What’s the Best Whiskey Stock? STBFY, DEO & BF.B

Whiskey has become increasingly cool and popular thanks to the whole cocktail movement, something that's good for big whiskey stocks like Suntory Beverage & Food Limited (OTCMKTS: STBFY), Diageo plc (NYSE: DEO) and Brown-Forman Corporation (NYSE: BF.B) who also produce a wide variety of liquors and beverages. In fact, a recent episode of the Daily Ticker cited these stats from a USA Today article:

US whiskey exports exceeded $1 billion in 2013, up from $400 million just a decade ago. Whiskey sales rose 10.2% in 2013, according to the Washington-based Distilled Spirits Council. Reversing a two-decade long decline in its share of the US alcohol market, whiskey has gained 6 percentage points since 2000, to 34.7%.

However, there are some problems with whiskeys increased popularity – mainly the fact that it must be aged a certain number of years in barrel and lately we are drinking whiskey faster than the distillers can produce it. There's also a shortage of American oak to make barrels with that's expected to last for a year or two.

In addition, all whiskey is distilled from fermented grain mash but it's the location of production, the aging process and selected ingredients that are the key differences between whiskey, bourbon and scotch. Right now, "Tennessee whiskey" must be aged in a new, charred oak barrel but Diageo plc, the owner of the George Dickel Tennessee whiskey brand, is trying to get that law change to allow whiskey aged in used barrels to qualify for the label (see: Fight rages over definition of Tennessee whiskey)

With that in mind, here is a quick look at three important whiskey stocks or whiskey players:

Suntory Beverage & Food Limited. A soft drinks company with an integrated platform in four key regions (Japan, Europe, Oceania and Asia), Japan based Suntory Beverage & Food acquired Beam Inc (NYSE: BEAM) for $16 billion (a 25% premium) earlier this year (the sixth-largest ever in the beverage industry) to form the world's third largest premium spirits company. Beam Suntory's brands or products include the flagship Jim Beam bourbon and Yamazaki Japanese whisky, as well as world renown premium brands including Maker's Mark and Knob Creek bourbons, Hakushu and Hibiki Japanese whiskies, Teacher's, Laphroaig, and Bowmore Scotch whiskies, Canadian Club whisky, Courvoisier cognac, Sauza tequila, Pinnacle vodka and Midori liqueur. Beam Suntory generates annual worldwide sales of approximately $4.6 billion (excluding excise taxes). The deal was made in part because of Japan's aging population means Japanese companies need to look overseas for growth while a strong Yen last year has helped to fuel acquisitions. It should be noted though that while Suntory Beverage & Food Limited's stock does trade on the OTC in the USA, volume over the past two months has ranged from a low of 9,740 shares to a high of 761,630 shares. On Tuesday, Suntory Beverage & Food Limited rose 1.42% to $19.33 (STBFY has a 52 week trading range of $15.25 to $19.43 a share) for a market cap of $11.78 billion plus the stock is 18.9% since the start of the year and up 13.7% since October 2013.

 

Diageo plc. One of the world's leading premium drinks business, London based and listed Diageo plc's brands include Johnnie Walker, Crown Royal, J&B, Windsor, Buchanan's and Bushmills whiskies, Smirnoff, Ciroc and Ketel One vodkas, Baileys, Captain Morgan, Tanqueray and Guinness. Trading in approximately 180 countries and with offices in 80 countries, Diageo plc also has manufacturing facilities across the globe including in Great Britain, Ireland, United States, Canada, Spain, Italy, Africa, Latin America, Australia, India and the Caribbean. Near the end of May, Diageo plc announced its intention to invest an estimated $115 million over three years to build a 1.8 million proof gallon (750,000 9-liter cases) distillery and six barrel storage warehouses in Shelby County, Kentucky. The announcement noted that over the last year, Diageo plc's momentum in North American Whiskey has accelerated with both flagship and new-to-world brands. On Tuesday, Diageo plc rose 0.22% to $128.44 (DEO has a 52 week trading range of $111.87 to $134.08 a share) for a market cap of $80.61B plus the stock is down 2.2% since the start of the year, up 9.1% over the past year and up 129.4% over the past five years.

Brown-Forman Corporation. Founded in 1870 by George Garvin Brown in Louisville, KY, whose original brand, Old Forester Kentucky Straight Bourbon Whisky, was America's first bottled bourbon, Brown-Forman Corporation is one of the largest American-owned spirits and wine companies and among the top 10 largest global spirits companies – selling its brands in more than 135 countries. Geo. Garvin Brown IV, a descendant of the founder, is also part of the 5th generation of Brown Family members involved with the company and serves as the Presiding Chairman of the Board. Back in early June, Brown-Forman Corporation reported a that fiscal 2014 sales of Jack Daniel's rose 8% thanks to the rising popularity of Jack Daniel's Tennessee Honey with the CEO commenting:

"We are pleased to report another fiscal year of excellent organic growth, particularly in light of the moderating growth rates of our global competitors. I believe that our leadership position in premium American whiskey, led by the one and only Jack Daniel's trademark, and a very balanced geographic contribution, underpin the company's differentiated performance. We remain optimistic about the organic growth prospects for Brown-Forman, and our investment posture and fiscal 2015 earnings outlook reflect that optimism."

On Tuesday, Brown-Forman Corporation rose 0.16% to $93.97 (BF.B has a 52 week trading range of $66.41 to $94.86 a share) for a market cap of $20.04 billion plus the stock is up 24.4% since the start of the year, up 34.4% over the past year and up 102.9% over the past five years.