2. Beer, Wine & Spirits
Considering that producing a gallon of wine requires 1,008 gallons of water and a gallon of beer requires 689 gallons of water, the industry as a whole is considerably vulnerable to rising water prices.
Beer companies like Anheuser Busch Inbev (NYSE: BUD), Molson Coors (NYSE: TAP) and Boston Beer (NYSE: SAM) would be hit hard by rising water prices.
Alcohol giant Diageo (NYSE: DEO) is best known for brands like Johnny Walker, Smirnoff and Baileys. But beer and wine together account for 26% of Diageo’s total sales. Constellation Brands (NYSE: STZ) is in largely the same situation.
3. The Coffee Industry
As water scarcity drives the price of water higher, the coffee industry will pay a heavy price. According to the Water Footprint Network it takes 880 gallons of water to produce a gallon of coffee.
That’s 55 gallons of water to produce an 8 ounce cup of coffee.
Like with chocolate, coffee beans are generally grown in regions with abundant natural rainwater. But the effects of changing climates and more expensive irrigation for the plants that are irrigated will certainly be felt.
Starbucks (Nasdaq: SBUX), Green Mountain Coffee Roasters (Nasdaq: GMCR), and Dunkin Donuts (Nasdaq: DNKN) are a few of the bigger coffee brands that would feel the pain if rising water prices spike the price of coffee.
Global Water Crisis: The Bottom Line
If UN forecasts and predictions from the world’s water advocacy community come true then the coming global water crisis will force the price of water to rise. Industries build on products with a high virtual water footprint will surely feel this pain the most, as they are leveraged to the price of water.
Time will tell whether these forecasts come true. But if they do, the coffee, alcohol and candy industries will be hit hard.
This article is brought to you courtesy of Jay Taylor from Wyatt Research.