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Nearly all alcoholic beverage makers will register higher earnings in 1994, but there are clouds on the horizon for brewers. Aluminum prices could rise by as much as 30% in 1995, boosting packaging costs, especially for sub-premium beers. Distillers, on the other hand, should do well, especially in export markets. The tremendous growth of the Mexican brewing industry makes it a favorable investment venue. The group as a whole is recommended to long-term investors.

The alcohol industry is expected to post weak gains through Aug 1995 but should have good prospects through the 1997-1999 period. The industry's growth improved from 1993 to 1994, part of which was the result of the introduction of ice beers. Many of these brewing companies have shown strong global expansion strategies, which should benefit them if the US economy slows. Companies such as Seagram Co and Anheuser-Busch Companies Inc should experience strong growth by the 1997-1999 period.

The beverage industry securities should only appeal to an investor who is interested in a long term investment, although this group will improve in 1994. Brewers will benefit from recovering economies in Europe and the US, and will prosper in the Latin American and Asian/Pacific markets. Ice beer, a new drink category, will help boost sales, and firms will benefit from cost reductions and other financial cuts.

A maturing domestic market for alcoholic beverages makes those companies that are expanding overseas the best bet for potential investors in the industry. Distillers Seagram and Brown-Forman are in an especially strong international position, while brewers Labatt, Coors and Anheuser-Busch plan to expand their international presence. A trend towards value products during the recession made premium brands lose some of their prestige as well as sales.

The alcoholic beverage industry stocks are not expected to do well during 1993-1994, due to the recession and low inflation around the world. Consumers are buying fewer premium brand products and more lower-priced brands. As a result, profits are below the high levels of the 1980s. However, the Clinton administration has yet to propose an excise tax on alcoholic beverages, and the industry outlook is expected to improve over the long term. In addition, Asian, Latin American and other foreign markets are increasing in size, as consumers buy more American products.