In this week’s edition of the Portrait Weekly Framing, we take a look at how rising use of GLP-1 agonists – such as Ozempic – are reducing alcohol addiction, and as a result reducing alcohol demand. Using Portrait’s capabilities, we dive into how alcohol companies are being affected by reductions in alcohol addiction. To research this (or any other topic), head over to Portrait today.
Recently, the FT published an article highlighting how Fundsmith Equity sold Diageo’s stock after nearly 15 years due to demand concerns from Ozempic. Searching around the web, I found that Ozempic seems to curb alcohol addiction, with alcohol addicts on GLP-1 prescriptions demonstrating a 50% reduction in binge drinking.
While I had anecdotally heard about GLP-1 agonists’ impact on addiction, I was surprised to learn of the significant 50% reductions in binge drinking. With such a massive impact on drinking habits, I turned to Portrait to learn more about how alcohol companies are being impacted by GLP-1 drugs like Ozempic.
To start, I asked Portrait to research the topic using a mix of studies, articles, and company documents:
Impact of Ozempic on Alcohol Demand and Financial Results
Clinical Evidence of GLP-1 Impact on Alcohol Consumption
Recent clinical studies provide compelling evidence that GLP-1 medications meaningfully reduce alcohol consumption. A large-scale Swedish study examining 228,000 people demonstrated significantly lower alcohol-related hospitalizations among GLP-1 users (Ozempic and Wegovy may help curb alcohol addiction, study suggests.pdf). This was further corroborated by Loyola University Chicago research showing a 50% reduction in binge drinking rates among GLP-1 users (Ozempic, Mounjaro may help with alcohol and opioid addiction, study finds - Shots - Health News - NPR.pdf). The mechanism appears to work through both reduced craving and diminished reward value of alcohol, similar to how these medications affect food consumption.
Management Commentary and Recognition of Risk
Beverage alcohol companies show varying levels of acknowledgement regarding GLP-1 impact:
Direct Acknowledgement
Boston Beer's Chairman Jim Koch explicitly identifies GLP-1s as one of their factors "chipping away at alcohol consumption," though he characterizes the individual impact as less than 1 percentage point annually (The Boston Beer Company, Inc. Presents at Barclays 17th Annual Global Consumer Staples Conference)
Brown-Forman management acknowledges GLP-1s as one of their "big 3" long-term headwinds alongside cannabis and Gen Z consumption patterns (Brown-Forman Corporation Presents at Barclays 17th Annual Global Consumer Staples Conference)
AB InBev acknowledges weight-loss drugs as an emerging factor in their risk disclosures but provides limited specific commentary (BUD 20-F FY 2023)
Financial Impact Evidence
Category-Specific Performance
Recent financial results show divergent trends across categories:
Investment Community Response
The potential impact has begun influencing investment decisions, most notably with veteran investor Terry Smith's decision to sell his fund's £22.5bn stake in Diageo after nearly 15 years, specifically citing concerns about weight-loss drugs (FT article.pdf)
Varying Impact Across Segments
Premium vs. Mainstream
Premium segments appear more resilient, with Brown Forman noting their premium positioning "may help obviate the impact of weight loss cigars" (FT article)
Mainstream and value segments show greater vulnerability, as evidenced by Constellation Brands' larger declines in lower-priced wine brands (STZ 10-K FY 2024)
Geographic Variations
Diageo's results show varying regional impacts (DEO 20-F FY 2024):
North America: -4% volume decline
Europe: -1% volume decline
Asia Pacific: +1% volume growth
Latin America & Caribbean: -16% volume decline
Sell-Side Estimate Changes
While many companies maintain their long-term growth algorithms, there is evidence of estimate revisions:
The emerging evidence suggests GLP-1 medications are beginning to impact alcohol demand, though the effect varies significantly by category and price point. While clinical studies have clear potential to impact consumption, management teams generally characterize it as one of several headwinds rather than a dominant factor. The impact appears most pronounced in wine and spirits, while beer has shown greater resilience. Premium segments may prove more insulated than mainstream offerings, suggesting a potential acceleration of existing premiumization trends.
Interestingly, GLP-1 medications seem to be just one of several headwinds facing alcoholic beverage companies. As well, premium spirits and drinks seem to be more resilient, as evidenced not only in the earlier FT articles, but also by Constellation Brands’ results (where lower-priced wine brands took a big hit).
Given how important premiumization seems to be for companies in this space, I then asked Portrait to sort these companies by their exposure to premium alcohol sales.
Ranking of Companies by Premium/Heavy User Exposure
Diageo - Highest Premium/Heavy User Exposure
Diageo demonstrates the strongest exposure to premium alcohol sales and heavy users through multiple factors. The company's portfolio is heavily weighted toward premium and ultra-premium spirits, with 63% of net sales value coming from premium and above products (DEO 6-K Q1 2025). Their focus on spirits categories typically associated with regular consumption, combined with strong on-premise presence and brands like Don Julio 1942 and Johnnie Walker Blue Label, indicates the highest exposure to premium regular consumers (Diageo plc, 2024 Consumer Analyst Group of New York (CAGNY) Conference).
Brown-Forman - Very High Premium/Heavy User Exposure
Brown-Forman shows the second-highest exposure through its concentrated premium spirits portfolio and strong on-premise presence. The company's data indicates that approximately 80% of consumers only purchase 2 bottles per year, suggesting a small segment of heavy users drives significant volume (Brown-Forman Corporation Presents at TD Cowen's 2nd Annual Sip, Snack & Scrub Summit 2024). Their strategic focus on premium American whiskey and super-premium line extensions, combined with recent acquisitions of ultra-premium brands like Gin Mare and Diplomatico, reinforces their premium positioning (BF.B 8-K 07/25/24).
Constellation Brands - High Premium/Heavy User Exposure
Constellation Brands maintains high exposure primarily through their premium Mexican beer portfolio, which represents over 82% of sales (STZ 8-K 07/02/24). The company shows particularly strong brand loyalty among Hispanic consumers who demonstrate higher buy rates than average, and their consistent ability to implement price increases while maintaining volume growth suggests a loyal premium consumer base (Constellation Brands, Inc. Presents at Bernstein's 40th Annual Strategic Decisions Conference).
AB InBev - Moderate-to-High Premium/Heavy User Exposure
AB InBev shows more moderate premium exposure with less than 40% of total volumes in "above core" segments, though this varies significantly by region (Anheuser-Busch InBev SA/NV, Q3 2024 Earnings Call). Their premium exposure is highest in Europe where premium and super-premium portfolios accounts for approximately 57% of revenue, while other markets show varying levels of premium penetration (BUD 6-K Q2 2024 Earnings Release).
Boston Beer Company - Moderate Premium/Heavy User Exposure
Ambev shows growing but still moderate premium exposure, with premium and super-premium brands growing volumes in the mid-twenties but from a smaller base (ABEV 6-K Q3 2024). Their premium strategy varies significantly by region, with strongest premium presence in Brazil where they are actively expanding premium brand penetration (Ambev S.A., Q3 2024 Earnings Call).
Molson Coors - Lowest Premium/Heavy User Exposure
Molson Coors demonstrates the lowest relative exposure with only approximately 27% of their portfolio in above-premium segments (Molson Coors Beverage Company, Q2 2024 Earnings Call). Their portfolio remains heavily weighted toward mainstream brands, particularly in their crucial US market where premium initiatives have struggled. The company shows high sensitivity to economic pressures and value-seeking behavior, suggesting lower exposure to premium regular consumers (Molson Coors Beverage Company, Q3 2024 Earnings Call.
From the results, we see that Diageo actually holds the highest premium exposure, with 63% of net sales coming from premium and above products. Meanwhile, Molson Coors sits at the other end of the market, with their portfolio “heavily weighted toward mainstream brands.”
While Molson Coors avoided the headwinds faced by spirits by focusing on beer – discussed in an earlier Weekly Framing – its focus on mainstream brands and less premium drinks means it is likely more exposed to binge drinkers. Looking at the company’s Case Study (below), we see further evidence of the company’s low penetration in premium.
Premiumization Strategy and Execution
Molson Coors is focusing on premiumization as a key growth driver, aiming to increase its above-premium portfolio's contribution to revenue. The debate centers on the company's ability to execute this strategy effectively, particularly in the U.S. market.
Bull case:
The company has set a medium-term goal of reaching about 1/3 of global net brand revenue from above-premium products.
Successful premiumization efforts in Canada and EMEA/APAC regions demonstrate the company's capability to execute this strategy.
Plans to expand successful premium brands like Peroni and Madri into new markets could drive growth.
Bear case:
The company acknowledges it has "work to do" in premiumization efforts in the U.S. market.
Stabilizing large above-premium brands in the U.S. remains a challenge.
Competition in the premium segment is intense, potentially making it difficult to gain market share.
Conversely, and perhaps ironically, Diageo may actually be the best positioned alcohol company, at least in terms of premiumization. We see from Diageo’s Case Study (below) that the company is gaining or holding share in over 75% of its net sales in measured markets.
Consumer Resilience and Premiumization Trends
The resilience of consumer demand for premium spirits and the sustainability of premiumization trends are key points of debate for Diageo investors.
Bull case:
Premiumization remains a strong trend, particularly in the U.S., where "more than 100% of the growth of the category is still coming from the super premium and above price segments."
Management emphasizes that consumers still want premium brands when they choose to consume spirits, viewing them as an "affordable luxury."
Diageo is gaining or holding share in over 75% of its net sales value in measured markets, including the U.S., suggesting its premium positioning is resonating with consumers.
Bear case:
The company is seeing some evidence of down-trading in certain markets, particularly in tequila and Scotch in Mexico.
Volume declines are most pronounced in vodka and rum, which are typically more standard and value-priced segments of the portfolio.
Economic pressures, including the resumption of student loan repayments in the U.S., are putting pressure on consumer wallets, potentially threatening premium spirits consumption.
So while no alcoholic beverage company is a sure bet in today’s world, Diageo may actually be relatively best positioned. If you want alcohol exposure, you can go with the best, although it might just be best to bottle it up and wait on the sidelines.
