Beer prices to rise north: 5 stocks you can add to your watchlist

Highlights

• According to a recent analysis of Office of National Statistics (ONS) data, the UK could be left with only 5,000 or less nightclubs.
• UK’s pubs bosses warned that the cost of beer is set to rise by 50p as the sale tend to decrease but the business costs are rising.

The hospitality sector is one of the worst-hit sectors in the last two years due to various reasons, such as Covid-19, HGV driver shortages, supply chain crisis, shortage of carbon dioxide, higher raw material prices.

According to a recent analysis of Office of National Statistics (ONS) data by two software startups, Storekit and Stampede, the hospitality sector has grown by around 10,000 businesses since March 2019, but the number of bars, pubs and clubs have declined during this period, especially due to the pandemic-related issues.

The analysis predicted that in the next few quarters, the UK could be left with only 5,000 or fewer nightclubs in operation. The declining trend has been there since 2010 when there were around 10,040 registered clubs. By 2015, the numbers had fallen to 8,370. At present, there are just 6,985 nightclubs.

Recently, UK’s pub bosses warned that the cost of beer is set to rise by 50p as the sales were showing a downtrend, but in contrast the business costs were rising. The worst rise in price will be seen in London as pub inflation has now surged by 10%, which will increase the prices by 40-50p. However, some pubs in London have already increased the prices to over £6.

According to British Beer and Pub Association, beer lovers pay an average price of £4.07 in the UK, while Londoners pay an average price of £4.84. In order to contain the rising beer prices, hospitality operators are urging for a permanent reduction in value-added tax (VAT) to remain at 12.5% ahead of a rise of over 20% in the spring.

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Let us now look at FTSE alcoholic beverage stocks.

1. C&C Group Plc (LON: CCR)

The company manufactures and distributes beer, wine, and spirits in the UK, Ireland, and other European countries. The market cap of the FTSE 250-listed company stands at £891.07 million, and it has given a negative return of 4.92% to its shareholders in the last one year and its year-to-date return stands at -3.36% as of 27 January 2022. C&C Group Plc’s shares were trading at GBX £225, down by 0.79%, at 8:03 AM (GMT), on 27 January 2022.

2. Diageo Plc (LON: DGE)

Diageo Plc is the world’s largest producer of spirits and beers, which sells beverages under various brand names. The market cap of the FTSE 100-listed company stands at £84,646.32 million, and it has given a positive return of 25.70% to its shareholders in the last one year and its year-to-date return stands at -9.39% as of 27 January 2022. Diageo Plc’s shares were trading at GBX £3,667, up by 0.62%, at 8:05 AM (GMT), on 27 January 2022.

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3. Young & Co’s Brewery Plc (LON: YNGA)

Young & Co’s Brewery Plc is a pub chain operator, engaged in management and operation of pubs and hotels across London and the South of England. The market cap of the AIM-listed company stands at £522.97 million, and it has given a positive return of 25.62% to its shareholders in the last one year and its year-to-date return stands at -2.56% as of 27 January 2022.  Young & Co’s Brewery Plc’s shares were trading at GBX £1,520, up by 0.33%, at 8:05 AM (GMT), on 27 January 2022.

4. Fevertree Drinks Plc (LON: FEVR)

Fevertree Drinks Plc is the world’s leading developer and supplier of premium mixed drinks. The market cap of the AIM-listed company stands at £2,750.58 million, and it has given a negative return of 6.63% to its shareholders in the last one year and its year-to-date return stands at -20.61% as of 27 January 2022. Fevertree Drinks Plc’s shares were trading at GBX £2,203, down by 6.55% at 8:05 AM (GMT), on 27 January 2022.

5. The Artisanal Spirits Company Plc (LON:ART)

The Artisanal Spirits Company Plc owns the leading curator and provider of premium single cask Scotch malt whisky for sale, The Scotch Malt Whisky. The market cap of the AIM-listed company stands at £66.13 million, and it has given a positive return of 2.61% to its shareholders in the last one year and its year-to-date return stands at -1.04% as of 27 January 2022. The Artisanal Spirits Company Plc’s shares were trading at GBX £95, down by 2.63% at 8:05 AM (GMT), on 27 January 2022.

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