Alcohol Stocks Plummet as Surgeon General Warns of Cancer Risks

According to the CDC, "alcohol is the most common substance used among people 12 and older in the United States." And it is the leading cause of preventable death in the US. This, along with new research linking alcohol to a variety of cancers, led the US Surgeon General, Vice Admiral Vivek Murthy, to state that alcohol should carry a warning label like cigarettes.

As alcohol stocks dip, other winners emerge. Here is what you should know for your health - and investment portfolio. Daria Kulkova from Getty Images

Tumultuous Stocks and An Uncertain Future

Friday made for a turbulent day for major alcohol producers' stocks, including Molson Coors, Anheuser-Busch InBev, Diageo, Boston Beer Co. Inc., and others.

As of Friday afternoon, these stocks had dropped between -0.29% (Constellation Brands Inc.), and -3.86% (Boston Beer Co. Inc.). As always, predicting future investor and consumer moves remains unclear. Will the Surgeon General's warning actually change consumer behavior? Daniel Balakov from Getty Images Signature

The Link Between Alcohol and Cancer

Friday morning's advisory stated that alcohol consumption is the "third-leading preventable cause of cancer in the United States."

According to the CDC, alcohol causes about 178,000 deaths each year, or about 20 people every hour. Alcohol-related deaths shorten lives by an average of 24 years. About two-thirds of those alcohol-related deaths are from chronic conditions that develop from consuming alcohol over time.

It went on to cite scientific evidence showing a causal relationship between alcohol use and increased risk for at least seven different types of cancer, including breast (in women), colorectum, esophagus, liver, mouth, throat, and voice box. Thirdman from Pexels

Fighting Alcohol Cancers: Education, Labels Proposed

In his statement, Murthy said, "This Advisory lays out steps we can all take to increase awareness of alcohol’s cancer risk and minimize harm."

Murthy's proposed actions to reduce alcohol-related cancers in America include boosting education about the risk, reassessing recommended limits, and adding a warning about cancer risk to the Surgeon General’s warning label on alcohol. The authority to update the Surgeon General's warning label lies with Congress. djedzura from Getty Images Pro

Will New Cancer Warnings Change Drinking Habits?

In terms of alcohol stocks expected to take the most significant hit, it's an even spread across beer, wine, and spirits. According to a Gallup poll from August 2024, America's choice of alcohol was nearly equally spread between beer (34%), wine (33%), and liquor (29%), meaning stocks in all three types of companies could take a hit.

However, whether an advisory is enough to change behavior remains to be seen. The advisory stated that already about 45% of Americans knew alcohol had a cancer risk.

Kate Bernot, a lead analyst at Sightlines, which researches the alcohol space, told Business Insider: "Maybe some people change their behavior, but I don't think we're going to see population-level dramatic shifts in alcohol consumption." Pavel Danilyuk from Pexels

NA Beverages Poised to Gain as Alcohol Health Risks Highlighted

With non-alcoholic beverages growing in popularity, some companies could benefit long-term from these warning labels. However, many of the big producers already have alcohol-free options that could take up a larger portion of their portfolio, such as a non-alcoholic version of Corona beer.

Tom Santangelo of the non-alcoholic spirit brand Spiritless stated that this is the beginning of a tipping point toward more non-alcoholic beverage consumption. Santangelo said, "My guess is that for a lot of Americans, this Surgeon General statement is kind of the message they need to come to a realization that this is something serious." atlasstudio