Talking to a buncha mostly larger AB and MC distribs across US this week, Memorial Day sales were generally a positive and month of May up for many, tho when 1 extra selling day factored in, biz not really any great shakes for most. But some distribs in growing Southern cities had strong May, especially if they had right portfolio (tho 1 reported "horrible" holiday hit by gas prices). Biggest difference maker remains Constellation. Total picture yr-to-date presented by many of these distribs healthier than one might have imagined, especially since nationwide industry depletions reportedly down a couple points thru May. Some big cities doing better, growing, as they come back to life; some rural areas getting hit as economically challenged consumers feeling pinched by gas prices, etc.

"Investors currently treat booze stocks as significantly less harmful than tobacco," Wall St Journal columnist wrote over the weekend. Analysis by Ethos ESG of funds with 200+ holdings found 11.5% of global assets under management exclude tobacco stocks, but just 2.5% bar alcohol investments. By working better with regulators, devoting funds to responsible drinking campaigns and building non-alc portfolios, top alc bev suppliers "are managing the risks well," according to WSJ. But oddly, it still concludes that they "have more in common with tobacco than investors like to admit." That's despite the flat statement that "having a few drinks isn't as bad for your health as smoking, and tobacco firms clearly sell a more toxic product." The column relays WHO estimates that tobacco leads to 8 mil deaths per yr, while alcohol causes 3 mil. Yet the org also asserts that tobacco-related problems reduce global GDP by 1.8%, while separate research suggests drinking causes a 1.6% hit. The paper doesn't question those claims, but does point out that "seven in 10 American adults reported drinking alcohol over the past year," while the prevalence of smoking dropped to 13% in NIAAA surveys. The popularity of drinking, plus associated "economic activity and employment" in hospitality, which "has no real equivalent in the tobacco sector," makes it hard for politicians to vote for alcohol tax hikes, especially in the US (tho look out for efforts in Europe), the column notes. And "without a cultural shift in how society views drinking, the risk that more investors will divest booze stocks seems low." Furthermore, for now, while the threat of even stricter tobacco laws have dampened those stocks, "the harder the better" in alcohol. That is, the outperformance of spirits in the market has helped distiller stocks generally trade at higher earnings multiples than brewer stocks, the paper assessed. Yet that's "at odds with how many governments treat stronger alcohol for tax purposes." So ambivalent attitudes toward alcohol are on display once again. Warning for Parents about Non-Alc Brands Going Hard Pops in LA Some observers looked askance at brand partnerships between major alc bev and non-alc bev producers when they announced "hard" or "spiked" versions of familiar NA brands. Those critics foresaw pushback, expecting claims that such cross-category branding lures underage consumers. Clearest example of those concerns popped on Memorial Day, when Los Angeles' KTLA alerted viewers that "parents need to be mindful of juicy booze brands." Brief piece asserts that "the problem for parents is that some leading edge beverage makers are repurposing existing juice brands as alcoholic beverages," which "poses a danger to little ones who might not understand what a spiked seltzer is, or why it's different from the fruit juice they may find in the fridge under the same brand." It specifically calls out Coca-Cola and Molson Coors collab, Simply Spiked Lemonade, and encourages parents who buy such products to "make sure they're inaccessible to kids." Stay tuned as Simply rolls out this month. Financial Regulators, Public Health Leaders Pick Up ESG Themes: Fund Disclosure Rules & Health Equity As companies commit to ESG initiatives and investments, regulators and researchers seek ways to move the needle, too. Last month, federal financial regulators took additional steps toward transparency in ESG investing at the same time that leaders in US public health published multiple reports and notes aimed at greater equity and inclusion in both health diagnoses and research. The former highlights the growing interest from investors in ESG efforts, especially environmental sustainability, as well as widely varying views of these efforts of the role of regulators. The latter acknowledges that diversity shortcomings stretch across many industries and sectors, taking serious medical and economic tolls. SEC Follows Corporate Climate Disclosure Proposal with Rules for ESG Funds Late last week, the SEC revealed 2 new proposed rules for investment advisers and funds, requiring clearer reporting of specific factors under consideration by funds that claim to have an ESG focus. "There's currently a huge range of what asset managers might disclose or mean by their claims," SEC Chair Gary Gensler said in a statement announcing proposed rules. It comes just 2 months after the agency proposed rules for climate disclosures by publicly traded companies (see Mar 31 issue). Like most government proposals, the suggested rules received mixed reviews. Climate activists argued it doesn't go far enough, while asset manager trade orgs say it will only raise costs that will ultimately be paid by investors, Wall St Journal wrote. The paper pegs global investments in ESG or sustainability-focused funds at $2.78 trillion in the 1st qtr alone, up from $1 tril 2 yrs ago, based on Morningstar analysis. No matter how the SEC's proposed rules turn out, they represent attempts to create more clarity in an area where both vocabulary and metrics continue to evolve amid fast growth. Closing Health Equity Gaps in Clinical Trials and Diagnoses In May, the Journal of the American Medical Association published a series of letters and news items that do not address alcohol specifically, but instead focus on the medical community's diversity, equity & inclusion goals and strategies. "Inequities in health and health care are common" and "widely recognized," a researcher at Johns Hopkins University's Center for Diagnostic Excellence reminded. Yet research has rarely examined how and how much of that may spring from "inequitable diagnosis" based on location, income and insurance status as well as race/ethnicity, age, gender and sexual identity. Later in the month, the National Academies of Sciences, Engineering, and Medicine published an extensive report that found "the US has fallen short of achieving" its stated goal of including more "women and underrepresented racial and ethnic groups in clinical trials and clinical research," according to a letter from the report's chief author. For instance, participation by Black individuals in trials funded by the National Cancer Institute topped out at 10.5% in any one year, which doesn't track "population representation," let alone "the disparate burden of common cancers in the US Black population." The report estimates tens of trillions of dollars in economic activity available by correcting health inequities. At the same time, the FDA issued draft guidance to help companies that conduct clinical trials enroll diverse and representative participant pools. Alcohol Read-Throughs While none of these stories are alcohol-specific, a couple of threads bear pulling out for closer attention. First, major alcohol supplier ESG commitments, including to transparency and accountability are clearly "on trend," as it were. But as both language and requirements evolve, navigating this space successfully will require both sustained focus and nimble maneuvering. Further, it's notable that members of the medical and public health communities use much of the same language to describe needed changes to their processes and systems. Consider this passage from the letter about equity in clinical research: "Building trust with local communities requires a sustained commitment and presence, with financial investment in [research] infrastructure and systems and technologies to reduce barriers to participation. Inclusive [clinical research] will require transparency and accountability." Replace the bracketed words and the sentences could be applied verbatim to industry equity & inclusion imperatives. Finally, it can't be ignored that broad public health shortcomings apply to alcohol research and diagnoses as well. Even many recent studies of alcohol's impact on health, reviewed by INSIGHTS, urge caution when considering their results for smaller demographic groups due to small sample sizes. And it doesn't take long to imagine possible impacts of disparate diagnosis and treatment of alcohol use disorders. While public health researchers broadly reject industry participation and funding, how might future industry ESG initiatives account for or address these inequities as well?

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