Shares of Asian liquor and beer companies dropped after the US Surgeon General highlighted a direct link between alcohol consumption and increased cancer risk, calling for warning labels.
Sapporo Holdings Ltd. saw a 5.1% drop in Tokyo, its biggest decline in five months, according to Bloomberg.
China’s Wuliangye Yibin Co. fell 3.7%, Budweiser Brewing Company APAC Ltd. dropped 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.”
Murthy stated in an advisory on Friday that despite mounting evidence, less than half of Americans recognize the link between drinking and an increased risk of several cancers.
He emphasized that adding a warning would address concerns about products consumed weekly by over 70% of US adults, with nationwide sales reaching $260 billion in 2022.
“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.
However, the decline in stocks may be temporary, as any regulatory changes could take years to be implemented, he added.
According to Anvarzadeh, Sapporo may be the most vulnerable stock in Japan after its strong performance in recent years driven by asset reduction efforts. The company’s shares have nearly quadrupled since the end of 2020.
