general pushes for cancer warnings
The alcohol industry is feeling the heat as the US surgeon general has called for cancer warnings on all alcoholic beverages. This news has sent alcohol stocks tumbling as investors worry about the potential impact on sales and consumer perception.
The surgeon general’s recommendation comes as part of a broader effort to raise awareness about the link between alcohol consumption and various types of cancer. Studies have shown that even moderate alcohol consumption can increase the risk of developing cancer, particularly in the mouth, throat, esophagus, liver, and breast.
While the alcohol industry has long been aware of these risks, the surgeon general’s call for explicit warnings on packaging could have significant implications for the industry. Consumers may think twice before reaching for that glass of wine or beer if they are reminded of the potential health consequences.
As a result, alcohol stocks have taken a hit, with some companies seeing their share prices drop by as much as 10%. Investors are concerned about the long-term impact on sales and profitability, especially if more stringent regulations are put in place in the future.
It remains to be seen how the alcohol industry will respond to the surgeon general’s recommendations, but one thing is clear: the push for cancer warnings is shaking up the industry and causing some uncertainty among investors.
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