Distilling and brewing stocks ‘most profitable’

11th February, 2015 by Becky Paskin

Entrepreneurs looking to invest in British business stock are better off putting their money into brewing and distilling companies, whose shares have been the best performing over the last 115 years.

The-Glenlivet-distillery

The distilling and brewing industries have reaped the biggest gains for investors over the past 100 years

A study published by the London Business School and Credit Suisse found that £1 invested in UK brewing and distilling shares in 1900 would be worth £243,152 today, with dividends reinvested.

By contrast, the same amount invested in engineering shares, which thrived in the early 20th century, would only equal £2,280 today.

The research, by Elroy Dimson, Paul Marsh and Mike Staunton of London Business School into responsible investing, showed that “sin” stocks (tobacco and alcohol) garner the biggest returns in the long-term.

While US alcohol stocks paled in comparison to Britain’s – largely due to the effect of Prohibition between 1920-33, investors in American tobacco companies fared much better.

In fact, the study shows just US$1 invested in American tobacco in 1900 would have reaped US$6.28m 115 years later, so long as dividends were reinvested.

Professor Dimson said the addictive nature of alcohol and tobacco may not be the sole reason for the industries’ success, but rather that some “ethical investors” declined to buy shares, thereby artificially lowering prices.

“Bizarrely this would be evidence that faith-based investors in the first half of the 20th century, and all sorts of ethical investors in the second half, had an effect,” he said.

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