Next on the list is global megabrewer Heineken (HEINY). Beer is no longer much of a growth industry in the West, but demand is stable. And in many emerging markets, beer still is a phenomenal growth opportunity and an excellent way to invest in rising incomes among the new global middle class.
Heineken gets about half of its revenues and 64% of its sales by volume from emerging-market countries, and it has excellent positioning in Africa — the last real investing frontier of any size. Africa already accounts for 22% of Heineken’s sales by volume and 14% of revenues, and this percentage will only increase with time as African consumers trade up from homebrews to branded beer.
Prices are considerably higher in developed countries, which explains the gap between revenues and sales by volume. Heineken sells less beer in the West, but it charges more for the beer it sells. As incomes rise in emerging markets, expect this gap to close.
Thirty years from now, Microsoft (MSFT) and Apple (AAPL) might no longer exist, or if they do, you can bet that they will look vastly different than they do today. But 30 years from now, beer drinkers the world over will still be cracking open bottles of their favorite brews.
Heineken trades for a reasonable 17 times earnings and pays a modest 1.8% dividend. Buy it and don’t let go.