Alcohol sales have surged in the United States as people try to raise their spirits or pass the time while stuck at home during the pandemic .

Minibar Delivery – a website and app that facilitates home delivery of alcohol – has been riding this wave. From March 11 through April 13, Minibar saw overall sales rise by nearly 150% compared to the previous month as orders more than doubled and new customers grew by nearly sevenfold.

"People are trying to make occasions to drink," Minibar CEO Lindsey Andrews says.

Read:

It's not just online alcohol sales that are up. Total domestic liquor sales at retail outlets like grocery and package stores – which does include alcohol ordered online – were up 25% in the week ending April 4 compared with a year ago, according to market research firm Nielsen. That's ahead of the 22% surge in retail sales the firm estimates would be necessary to replace sales from the collapsed market that includes restaurants and bars.

That's a good sign for alcohol producers, which have seen their shares rebound in the days following the mid-March sell-off . These stocks haven't fully recovered, though. While the dip may have created a bargain opportunity for some, it also reflects uncertainty for the shares of producers including Anheuser-Busch InBev (ticker: BUD ), Diageo ( DEO ), Constellation Brands ( STZ ), Brown-Forman Corp. (BF.A, BF.B) and Molson Coors Beverage Company ( TAP ).

"Those mainstream companies are probably good buys now," says Louis Terminello, partner with the Greenspoon Marder law firm, where he provides legal services to the alcoholic beverage industry. "They will climb their way back to the top."

Tim Bain, chief investment officer at Spark Asset Management Group, has recently bought shares of Constellation for a few clients. "I think Constellation will weather any near-term recession and offers good growth potential," Bain says.

While alcohol stocks may look attractive right now – and some companies could in fact make good buys today – investors should weigh recent success against the long-term outlook for this industry.

Here are a few things to keep in mind:

Alcohol stocks tend to do well in down times.

Current sales may not be sustainable.

The perks of being an "essential business."

High Proof, Recession Proof

Alcohol stocks tend to be recession-resistant because people drink no matter how the economy is performing.

"People drink in good and bad times," Terminello says.

While a diversified basket of alcohol stocks will perform well regardless of the economy's health, liquor sales go through phases that are linked to economic cycles , says Dan Ahrens, chief operating officer of AdvisorShares, which runs the AdvisorShares Vice ETF ( ACT ) that includes alcohol makers.

Read:

In the last decade, as the economy has been in growth mode and the bull market in stocks made a historic run, there has been a shift toward more expensive craft beer and higher-end liquor and wine. This has benefited companies like Boston Beer ( SAM ) and Brown-Forman, at the expense of sales of "low-rent beer," Ahrens says.

That atmosphere appears to be changing today. A pandemic-sparked recession would shift that equation toward cheaper beer that sells better when people earn less money, Ahrens says.

A Closer Look at the Alcohol Sales Spike

Despite the recent bump in overall alcohol sales in the U.S., the outlook for these companies is still uncertain as a global curtailment on travel reduces drinking on planes and trains, restaurants and bars remain closed and the impact on international markets will be significant.

Diageo has reported that it's unclear whether the pickup in retail-store sales in North America and Europe will be sustained. Indeed, the latest Nielsen sales number for the total U.S. retail alcohol market is markedly lower than the 55% year-over-year growth recorded in the week ended March 21.

A key factor is how much of the buying is related to stockpiling versus immediate consumption. People who have stocked up on booze may not need to return to the liquor store or order more online for some time.

While some of the increased domestic booze sales are from panic-buying amid the "toilet-paper-and-whisky syndrome," some are from restaurants selling to-go alcohol along with food as well as from people drinking more as they have more time on their hands, Terminello says.

"It's easier to sit around with friends and family and uncork a bottle or two," he adds.

READ:

The Essential Business Status Boost

A significant portion of U.S. alcohol sales right now are coming from liquor stores, which, along with gas stations and beverage production facilities, are considered essential businesses and have been safeguarded from forced closures.

"The decision by the federal and state governments to deem liquor stores as an essential business during this time is quite nuanced, as there are many scientific, health and economy-related factors at play," Andrews says.

Most U.S. consumers endorse and condone liquor consumption as it is interwoven with a lot of American life and provides important tax revenue, Ahrens says.

Like grocery stores, liquor stores can still operate in times of social distancing, unlike bars and restaurants, he notes. Shopping for liquor can be therapeutic. Furthermore, shuttering liquor stores could make them more vulnerable to robberies, Ahrens says.

Wine and beer sales complement the food that restaurants are serving to go, says Terminello, whose firm recently lobbied Florida's government to permit restaurants at which curbside and delivery service is available to also sell alcohol to go.

7 Top Stocks in the Strongest Industries

Compare Offers

Compare Offers