“Buy Nicotine, Energy Drink, Candy Stocks”: Goldman Tells Clients Get Ready For Party In USA 

Bonnie Herzog, managing director and senior consumer analyst at Goldman Sachs, told clients Tuesday that, after consumer staples’ underperformance in 2025, it is time to buy nicotine, energy drink, candy, and beauty stocks heading into 2026 as a stronger consumer backdrop emerges.

Herzog wrote:

Our View — 2025 has been another year of underperformance by Consumer Staples with all but Nicotine stocks lagging the market as concerns around the health of the US consumer (owing to macro uncertainty, geopolitical tensions, tariffs, layoffs, etc.) which weighed on consumption trends and drove value-seeking behavior amongst consumers during the year.

Heading into 2026, we expect a more constructive US consumer backdrop (esp. middle-income cohorts) given a pickup in real income growth (aided by job growth, tax cuts, and fading tariff-related inflation) to support a discretionary over defensive approach, which will likely weigh on Staples’ performance again next year. Irrespective of Staples’ trajectory, we see an encouraging backdrop for stock picking in 2026. We continue to encourage investors to put new money to work in stocks with exposure to categories with attractive and profitable growth that should outpace broader Staples such as energy drinks, nicotine, candy, and beauty.

Herzog even noted that next year could be considered “the year of beer stocks“:

Furthermore, we believe 2026 could be the year of beer stocks as we expect headwinds to abate and see a few tailwinds such as the lapping of easy comps, better weather (we hope), and increased consumption occasions given a trifecta of events next year including the FIFA World Cup, the Olympics, and the 250th anniversary of the US, which we believe should support greater beer consumption in the year.

Amid the growing specter of a “K-shaped” economy, core retail sales growth was strong in October. Whether that strength reflects inflation or real economic growth, the consumer is holding up in aggregate. With tailwinds expected to emerge in the economy early next year, as Treasury Secretary Scott Bessent recently outlined, Herzog’s bullish call to buy nicotine, energy drink, candy, and beauty stocks appears to reflect that improving backdrop.

Here is Herzog’s bull call (summary):

• Market share gainers and strong topline performers: Philip Morris International and Monster Beverage

• Where bearishness appears overdone: PepsiCo, e.l.f. Beauty, Celsius Holdings, Hershey, and Sprouts Farmers Market

• Beer recovery beneficiaries: Constellation Brands and Molson Coors

• Growth-advantaged emerging market exposure: Philip Morris International, Mondelez International, and Colgate-Palmolive

• Easing cost pressure beneficiary: Hershey

• GLP-1 and better-for-you positioning: Sprouts Farmers Market

Is next year going to be like …. ?

For the full note and a much more granular breakdown of this bull case, ZeroHedge Pro subscribers can read it in the usual place.