By: Mike Sunderland, Wealth Advisor
Our Freedom From Addictions Screen looks to avoid companies that promote or participate in activities that contribute to common addictions, such as companies involved with gambling, tobacco, and alcohol. A point of contention among Christians with this screen can be alcohol. We make a note of any company that produces, distributes, or produces equipment for alcoholic beverages for members whose convictions are opposed to it entirely.
Supporting or defunding the alcohol industry in America may be more than a matter of alcohol consumption being permissible or forbidden in the Bible. For those who believe that alcohol consumption is forbidden by scripture, the answer is simple. However, even if drinking alcohol is permissible in moderation, owning the corporations that produce alcoholic beverages might not be biblically responsible. In this article, we will research data and ask questions that challenge biblically responsible Christian investors to consider if anyone can own shares of breweries and alcoholic beverage producers with a clear conscience.
In September of 2014, The Washington Post published a blog post that presented the breakdown of alcoholic beverage consumption by Americans. The data presented in the article is astounding, and we need to consider its implications as we select BR investments. The graph pictured comes from the book entitled “Paying the Tab” written by Philip J. Cook in 2007. His calculations were made from research conducted by the National Epidemiologic Survey on Alcohol and Related Conditions.
While many Christians believe that drinking alcohol is permissible, becoming drunk is clearly not. Ephesians 5:6, Romans 13:13, Galatians 5:19-21, and 1 Peter 4:3 are straightforward on the matter. “Do not get drunk on wine, which leads to debauchery. Instead, be filled with the Spirit.” – Ephesians 5:6
Although brewing, producing, or distributing alcoholic beverages may be acceptable in and of itself, the data suggests that the industry currently needs at least some of the population to consume huge amounts of alcohol to be profitable. As shown in the graph, 30% of Americans do not drink at all. The next 30% average only about one drink per month, and only the top 20% consume more than one drink per day. It is debatable whether one can drink 15.28 drinks per week without getting drunk, but the top 10% of Americans leave very little room for doubt. The top tenth of all Americans consume an average of 74 drinks per week! Consequently, if we can rightfully infer sales from consumption, the top tenth of consumers represents over 75% of the industry’s total sales.
What constitutes a drink exactly? To put the number in perspective, a “drink” is the equivalent of about one can of beer. That means the top ten percent of Americans drink 74 beers per week or an average of over 10 cans of beer per day, every day. For more “sophisticated” drinkers, that is about 18 bottles of wine per week.
For biblically responsible Christian investors who might enjoy a sip of the brew, can you also feel free to invest in the alcohol industry if such a large percentage of its profits are likely driven by drunkenness? Is there a conflict of ethics when companies who encourage customers to drink responsibly know that 75% of their profits come from people who drink in excess? Is it possible that the data does not correspond to industry profits? Is it possible that the industry would like more people to drink less, but they cannot help who chooses to drink too much?
The likelihood of the alcoholic beverage industry escaping its ratio of consumers to amounts consumed is slim. The Pareto Principle describes a phenomenon that exists in many relationships between a population and a financial market, and the data suggests that it also applies to alcohol consumption in the American population. The principle basically states that 20% of any input is responsible for 80% of the results obtained. In economics, that means roughly 20% of the people are responsible for 80% of the market share. The research from which this distribution came to be known focused on the relationship between populations and their accumulated wealth. For example, 80% of the wealth of a population is controlled by 20% of the people. This distribution appears so frequently and predictably in economics, that it is often treated as a natural law in the business sphere. If such is the case, attempts to impede the natural distribution could cause damage to the entire system until it returns to equilibrium. The economic implications for wealth and income distributions can be discussed another day, but for our study of alcohol consumption the same principle applies. The Pareto Principle not only applies to incomes and wealth of populations, but it also is seen readily in consumer markets across all product lines. Even in churches, 80% of the church’s income is most likely to come from 20% of the congregation. In every market, about 20% of the people drive 80% of the sales. Successful churches don’t show favoritism, but successful businesses do well to identify their top 20% of customers and keep them satisfied.
There always seems to be a shadowy line where an investment moves from responsible to irresponsible, and this is no exception. A BR investor might invest in a department store whose own corporate behavior and investments are pure. Yet within that same department store, the companies who produce the clothing, cosmetics, or other products sold there might fail for their practices. Beacon Wealth takes the perspective of being responsible for the money that leaves our hands directly. Once it leaves our hands, it becomes the responsibility of the one who received it from us. As investors, we are the legal owners of the companies in which we invest. Our invested money is still in our hands so to speak, and as owners of companies, we are responsible for the company’s behavior in which we are invested. If we are invested in Bon Ton, then we are responsible for what Bon Ton directly supports and promotes in terms of sin and righteousness. If Bon Ton is pure, but it sells products of companies who are irresponsible, then that irresponsibility falls on those companies. Bon Ton is selling a purse, not pornography. But if the purse manufacturer supports pornography, the manufacturer is responsible before God and we would not invest directly in it. If Bon Ton would select a different purse manufacturer or discourage the current one from their side promotions, we wouldn’t mind in the least.
This is also a key difference in owning versus patronizing a business. If we eat at the Olive Garden, for instance, the money that leaves our hands is for the purchase of food and related service. We are not responsible for how Darden Restaurants (owner of the Olive Garden) uses that money or how our server uses his or her tip. On the other hand, if we know that Darden Restaurants directly supports and promotes a sinful agenda, then we may indeed want to rethink our dining choices and/or encourage Darden Restaurants to change their practices with our wallets.
If a man on the street asks us for $50 and we give it to him, then he is responsible for what he does with it. However, would we give him the $50 if we knew that he would use it to get drunk? How does that scenario apply to investing in the alcohol industry? If Anheuser-Busch is pure in every BRI screen (which it is not) except for producing alcoholic beverages, should we consider it a responsible investment when we and the company both know that it needs drunkenness to drive growth? We take this question seriously and must consider it as we choose to keep or ignore the alcohol screen in our investment selections. It is often the case that companies in the alcohol industry fail other screens and are already eliminated from BRI consideration, making our job easier.
As for restaurants or other venues who sell alcohol, their inclusion as a BRI company depends upon the policies and environment surrounding their alcohol sales. If their company policies discourage patrons from drinking in excess, then they are upholding biblical commands. They are not directly contributing to sin through their practices. If; however, they create an environment that is conducive to and/or encouraging drunkenness, then they fail the screen.
These questions remain for each of us. Do the actions of alcoholic beverage producers and distributors directly create an environment that encourages drinking in excess? If we know that our investment in them needs a tenth of the population to drink in excess to grow, is this a biblically responsible investment for Christian investors?