The stock values of European and American alcohol producers took a hit on Friday following a statement from the US Surgeon General, Vivek Murthy, advocating for cancer warnings on alcoholic beverage labels. Murthy’s advisory highlighted the increased risk of developing various types of cancer, including breast, colon, and liver, associated with alcohol consumption.
The advisory further stated that the risk of developing certain cancers, such as those of the breast, mouth, and throat, may start to increase with the consumption of one or fewer drinks per day. This announcement led to a decline in the shares of several major alcohol manufacturers.
Brown-Forman, the parent company of Jack Daniel’s, saw its shares drop by 2.5% to $36.25, marking their lowest point since April 2017. Molson Coors, the maker of Coors Light beer, experienced a 3.4% fall in its shares. Meanwhile, Constellation Brands, known for Corona beer, saw a less than 1% decrease, and Boston Beer’s shares slumped by 3.8%, marking its most significant drop since February of the previous year.
The timeline for the implementation of the Surgeon General’s recommendations remains uncertain. The final decision to update the labels will be made by Congress. However, some industry experts are skeptical about the potential impact of these warning labels.
Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors, expressed doubt about the effectiveness of such measures. He compared it to the limited impact of warning labels on cigarette packs in curbing public smoking, suggesting that warning labels on alcohol might have a similarly minimal effect.
European alcohol producers also felt the impact of the Surgeon General’s advisory. Shares in Diageo, the world’s leading spirits maker, fell by 3.9% to their lowest since mid-December. French spirits maker Pernod Ricard, owner of brands like Martell cognac, Mumm champagne, and Absolut vodka, saw a 3.1% decrease in its shares. Other European companies, including Remy and Italian spirits group Campari, experienced around a 5% drop in their shares.
Brewers were not spared either. Anheuser-Busch InBev, the maker of Budweiser, saw a 2% drop in its shares, while Heineken and Carlsberg experienced a decrease between 0.8% and 1.8%.