Apparently there was a lot to celebrate last week, as brewers and distillers posted large gains while Latin American beverages gained favor. Anheuser-Busch InBev (NYSE:BUD) was negotiating with regulators over the approval of its acquisition of the other half of Grupo Modelo -- Mexico's largest beer maker -- that it doesn't own, no doubt also helping to push its Brazilian business Companhia de Bebidas das Americas, or AmBev, higher too.

Yet it wasn't just brewers that were bubbling higher. Distillers such as Constellation Brands (NYSE:STZ) and Brown-Forman also had their cups running over last week.

A model merger?
It's easy to understand why Constellation might be running higher. When Bud announced its plans to acquire Modelo last year, it said it would use Constellation's distribution network for Modelo, too. While Constellation already imports Modelo and its sister brew Corona, A-B was hoping to blunt any objections regulators might have to the acquisition. With a massive distribution network of its own, Bud realizes the fears that it would control so much of the market and have the ability to influence beer prices. Constellation is enjoying a surge in business of its own, with sales rising 9% last quarter as wine and spirits grew 6% organically.

Anheuser-Busch is willing to negotiate with the Justice Department, but apparently it's not willing to give up everything simply to close the deal. If regulators require a sale of its new, state-of-the-art Piedras Negras brewery, for example, it's said Bud will just walk away from the deal or take it to court. It believes that by allowing Constellation to import the beer and set the distribution and pricing, that should make it far enough removed from the equation to allow the merger to go through.

Where's the heady growth?
The beer industry has been flat lately. U.S. beer sales dropped 1.3% in 2011, according to the Brewers Association, while the Beer Institute says sales rose just 1.9% over the first eight months of 2012. But that masks the impact craft beer has played in keeping the industry afloat. The craft-beer segment grew 13% in 2011 by volume and 15% in dollar terms, while over the first six months of 2012 volumes were 12% higher and dollar sales are up 14%. Even though craft brewers account for just 5.7% of the nation's overall beer sales, they've been the industry's growth engine.

Yet like beer, not even all craft brewers are created equally. Boston Beer (NYSE:SAM), arguably one of the best-known craft brewers for its Samuel Adams brand, has seen more traction from its hard teas and ciders division than its flagship brand, though admittedly seasonals have done quite well, too. And while Craft Brew Alliance (NASDAQ:BREW) saw a 21% increase in depletions of its Kona brand, Widmer Brothers dropped 9% last quarter. Its Redhook division rose 6%, but there was an overall increase of just 4%. Of course, Craft Brew also relies on Anheuser-Busch for its distribution.

Spirited away
Alcoholic beverages in general are taking a turn for the better, though. According to spirits maker Beam, industrywide sales grew 3% to 4% over the past year, but the top distillers are focusing more on their premium brands these days where they're making more profits. Beam is selling some of its down market brands for $65 million to focus instead on what it calls its Power Brands and Rising Stars such as Jim Beam, Courvoisier, and its popular Skinnygirl cocktails.

Diageo (NYSE:DEO) is the No. 1 international spirits company in Asia, Latin America, and Africa, which contribute nearly 40% of its net sales, up from 20% in 2005. It expects those markets to contribute half of its sales by 2015. Through a combination of double-digit organic growth and targeted acquisitions like United Spirits, Diageo is looking for world markets to juice returns and it has enjoyed some heady growth in India (up 24% in 2012), China (up 14%), and Southeast Asia (15%).

Name your poison
So it comes down to whether your personal libation preferences lie in beer or liquor. If you prefer barley, malt, and hops, it's hard to bet against the world's top brewer, Budweiser, or even second-place MillerCoors, the SABMiller and Molson Coors joint venture that commands 28% of the beer market. Despite their preeminent position in the industry, both offer some of the lowest valuations. On the spirits side, Constellation and Diageo seem to offer up the best valuations even though they've made the largest gains over the past year.

Then again, maybe just stocking your portfolio's bar with a six-pack of the alcoholic beverage makers and planning for a keg party would be your best bet.