Jim Cramer says people are drinking 'significantly less' due to weight-loss drugs – Alcohol dividend stocks in trouble?

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Analysts are beginning to study the potential impact of weight-loss drugs like Ozempic and Zepbound on the food and beverage industry. These drugs work by reducing cravings for crunchy snacks and sugary drinks. No cravings also means no temptation to fill the shopping cart with those snacks and sugary drinks. That's a win for health-conscious consumers, but a major threat to the food and beverage industry, which is estimated to be worth trillions.

Jim Cramer didn't hold back on his CNBC show and criticized food and beverage manufacturers for ignoring the impact and growing influence of GLP-1 weight loss drugs. According to Cramer, these drugs are already leaving a noticeable dent in the industry's bottom line.

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“Despite the fact that some 20 million Americans are reportedly taking GLP-1 weight-loss drugs for diabetes, none of the food and beverage companies are willing to admit that these drugs have harmed them in any way. They don't even hint at it,” Cramer said on CNBC's “Mad Money” show.

Cramer stressed that these drugs are incredibly “powerful” and it is “crazy” to think they would have no impact on snack food companies and liquor manufacturers.

He said the fact that around 20 million people are eating and drinking “dramatically less” than before is affecting these companies and “shrinking” their price-earnings ratios.

Cramer also called on some spirits producers.

Can GLP-1 weight loss drugs dethrone these multi-billion dollar spirits giants so easily? Should investors in dividend-paying beverage companies be worried? Let's take a look at some major stocks, review their recent performance, and analyze what they have to say in their latest earnings reports.

Diageo

Jim Cramer highlighted Diageo PLC (NYSE:DEO) on CNBC, noting that the company, which owns popular spirits brands such as Johnnie Walker whiskey, Casamigos tequila and Guinness beer, is experiencing a decline in sales, but did not mention the reason for the decline.

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“Why did Casamigos fall 20 percent? Nobody says anything,” Cramer said.

Cramer was referring to a 20% drop in sales at tequila company Casamigos, which Diageo bought back in 2017, in the fiscal year ended June 30.

Diageo reported a drop in sales in the quarter for the first time since the pandemic. The company cited “unfavorable” currency impacts and a “more cautious” consumer environment as reasons for the slump. But what is the reason for this caution? Is it inflation concerns or could it be GLP-1 drugs curbing people's cravings for alcohol? Time will tell. Meanwhile, Diageo still offers a decent yield of 3.18% and has an impressive 25-year history of increasing dividends.

Constellation marks

Constellation Brands, Inc. (NYSE:STZ), the company behind Corona and Modelo, reported first-quarter results last month. Total revenue rose 6% year over year, with the beer business reporting high single-digit revenue growth and double-digit operating income growth. However, Constellation's net sales in the wine and spirits business slumped 7%.

Wall Street was positive on the stock after the results were announced. Bonnie Herzog of Goldman Sachs pointed to the company's fundamental strength and the forward-looking nature of Constellation's growth targets. He issued a price target of $300 and a buy rating for the stock.

For 2025, Constellation still expects revenue growth of 7% to 9% for its beer business and operating income growth of 10% to 12%. This means that Constellation's beer business has no short-term problems with weight-loss drugs.

Brown Forman

Cramer also attacked Jack Daniels maker Brown-Forman Corporation Class B (NYSE:BF), calling its sales “appalling.”

“If you drink Jack Daniels, it's full of sugar, OK? And that's really affected, but they don't say what's harming it,” Cramer said.

Brown-Forman has a dividend yield of about 1.9%. The company has increased its dividend payouts for 40 consecutive years. In fiscal 2024, the company recorded higher sales for Jack Daniel's Tennessee Apple and reported a 150 basis point increase in gross margin. Looking ahead to fiscal 2025, Brown-Forman expects the business environment to remain “volatile,” citing global macroeconomic and geopolitical uncertainties.

Because Brown-Forman has a portfolio of several well-known brands, the company is better equipped to manage the risks that may be associated with GLP-1 drugs.

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Molson Coors Beverages

Molson Coors Beverage Co Class B (NYSE:TAP), known for beer brands such as Coors Light and Miller Lite, recently announced its second-quarter results. Earnings rose 7.9% over the past year, but revenue fell 0.6%. For the full year, the company expects revenue to increase in the low single digits.

With a dividend yield of around 3.2%, Molson Coors sells not only beer but also spirits and non-alcoholic beverages. At the beginning of the year, the company increased its dividend for the third time in a row.

Molson Coors acknowledged inflation-related challenges and a slowdown, but not for the reasons cited by Jim Cramer.

The company’s CFO said the following during the call:

“While this forecast implies a slowdown in performance in the second half of the year, it is important to remember that this is due to this year's delivery timing and does not affect our confidence in our long-term growth expectations.”

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This article “Jim Cramer Says People Are Drinking 'Significantly Less' Due to Weight-Loss Drugs – Alcohol Dividend Stocks in Trouble?” originally appeared on Benzinga.com