Alcoholic beverage stocks slide in Asia on US cancer warning

Shares of Asian liquor and beer makers declined after the US Surgeon General outlined a direct link between alcohol consumption and heightened cancer risk, and called for warning labels.

Sapporo Holdings Ltd. shares dropped as much as 5.1% in Tokyo on Monday, the most in five months. China’s Wuliangye Yibin Co. fell as much as 3.7%, while Budweiser Brewing Company APAC Ltd. slid 2.6% in Hong Kong and Treasury Wine Estates Ltd. dipped 2.7% in Australia.

“The market will adopt a ‘shoot first ask questions next’ approach to the risk of potential health warning labels on alcoholic drinks and cancer risk in the US,” Edward Mundy, an analyst at Jefferies Financial Group Inc., wrote in a note. “This could act as an overhang on a sector that is already trading on a depressed multiple.”

Despite a growing pile of evidence, less than half of Americans recognize that drinking raises their chances of developing several cancers, Surgeon General Vivek Murthy said Friday in an advisory. Adding a warning would highlight concerns for products that more than 70% of US adults consume at least once a week, with some $260 billion in 2022 nationwide sales.

“Many now believe alcohol warnings labels and marketing regulations of brands will get much tighter and go the same way as tobacco did 30 years ago,” said Asymmetric Advisors’ Amir Anvarzadeh. The decline in stocks may be short-lived, however, because any regulation changes could take years to come into effect, he added.

In Japan, Sapporo may be the most vulnerable stock after its strong performance in recent years on asset reduction moves, Anvarzadeh said. The company’s shares have nearly quadrupled since the end of 2020.