Alcoholic drinks stocks are nursing hangovers in the wake of the US surgeon general’s call (3 January) for more prominent warning labels on boozy drinks to raise awareness of their link to cancer. A report addressed a ‘direct link’ between alcohol consumption and an increased risk of cancer; according to the advisory, alcohol is the ‘third leading preventable cause’ of cancer in the US after tobacco use and obesity.

Already contending with the demand impact of cost-of-living pressures, consumers switching to alcohol-free tipples in droves and concerns over tit-for-tat tariffs involving the EU, US and China, alcoholic drinks names including Johnnie Walker-to-Smirnoff vodka maker Diageo (DGE), Jack Daniel’s distiller Brown-Forman (BF.B:NYSE) and wine and spirits powerhouse Pernod Ricard (RI:EPA) slid on the news.

The news also soured sentiment towards the likes of beer, wine and spirits producer Constellation Brands (STZ:NYSE), cognac maker Remy Cointreau (RCO:EPA) and brewing giants Anheuser-Busch Inbev (BUD:NYSE) and Heineken (HEIA:AMS).

The timing for Shares is inauspicious given we selected Diageo as one of our top stock ideas for 2025, although the market response has been relatively measured so far.

Investment bank Jefferies, commenting on the impact on Diageo, says: ‘On regulation, we take no view on the likelihood that alcoholic drinks carry health warnings linking alcohol to cancer in the US, however our view is unchanged that there are a number of key differences between the set up for alcohol and tobacco.’   

‘Health warning labels are well-established and effective approaches to increasing awareness of health hazards and fostering behaviour change. Considerable evidence supports the use of health warning labels, including promising evidence toward their role in raising awareness about alcohol-related risks,’ stated the advisory.

Surgeon general Vivek Murthy said: ‘Alcohol is a well-established, preventable cause of cancer responsible for about 100,000 cases of cancer and 20,000 cancer deaths annually in the US - greater than the 13,500 alcohol-associated traffic crash fatalities per year in the US – yet the majority of Americans are unaware of this risk.’

According to a 2024 World Health Organization (WHO) report, around 2.6 million annual deaths are due to alcohol consumption, and regulators and consumers are taking notice. In May 2023, Ireland became the first European Union country to mandate health labelling on alcoholic drinks and this law is expected to take effect from 22 May 2026.

Survey data from Nielsen shows that total wine consumption in France is down over 80% since 1945, with red wines in particular falling out of favour with health-conscious younger consumers. 

‹ Previous2025-01-09Next ›