Bad News Beers: Why These 2 Stocks Are Starting To Go Flat

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tdp2664 InvestorPlace Since Wall Street just suffered its worst week since 2008, conventional wisdom might suggest investors will be eager to drown their sorrows in a big, fat mug of beer. But conventional wisdom is likely to be wrong. Why? Beverage consumption might be on the rise in the U.S., but beer sales have gone flat, leaving many shareholders scratching their heads and wondering why those supposedly "recession-proof" earnings have fizzled. A recent study by the consulting firm AlixPartners found 87% of U.S. customers plan to spend the same or more on alcohol during the next 12 months as they have over the past year. That's an increase of 17% over 2010. But that good news is tempered by the fact fewer drinkers are reaching for beer. Indeed, the U.S. now leads the world in wine consumption. "Despite the overall uptick in demand, our analysis found that one in three consumers would look to reduce their spending on beer by lowering consumption, looking for sales and promotions or trying less expensive brands," says Darren Morrison, vice president of AlixPartners' Consumer Products Practice. Brewers' problems don't end there. Internal and commodity costs for brewers have skyrocketed over the past year and show no signs of receding. In a $101 billion U.S. beer market, costs combined with lower demand could result in a $1 billion hit to beer sales this year. The researchers point to one bright spot: Craft brew sales have risen by 11% over the past year. Here are two beer stocks showing signs of going flat: Anheuser-Busch InBev Anheuser-Busch InBev (NYSE: BUD ), which announces earnings next week, is grappling with the headwinds the rest of its industry faces. The company plans to hike prices this fall by 3% to 5% but might find resistance from U.S. customers, who are far less loyal to the brand than they once were. And the company's decision to redesign Budweiser cans to look redder is not likely to be enough. At $54.32, BUD is trading more than 16% below its 52-week high of $64.77 last October and slipped about 5% this week. One bright point: The stock has a 1.70% dividend yield. Boston Beer Co. Boston Beer Co. (NYSE: SAM ), the leader of the craft beer craze, had a very bad week last week when second-quarter earnings came in below estimates. The Sam Adams brewer reported revenue of $134 million, up 3.4% from the same quarter last year and earnings of $28 million — an adjusted $1.09 a share instead of the expected $1.19. Investors grew even more skittish when the company revised earnings for the rest of the year downward. The culprit: higher commodity costs, particularly rising barley prices. The company's "freshest beer" monitoring program could have cost the company as much as 5 cents per share in earnings this quarter. At $85.55, SAM is trading 15.24% lower than its 52-week high of $100.93 last December. The stock slipped about 5% this week. And here's one that could look a lot better at last call: Molson Coors Brewing Co . Molson Coors Brewing Co .’s (NYSE: TAP ) second-quarter earnings rose 2% to $398.7 million on lower revenue of $2.13 billion, which Molson Coors attributed to a weak economy and higher gas and commodity prices. The company is giving SAM a run for its money with higher-end craft beers like Blue Moon and posted 54% growth in its international business — particularly in Asia. At $42.53, TAP is trading 16.79% below its 52-week high of $51.11 last December. The stock lost nearly 5% this week. It offers a very nice dividend yield of 2.9%. As of this writing, Susan J. Aluise did not hold a position in any of the stocks named here.