<< Read Wine Buyers, Sellers and Grape Growers, Part 1: What The Future Holds

Whenever considering investing in the “drinking industry”, it is worth looking at the holdings of The Vice Fund (VICEX), now strangely renamed the “USA Mutuals Barrier Investor Fund." VICEX limits its investments to drinking, smoking, gambling and defense on the grounds that some investors will shy away on moral grounds meaning their stocks will be undervalued. The fund has performed quite well with an average 5-year return of 17.25%.

Its alcoholic beverage holdings include: Anheuser-Busch InBev SA/NV (BUD) (ABI.BR) – P/E 17, Brown-Forman Corporation (BF-B) – Price/Earnings (P/E) 29, Boston Beer Co. Inc. (SAM) – P/E 44, Carlsberg A/S (CABGY) – P/E 13, Constellation Brands Inc. (STZ) – P/E 26, Diageo plc (DEO) – 20, Heineken NV (HINKF) – 25, Molson Coors Brewing Company (TAP) – P/E 25, Pernod-Ricard SA (PDRDF) – P/E 24, and SABMiller plc (SBMRY) – P/E 23. Many of these are huge beverage distribution companies. This is a highly competitive industry in the process of consolidation.

Perhaps more interesting is Vina Concha y Toro S.A. (VCO) – P/E 21, a Chilean wine company that has large growing areas and brand names under its control. It has successfully marketed premium wine brands in the US for many years and aggressively entering new markets worldwide.