EU: Bad weather weighing on brewers stock

Carlsberg A/S and Heineken NV may have closed at fresh highs this week, but persistent bad weather in Europe is killing the craving for pitchers of cold beer on a hot summer’s day, Bloomberg reported on June 14.

“Nobody is outdoors having a drink,” Keith Temperton, a sales trader at Tavira Securities Ltd., said in an emailed response to a Bloomberg query. “The bad weather in Europe is weighing on brewers.”

Carlsberg shares dropped as much as 3.4% in Copenhagen, with Heineken retreating 1.9% as of 2:22 p.m. in Amsterdam. The stocks were the top losers in Europe’s Stoxx 600 Food and Beverage Index on Friday, with Belgium’s Anheuser-Busch InBev NV the third-biggest decliner.

Summer is high season for European brewers and soft-drink makers, with the second and third quarters typically accounting for about two-thirds of profit, according to Jefferies International Ltd.’s estimates.

Even if bookmakers are slashing the odds of this June being the U.K.’s wettest on record, it doesn’t look good. Europe’s recent weather is likely to hit brewers and soft drink companies such as Fevertree Drinks Plc, especially compared with last summer, host to a heatwave, the soccer World Cup and a royal wedding, Jefferies analyst Edward Mundy wrote in a June 13 note to clients.

It’s not just about beer -- the rain is also causing U.K. retailers such as Next Plc to suffer, Tavira’s Temperton said.

To be sure, a cloudy sky may be a boon to investors seeking a foot in the door at companies such as Heineken. The food and beverage sector is by far the best-performer in Europe this year, with the three big beer stocks among the top in the index segment -- something to toast during the thunderstorms.

14 June, 2019