Alcohol Stocks Fall After US Surgeon General’s Call for Cancer Warnings

Shares of major alcohol companies took a significant hit on Friday following a new advisory from the U.S. Surgeon General, Vivek Murthy, that highlighted the link between alcohol consumption and cancer. The advisory, which calls for cancer warning labels on alcoholic beverages, has raised concerns among investors and put the spotlight on the health risks associated with drinking.

The Surgeon General's Message

In his advisory, the Surgeon General emphasized the connection between alcohol consumption and certain types of cancer, including breast, colon, liver, mouth, and throat cancers. According to Murthy, the risk of developing some of these cancers increases even with low levels of alcohol consumption.

“For certain cancers, like breast, mouth, and throat cancers, evidence shows that the risk of developing cancer may start to increase around one or fewer drinks per day,” the advisory stated.

The announcement has reignited discussions about the potential dangers of alcohol, drawing comparisons to past campaigns to warn consumers about the risks of smoking. However, unlike tobacco, the decision to add warning labels on alcoholic beverages will ultimately rest with Congress, and it remains uncertain if or when these suggestions will be implemented.

Impact on Alcohol Stocks

The advisory had an immediate effect on the stock market, particularly on companies involved in the production of alcoholic beverages. Shares of both American and European alcohol manufacturers and brewers fell sharply after the announcement.

In the U.S., Jack Daniel’s parent company Brown-Forman saw its shares drop nearly 3%, hitting $37.10, their lowest point since April 2017. Molson Coors, known for its Coors Light beer, fell 4%. Meanwhile, Constellation Brands, the maker of Corona beer, experienced a 1.3% decline. Boston Beer, which produces Samuel Adams, suffered the steepest drop, falling nearly 6%—its biggest single-day decline since February 2023.

The decline wasn’t limited to American companies. In Europe, the world’s largest spirits maker, Diageo, saw its shares drop by 3%, marking their lowest value since mid-December. French spirits maker Pernod Ricard, known for Martell cognac and Absolut vodka, fell 3.2%. Similarly, Italian spirits group Campari and French cognac producer Remy Cointreau both saw their shares decline by about 3.8%.

Investors React

The reaction from investors reflects concerns about the potential long-term impact of the Surgeon General’s advisory on alcohol sales. If Congress decides to adopt cancer warning labels, it could lead to a shift in consumer behavior, particularly among health-conscious individuals.

However, some industry experts believe the impact may be limited. Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors, argued that Americans tend to believe that consuming almost anything in moderation is acceptable.

“Warning labels alone, much like those on cigarette packs, may have little effect on overall alcohol consumption,” Schulman said. His comments suggest that while the advisory might raise awareness, it’s unlikely to bring about significant changes in drinking habits without broader public health campaigns or stricter regulations.

Why This Matters

The Surgeon General’s call for warning labels comes at a time when public awareness of the health risks associated with alcohol is growing. Studies have increasingly shown that even moderate alcohol consumption can have serious health consequences, contradicting the long-held belief that a drink or two a day is harmless.

Cancer warning labels on alcoholic beverages could mark a significant shift in how alcohol is marketed and perceived. Similar to the warnings introduced on cigarette packaging decades ago, these labels could serve as a reminder of the potential risks, particularly for those who may not be aware of the connection between alcohol and cancer.

What’s Next?

While the Surgeon General’s advisory has sparked debate and rattled the stock market, the decision to implement cancer warning labels on alcoholic beverages is far from finalized. Congress will have to decide whether to act on these recommendations, and any potential changes could take months or even years to roll out.

In the meantime, alcohol manufacturers may face increased scrutiny from health organizations and consumers. Companies could also consider proactive measures, such as promoting moderation or investing in lower-alcohol alternatives, to address growing health concerns.

Conclusion

The U.S. Surgeon General’s advisory on alcohol and cancer has not only raised awareness about the health risks associated with drinking but also sent shockwaves through the stock market. While it remains unclear whether warning labels will become a reality, the announcement has reignited discussions about the role of alcohol in public health.

For now, alcohol companies will likely focus on reassuring investors and consumers while navigating the potential changes ahead. As the debate continues, the message from health officials is clear: even small amounts of alcohol can carry risks, and it’s important for consumers to stay informed about the choices they make.