Analysts tip major alcohol stocks to rebound in 2025

Despite the pervasive gloom around alcohol share prices, analysts are tipping the big spirits companies to recover, partially, at least, over the next 12 months. Investors in global spirits have taken a pounding as shares tumbled, with consumers reining in spending to cushion the effects of inflation, premiumisation stalling, younger generations drinking less amid growing health concerns and punitive tariffs being threatened as weapons in trade wars. The share price slump has been evident since the end of the pandemic, but the pain has been most keenly felt over the past 12 months. Diageo is down 30%, Pernod Ricard 37%, Constellation Brands 34%, Brown-Forman 34% and LVMH (Moët Hennessy) 33%. The worst hit in the past year were Campari, down 56%, and Rémy Cointreau, whose shares have collapsed by a spectacular 79% in value. But even with heightened global insecurity and the threat of Trump-era tariffs and reciprocal penalties, analysts calculate that the companies are sufficiently resilient to encourage investors to move back into the sector.

Impact of negative press

While the companies remain cautious about prospects – Diageo has even declined to issue forecasts for the time being – analysts believe all the bad news, including the tariff threats, has been factored into today’s share prices. At worst, they say, shares will not fall further. Brokers are telling clients that now is the time to pick up shares on the cheap. That is exactly what legendary stock picker Warren Buffett has done by taking a stake in Diageo. The consensus opinion is that Diageo’s shares could rise by 30% by spring 2026; Pernod Ricard’s could climb by 37%, Campari and Constellation Brands both by 30%, LVMH by 27%, and Brown-Forman by 17%. Some believe those figures are too cautious. The strongest rebound is predicted for Rémy Cointreau, with shares tipped to soar by 60% in the next 12 months. So, why are the brokers – who live or die by their forecasts – so confident that the drinks sector will recover some of the ground it has lost over the past five years?

Economic indicators point to recovery

First, they point to the basic economics. Inflation is slowing in the major developed nations while wages are rising. Globally, spending power is beginning to recover, which will allow consumers to return to their favoured brands and larger pack sizes. The Chinese government is moving to stimulate the consumer market and India’s economy continues to boom.

Corporate streamlining and efficiency gains

Second, all the major players have made moves to improve performance and increase returns on capital through a focus on key brands and much tighter cost control. Pernod Ricard has sold off its underperforming Antipodean wines, Constellation Brands is looking to exit wines completely, and LVMH is shaking up Moët Hennessy. Diageo has strengthened its production and stock control systems, while Brown-Forman has sold its disappointing Finlandia vodka to Coca-Cola and contracted out the expensive making of casks.

Preparing for tariffs – without panic

Even if Donald Trump goes ahead and imposes tariffs on European, Canadian and Mexican alcohols, the threat has been signalled so far in advance that producers have stockpiled key products – even if they won’t admit it. US Customs data for the first two months of this year confirm significant extra shipments. In addition, tariffs will not halt all purchases. They are painful – as evidenced by the Scotch malt whisky sector losing £1 million a day due to tariff penalties during Trump’s first term in the White House – but there is considerable brand loyalty among consumers. Analysts at UBS estimate that 79% of spirits sold in the US are imported. Americans cannot substitute their favourite Mexican tequilas, Canadian whiskies or Cognacs as they are all products of protected origin. Nor will Europeans shun bourbon entirely. Sales will be hit, but not obliterated. Balance sheets are sufficiently resilient to bear significant pain while negotiations to remove tariff hurdles take place. After all, that is often the very purpose of issuing such threats.