Beer is one of the original alcoholic beverages developed at the dawn of human civilization. A product thousands of years in the making, beer is now a basic staple of the global economy. Through good times and bad, beer businesses overall enjoy steady rates of consumer consumption of one of the top beverages of choice around the world.  

However, the beer industry is dominated by massive conglomerates such as Budweiser parent Anheuser-Busch InBev (NYSE:BUD) and Heineken (OTC:HEINY). This is an industry mostly devoid of small, fast-growing companies -- at least, publicly traded ones for the average investor. But for those looking for stable growth over time from this large component of the consumer staples sector of the stock market, some beer stocks are worth considering.  

A glass of beer sitting on a table.

Image source: Getty Images.

Investing in beer stocks

Beer is a big business, but it's not a high-growth industry. Nevertheless, a few notable names stand out as worthy of investor attention.

Company

Market Cap

Description

AB InBev (NYSE:BUD)

$101 billion

The world's largest beer producer and owner of dozens of labels, including Budweiser.

Constellation Brands (NYSE:STZ)

$44 billion

Holding company for Corona, Modelo, and other wine and spirits brands.

Kirin Holdings (OTC:KNBWY)

$14 billion

Best known for Kirin, one of Japan's largest beer labels.

Molson Coors Beverage Company (NYSE:TAP)

$10 billion

Owner of brands such as Coors, Miller, Blue Moon, and dozens of other beers.

Boston Beer Company (NYSE:SAM)

$5.6 billion

Best known for Samuel Adams, one of the largest craft beer names.

Data source: YCharts. Market cap as of Nov. 22, 2021.  

1. AB InBev

AB InBev is the world's largest beer company by far, controlling hundreds of beer brands such as Budweiser, Stella Artois, Beck's, Leffe, and an assortment of acquired craft brewers in the U.S. The company is a product of the merger between U.S. brewer Anheuser-Busch and Belgian-Brazilian brewer InBev in 2008, as well as the acquisition of South African brewing giant SABMiller in 2016.

Things started out well for the mega-beer experiment, but rapid changes in consumer preferences and sluggish major beer label growth have hurt AB InBev shareholders in recent years. Since the creation of the new entity in 2008, shares are only up about 50% compared to more than 400% for the S&P 500.  

However, since the market hit the reset button on AB InBev (shares are down some 30% since the start of 2020), the company trades like the value stock it is -- reflecting slow but steady sales, consistent profitability, and a decent dividend for investors seeking income. 

2. Constellation Brands

While Constellation Brands isn't exactly a household name, some of the beers it produces are quite well-known. Among them are Corona, Modelo, and Pacifico. It also has several wine and spirits brands and an almost 40% stake in marijuana business Canopy Growth (NASDAQ:CGC), making it one of the largest diversified beverage companies around.  

It may already be a sizable business, but Constellation has been able to sustain double-digit percentage sales growth from its beer brands for years, which make up almost three-quarters of total revenue and nearly 80% of the company's profits. Growth is expected to slow to a high single-digit percentage pace, but Constellation coaxes close to a 40% operating profit margin from its beer operation. Given its top free cash flow-generating ability, there's plenty to like about this diversified and highly profitable beer business.

3. Kirin Holdings

Kirin is Japan's second-largest beer label, just behind Asahi Group Holdings (OTC:ASBRF), and it's one of the largest consumer staples companies in the country. Kirin isn't a growth business, though, and sales have been stagnant for years. However, profitability is making a comeback in the wake of the COVID-19 pandemic and helps to support this top dividend-paying beer investment.

Kirin also has a health science group, leveraging its expertise in beverage production to build a healthy food and drink business. With consumers around the world increasingly concerned with health and well-being and focused on a better diet, applied health science in food and drink could be a promising area for Kirin. This tiny segment won't rekindle growth overnight for Japan's No. 2 beer maker, but it gives Kirin a new area to plant future seeds of expansion. And, along the way, Kirin is embarking on digital updates to modernize its operation and increase efficiency, further bolstering the company's dividend-paying capability.

4. Molson Coors

Another potential value stock in the beer industry is Molson Coors. The parent holding company for Coors, Miller, Blue Moon, and dozens of other beer labels has struggled with stagnant sales for the past three years as North American consumers have increasingly favored craft beer and other alcoholic beverages.

Although it's the fifth-largest beer maker in the world, Molson Coors' stock has substantially declined for years, but it could be due for a rally if management can turn things around.  

Attention has shifted to higher-end beers and trendy beverages such as sparkling hard seltzer (the premium side of the business) to better align the brand portfolio with current consumer tastes. Molson Coors also reinstated its dividend payment following a temporary pause at the start of the pandemic. This stock could be a great addition for investors seeking income from their portfolios.

5. Boston Beer Company

Boston Beer -- best known for its Samuel Adams craft beer label, Truly Hard Seltzer, Angry Orchard hard cider, and several other small regional brewers -- has long been a top advocate for the independent craft beer movement. Although it isn't the small business it once was, Boston Beer still represents a sliver of North American beer consumption.  

The pandemic led to a sharp increase in at-home alcohol consumption. As a result, Boston Beer enjoyed an acceleration in its sales growth this year and last. Constantly changing consumer trends have caused some headaches such as lower than anticipated demand for spiked seltzer products this past summer and autumn. But double-digit percentage sales growth is fantastic in an industry largely dominated by slow and predictable consumption trends.

Boston Beer also has zero debt, which is a rarity among the massive global beer conglomerates. Consequently, this is an uncommon growth stock in the alcohol investment world. Shares are down more than 50% in 2021 due to the slowdown in sparkling seltzer sales expansion, but the Samuel Adams parent will be more than just fine over the long term.

Making the best of a slow-growth industry

The beer industry isn't the most exciting investment theme around. But there are some standouts in the space worth paying attention to, especially for investors seeking to generate some dividend income along the way.

Beer is a top beverage for consumers all over the world and generates ample profits for the major producers and their shareholders. If you decide to add some beer stocks to your portfolio, bear in mind some of these stocks can exhibit volatile price action. Remember to stay diversified and focus on the long-term potential for these alcoholic beverage makers.