Raise a glass to the investment funds that are big into beer

Gettyimages 697853664 WEB
Julia Grimes
Published: 14 Jun 2021 Updated: 03 Aug 2021

Tomorrow is National Beer Day, an annual celebration of the UK’s national drink when people across the country are encouraged to raise a glass at 7pm and say “Cheers to Beers”. Pubs, bars and breweries will certainly welcome any extra trade this might bring. The COVID-19 pandemic has been really tough for the industry with pubs and bars closed for much of the last year, sending sales plunging by 56%.

But with pubs and bars now open again, the arrival of sunny weather and the UEFA Euro 2020 football championship now underway and expected to boost off-licence sales, things are looking a little better for both pubs and breweries; so could now be a time to invest and which professional fund managers are backing beer?

Jason Hollands, Managing Director of Bestinvest, the online investment services, comments:

”Both brewers and pubs have had a really tough time during the pandemic, particularly rural pubs, many of which will sadly not be reopening their doors again. While breweries were able to refocus on sales through supermarkets and off-licences, this has been tough for smaller breweries who were less geared up to switch to the demand for large packs. The rocketing price of both hops and packaging have also squeezed margins.

“Yet over the longer-run, beer has proven to be very resilient in most economic ups and downs. When times are tough you might put a long-haul holiday or new car purchase on hold, but few regular beer drinkers will forgo their favourite pint.”

For investors, there are two routes to tap into beer: stock exchange listed pub and bar companies and breweries. On the London Stock Exchange these include Whitbread (£6.68 billion) which owns Brewers Fayre, Mitchells & Butlers (£1.82 billion), JD Wetherpoon (£1.65 billion), Young & Co Brewery (£749.6 million), Marston’s (£575.8 million), Fuller Smith & Turner (£338.5 milllion), Loungers (£270.4 million), Revolution Bars (£28.8 million) and Heavitree Brewery (£14.4 million). The Acquis Exchange, aimed at small, growth companies, is also home to three small breweries: Adnams (£27.7million), Thwaites (£55.9 million) Shepherd Neame (£151.6 million).

However, the really big money in the world of beer and is with large international giants. These include Anheuser-Busch InBev, the world’s largest brewer, which owns over 500 beer brands including Becks, Budweiser, Hoegaarden and Stella Artois; drinks giant Diageo which owns Guinness and Dutch firm Heineken which has over 300 brands including Amstel, Tiger Morretti and Lagunitas IPA.

Hollands continued: “When it comes to backing beer, the fund management company planted firmly at the corner of bar is Lindsell Train. Managers Nick Train and Mike Lindsell are long-term, buy and hold investors prepared to take big positions in their preferred companies. They like businesses which generate lots of cash, which brewers do. In the Lindsell Train Global Equity fund they hold a whopping 8.52% of the fund in Diageo and 7.72% in Heineken, making these their two largest holdings. Both stocks are also held in their LF Lindsell Train UK Equity fund, with Diageo in top place at 9.86% and Heineken at 6.04% of the fund. The latter fund also has a small holding in Young & Co.

“While no other funds come we could find come quite as heavily weighted to beer stocks than Lindsell Train, other larger holders of breweries include the BMO European Select fund, which has a 5.58% position in Heineken, and the ASI Japanese Equity fund which has 4.93% invested in Asahi. Alongside its iconic Japanese lager brand, Asahi’s beer portfolio includes Pilsner Urquell, Peroni, London Pride as well as craft beers Hophead and Meantime.

“When it comes to investments in pubs, the ASI UK Equity Unconstrained fund has 3.13% invested in Mitchell & Butlers alongside 1.52% invested in brewer Marston’s and a 1% position in The Restaurant Group which owns rural pub chain Brunning & Price alongside its other chains.”

Hollands points out that in February brewery Martson’s, which owns around 1,400 pubs, rejected an offer worth circa £690 million from a US private equity firm. The company is currently valued at £575.8 million and last year created a brewing joint venture with Carlsberg. At a time when UK shares are relatively cheap for overseas investors, Hollands argues that there is potential for further acquisition attempts by overseas buyers.

“All of these funds are widely accessible though online Stocks & Shares Individual Savings Accounts and personal pensions, so avid beer enthusiasts can turn their love of a pint into a investment as well as a regular expense!”


This release was previously published on Tilney Smith & Williamson prior to the launch of Evelyn Partners.