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2015/05/22

How to Profit from the Rise of the "Beer Snob"

Bubbles and beer...
Rude Awakening
May 22, 2015
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How to Profit from the Rise of the "Beer Snob"

  • Bubbles and beer
  • The end of the microbrew?
  • Plus: The ultimate social media IPO

Greg Guenthner coming to you from Baltimore, MD...

Greg GuenthnerWarning: the bubble's about to burst!

No silly, not the stock bubble everyone thinks we're in. The beer bubble...

That's right. The beer market might be getting a little too heady these days. Too many craft beers--yet not enough craft beer drinkers to keep everyone rolling in profits.

But the good news is that the larger craft brewers will do great. And today we're gonna grab the best of 'em...

There are just way too many craft breweries popping up all over the place. It's unsustainable. Sure, it's great to have your pick of a billion different experimental beer styles but come on already.

Consider these statistics from Fortune:

The number of craft breweries has more than doubled over the past six years. And by the end of this year there'll be a new craft brewery opening in the U.S. every 12 hours. Every 12 hours!

Now I'm seeing this stuff called sour beer showing up. I guess it's been around for a while but I've never heard of it. Have you? I just can't bring myself to try it. Call me crazy but to me 'sour' and 'beer' don't mix. It just seems that this whole craft beer thing might be getting out of hand. You can keep your damn strawberry and peach beer. Ya know?

Anyway, it's funny that we've witnessed the birth of the "beer snob" over the past few years, especially when you consider that for decades beer was a working man's drink enjoyed best shirtless after mowing the lawn on a hot summer day.

But this is a huge market we're talking about here...

Now, do I think every craft brewer will go flat if this whole craft beer trend tanks? Nah. The big kids that earned market share will probably be fine. It's the Johnny-come-lately's that'll suffer the most.

So while smaller microbrews might not be the best investment right now, I think the trend of better beer isn't going anywhere. And the bigger breweries are realizing they need to figure out how to compete in a market where tastes are clearly evolving.

So saddle up to the bar and order yourself a cold one for the long Memorial Day weekend-- it might actually help you book some gains.

Just don't order any of that stupid sour beer.


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Rude Numbers

When to Buy... When to Sell
18,285

is where the Dow Jones Industrial Average closed yesterday. All of the major averages have traded in very tight ranges this week...

$60.15

buys a barrel of crude today. Oil is back above $60 after Thursday's strong rally...

$2.95
is the price of natural gas this morning. Natty is stalling out below the $3 mark after a three-week rally off its lows...
$1,211
is where you'll find gold futures today. The shiny yellow metal is up about $8 in early trading...
2,128

marks the spot for S&P futures just before the morning bell. Stocks are looking to pick up where they left off yesterday...


Rude Trends

When to Buy... When to Sell

"Loved your Awakening today," a reader comments on our death care edition. "Especially the Social media poke. I await the next Social media IPO combining YouTube, Twitter and Facebook. Death to us all!"

Unfortunately, I don't think you're going to get your wish. Twitter and Facebook are already public companies. And YouTube is owned by the folks over at Google.

Now, if we ever do see a social media merger of this magnitude, you can bet that'll be a sign that we can stick a fork in this whole social media thing. But hey, there are already some beat charts in this group. I wouldn't want to buy Yelp, LinkedIn, or Twitter right now. None of these stocks look strong after taking earnings beatings. Maybe this whole sector will melt away quietly, leaving only Facebook to catalogue all of our personal information.

Have a great holiday weekend. I'll be back Tuesday...

[Ed. Note: Send your feedback here: rude@agorafinancial.com - and follow me on Twitter: @GregGuenthner]


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