how to play it
craft beer—how quaint, how cute! But don’t fall in love with an investment because you love the product. craft Brew alliance is an assortment of artisanal beermakers from Oregon, hawaii, New hampshire and elsewhere. But a fair amount of its brewing and most of its distribution is handled by anheuser-busch inbev, the Budweiser outfit. in this crowded business, where freshness and economies of scale matter, smallness does not confer profits. craft Brew’s enterprise value runs to 29 times its plausible 2017 net before interest, tax and depreciation; the ratio for ab inbev is more like 18. Own the latter.
William Baldwin is Forbes’ Investment Strategies columnist.