PROP 19 Fails; Cigs, Beer, Booze Win (MO, BUD, BF-B, STZ, DEO, TAP)
November 3, 2010 by Jon C. Ogg
Pot is still not going to be legal in California for recreational use. PROP 19 failed to win enough votes on a low voter turnout and California will not have to worry about whether the taxes will offset the expense of policing open use. As you might guess, there is a silver lining here as no legalized marijuana is now no longer a threat to beer, wine, booze, and even tobacco. Without assuming that this means that the hemp trade will go away, this is sort of a win for companies to the tune of Altria Group Inc. (NYSE: MO), Anheuser-Busch InBev (NYSE: BUD), Brown-Forman Corporation (NYSE: BF-B), Constellation Brands Inc. (NYSE: STZ), Diageo plc (NYSE: DEO), Molson Coors Brewing Company (NYSE: TAP), and others.
Altria Group Inc. (NYSE: MO) is hard to really reference in a direct comparison because many pot smokers are not cigarette smokers. The company does own an interest in SAB/Miller. Shares are indicated up around $25.65 after closing at $25.57 yesterday. Keep in mind that Altria shares are at multi-year highs.
Anheuser-Busch InBev (NYSE: BUD) is now global, so one market might not have mattered anyway. Shares are down 2.6% at $61.82.
Brown-Forman Corporation (NYSE: BF-B) is indicated flat after a $61.22 close and its market cap is nearly $9 billion. Some of its brands are Jack Daniel’s, Southern Comfort, Herradura, Finlandia, Jekel Vineyards, Gentleman Jack, Korbel California Champagnes, Michel Picard Wines, New Mix Ready-to-Drinks brands, and many more.
Constellation Brands Inc. (NYSE: STZ) is indicated flat after a $19.52 close and its market cap is roughly $4.1 billion. Brands are Mondavi, Franciscan and others for wine; it imports imports, markets, and sells Corona Extra, Corona Light, Coronita, Modelo Especial, Pacifico, Negra Modelo, St. Pauli Girl, and Tsingtao for beer; and Svedka, Black Velvet, and others in spirits.
Diageo plc (NYSE: DEO) is also an ADR and its market cap is north of $46 billion, although its shares are up 1% at $75.36. Its brands are Crown Royal, Seagrams, Johnnie Walker, Smirnoff, Baileys Irish Cream, Captain Morgan, Jose Cuervo, Tanqueray, Guinness, and more.
Molson Coors Brewing Company (NYSE: TAP) reported earnings of more than $256 million; shares are up 2.2% at $48.25 this morning.
The interesting issue here is that the news of a failure to pass revolves more around a low voter turnout from the young and those who would have been for PROP 19. The Economist recently showed a chart with damage by sins in the United Kingdom, and alcohol was shown to be far damaging in a United Kingdom study conducted by The Lancet:
JON C. OGG
