Jim Cramer Says People Are Drinking ‘Dramatically Less’ Because Of Diet Pills – Are Alcohol Dividend Stocks in Trouble?

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Analysts are beginning to focus on the potential impact of weight loss drugs like Ozempic and Zepbound on the food and beverage industry. These drugs work by reducing cravings for crunchy snacks and sugary drinks. No cravings means no temptations to fill carts with those sugary snacks and drinks. It’s a win for health-conscious consumers, but a major threat to the trillion-dollar food and beverage industry.

Jim Cramer didn’t hold back on his CNBC show, which grilled food and beverage companies for not acknowledging the growing impact and influence of GLP-1 weight loss drugs. According to Cramer, these drugs are already making a noticeable dent in the industry’s bottom line.

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“Despite the fact that about 20 million Americans are said to be taking GLP-1 weight loss drugs for diabetes, no, none of the food and beverage companies are willing to admit that these drugs have hurt them at all. They won’t even suggest it. at this,” Cramer said on his “Mad Money” show on CNBC.

Cramer pointed out that these drugs are incredibly “powerful” and it’s “crazy” to think they won’t affect snack companies and the liquor business.

He said about 20 million people eating and drinking “dramatically less” than before is affecting these companies and their price/earnings multiples are “shrinking.”

Cramer also called out several liquor companies.

Can GLP-1 Weight Loss Drugs Topple These Billion Dollar Liquor Giants So Easily? Should investors in dividend-paying beverage companies be worried? Let’s look at some key stocks, see their recent performance and analyze what they had to say in their latest earnings reports.

Diageo

Jim Cramer singled out Diageo PLC (NYSE:DEO) on CNBC, noting that the company, which owns popular liquor brands such as Johnnie Walker whiskey, Casamigos tequila and Guinness beer, is experiencing declining sales, but didn’t say why this decline.

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“Why is Casamigos down 20%? Nobody’s going to say anything,” Cramer said.

Cramer was referring to a 20% drop in sales for tequila company Casamigos, which Diageo bought in 2017, in the year ending June 30.

Diageo saw its sales fall for the first time since the pandemic during the quarter. The company pointed to “adverse” currency effects and a more “cautious” consumer environment as reasons behind the downturn. But what motivates this caution? Is it inflation, or could it be that GLP-1 drugs reduce people’s cravings for alcohol? Time will tell. Meanwhile, Diageo still offers a decent yield of 3.18% and has an impressive 25-year history of dividend growth.

Constellation Brands

Constellation Brands, Inc. (NYSE:STZ), behind Corona and Modelo, reported fiscal first-quarter results last month. Overall revenue was up 6% year-over-year, with the beer business posting high single-digit net sales growth and double-digit operating income growth. However, Constellation’s net wine and spirits sales fell 7%.

Wall Street was positive on the stock market after the results. Goldman Sachs’ Bonnie Herzog emphasized the core strength of Constellation’s business and visibility into growth targets. He has a $300 price target and a buy rating on the stock.

For 2025, Constellation continues to see sales growth of 7% to 9% for its beer business and operating income growth of 10% to 12%. That means at least Constellation’s beer business isn’t facing short-term problems from diet pills.

Brown Forman

Cramer also took aim at Jack Daniels maker Brown-Forman Corporation Class B (NYSE:BF), calling its sales “horrendous.”

“When you drink Jack Daniels, it’s loaded with sugar, okay? And that really is affected, but they won’t say what hurts him,” Cramer said.

Brown-Forman has a dividend yield of about 1.9%. It has increased its dividend payments for 40 consecutive years. In fiscal 2024, the company saw higher sales for Jack Daniel’s Tennessee Apple and reported a 150 basis point increase in gross margin. Looking ahead to fiscal 2025, Brown-Forman expects the business environment to remain “volatile,” citing global macroeconomic and geopolitical uncertainties.

With a portfolio of several well-known brands, Brown-Forman is better equipped to manage the risks that GLP-1 drugs may present.

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Molson Coors drink

Molson Coors Beverage Co Class B (NYSE:TAP), known for beer brands like Coors Light and Miller Lite, recently reported its second quarter results. Profits rose 7.9% last year, although revenue fell 0.6%. For the full year, the company expects revenue to grow by single digits.

With a dividend yield of around 3.2%, Molson Coors isn’t just about beer, it also sells spirits and non-alcoholic beverages. Earlier this year, it raised its dividend for the third consecutive year.

Molson Coors acknowledged the challenges of inflation and a slowdown, but not for the reasons mentioned by Jim Cramer.

Here’s what the company’s CFO had to say during the call:

“While this guidance implies slower trends for the second half of the year, it is important to remember that this is driven by the timing of deliveries this year and does not change our confidence in our long-term growth expectations.”

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