The Best Consumer Defensive Stocks to Buy

Consumer defensive stocks are like umbrellas; you want them around in case economic skies darken. These companies provide goods and services that consumers will purchase and use regardless of whether times are good or bad.

Over the past 12 months, the Morningstar US Consumer Defensive Index rose 7.83%, while the Morningstar US Market Index gained 22.98%.

The 12 Best Consumer Defensive Stocks to Buy Now

These were the most undervalued consumer defensive stocks that Morningstar’s analysts cover as of March 11, 2026.

1. Campbell’s CPB
2. Lamb Weston Holdings LW
3. The Kraft Heinz KHC
4. Brown-Forman BF.B
5. General Mills GIS
6. Constellation Brands STZ
7. Diageo DEO
8. Clorox CLX
9. Mondelez International MDLZ
10. Kimberly-Clark KMB
11. The Estée Lauder Companies EL
12. The Boston Beer Company SAM

To come up with our list of the best consumer defensive stocks to buy now, we screened for:

• Consumer defensive stocks that are undervalued, as measured by our price/fair value metric.
• Stocks that earn narrow or wide

  Morningstar Economic Moat Ratings

  . We think companies with narrow economic moat ratings can fight off competitors for at least 10 years; wide-moat companies should remain competitive for 20 years or more.

• Stocks that earn a Low, Medium, High, or Very High

  Morningstar Uncertainty Rating

  , which captures the range of potential outcomes for a company’s fair value.

Here’s a little more about each of the best consumer defensive stocks to buy, including commentary from the Morningstar analysts who cover each company. All data is as of March 11, 2026.

Campbell’s

• Morningstar Price/Fair Value: 0.38
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 6.80%
• Industry: Packaged Foods

Packaged-food company Campbell’s is the most affordable stock on our list of the best consumer defensive stocks to buy. Over the past 150-plus years, Campbell’s has evolved into a leading domestic packaged-food manufacturer, with a portfolio that extends beyond its iconic red-and-white labeled canned soup. The stock is trading 62% below our fair value estimate of $60 per share.

Over the past six-plus years, Campbell’s has orchestrated significant changes. For one, the portfolio mix has shifted significantly: Its core soup lineup now accounts for just over 25% of total sales (down from more than 40% in fiscal 2017), while snacks account for just over 40% (up from less than 30%). In addition, the firm has worked to drive efficiencies across its supply chain and manufacturing network to boost spending behind its brands and capabilities, thereby solidifying its competitive edge. The byproduct of these efforts has been 1% average annual organic sales growth over the past five years alongside low-teens average adjusted operating margins.

We expect further gains from Campbell’s sound strategic focus—leveraging technology, data insights, and artificial intelligence to bring products to market that align with evolving consumer trends in a timely manner while strictly managing costs. To further these efforts, Campbell’s recently outlined plans to unlock $375 million in savings through fiscal 2028 (up from $250 million previously), in addition to the $950 million realized over the past few years, driven by optimization, technological enhancements, and reduced indirect spending. Importantly, we don’t expect these efforts merely to enhance the bottom line, but to fund investments in consumer-valued innovation and marketing. As such, we forecast 5% of sales will be directed to research, development, and marketing annually on average (approximately $575 million). We see this as key to helping ensure its brands keep pace with consumer preferences, underpinning the firm’s intangible-based moat.

We think Campbell’s still seeks inorganic growth opportunities. Most recently, Campbell’s acquired a 49% stake in La Regina, maker of Rao’s sauces. This follows the 2024 acquisition of Sovos Brands, which generates around $1 billion in annual sales. We see its exposure to the premium sauce aisle complementing its lower-priced Prego brand and benefiting from Campbell’s financial resources and entrenched retailer relationships. This addition should spur distribution gains as the integration progresses, juicing its sales prospects.

Read more about Campbell’s here.

Lamb Weston Holdings

• Morningstar Price/Fair Value: 0.54
• Morningstar Uncertainty Rating: High
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 3.50%
• Industry: Packaged Foods

Lamb Weston is North America’s largest and the world’s second-largest producer of branded and private-label frozen potato products, both by volume and value. Lamb Weston Holdings is an affordable consumer defensive stock, trading at a 46% discount to our fair value estimate of $80 per share. The packaged-food company earns a narrow economic moat rating.

Lamb Weston is North America’s largest frozen potato producer (more than 40% share), followed by McCain Foods (30%), J.R. Simplot (20%), and Cavendish Farms (7%-8%), though it trails McCain globally. The firm primarily sells french fries to restaurants. Despite its niche focus, we view frozen potatoes as positioned for solid long-term demand growth.

Historically, there’s been enough demand for high industry capacity utilization rates, reducing price competition. Moreover, Lamb Weston primarily sources its potatoes from the Columbia Basin and Idaho regions, which boast the highest yields, leading to 10%-20% lower costs per pound. Its position is protected by the difficulty in securing water rights for new agriculture. While it doesn’t grow most of its own, multiyear contracts and long-standing farmer relationships protect its supply position.

Global frozen potato demand grew at a robust 5% per year before the pandemic, and we see tailwinds that should support a return to high growth. While 42% of global menus feature french fries, only 23% of US restaurants offer the item. The item is popular across all ages, which should drive incremental sales if added to menus. Also, fries are very profitable for restaurants, with one of the highest contribution margins at 81%. Although QSR traffic remains weak, we think Lamb Weston’s focus on improving execution should help drive volume improvement nonetheless.

Sluggish restaurant traffic, industry capacity expansions, and price investments are likely to weigh on operating margins in the near term. However, we think long-term demand growth will eventually absorb excess capacity. Restructuring efforts to shutter older, higher-cost production and temporarily curtail other capacity should help. Still, with QSR traffic slow to recover, it may take years before margins recover to historical levels. On the positive side, North American utilization has already returned to the low-90% range.

Longer-term, GLP-1 drugs are a risk, with our forecast for 16% of US adults taking them for obesity by 2031. However, we think these drugs will only slow the growth of, rather than reduce, the number of obese people.

Read more about Lamb Weston Holdings here.

The Kraft Heinz

• Morningstar Price/Fair Value: 0.55
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 6.91%
• Industry: Packaged Foods

Next on our list of the best consumer defensive stocks to buy is The Kraft Heinz. In July 2015, Kraft merged with Heinz to create one of North America’s largest food and beverage manufacturers. The stock is trading at a 45% discount to our fair value estimate of $42 per share.

The 2015 Kraft Heinz merger has failed to deliver a durable improvement in sales and profitability. But recently appointed CEO Steve Cahillane sees opportunities to invest in its brands and capabilities—to the tune of an incremental $600 million. With this slated as its prime directive, he’s put the firm’s pending plans to split on ice. We never thought that separating its operations would bring an enhanced level of focus that would ultimately boost its competitive position or financial prospects. While we look favorably upon this strategic pivot, we recognize it will take time for the fruits of this stepped-up spending to manifest.

Similar to others, the firm has succumbed to the waning consumer spending narrative. In this vein, we aren’t surprised that management is also opting to lower opening price points and alter pack sizes in some of its categories to increase its appeal to value-conscious consumers after years of inflation-induced pricing. The combination of brand spending and managing price gaps have begun to yield some initial traction (evidenced by the fact that 70% of its taste elevation mix is now gaining share). However, we also suspect management could siphon select, noncore brands and businesses in time to ensure it is adequately positioned to navigate an intensely competitive backdrop.

Over the last few years, Kraft Heinz has abandoned its past bent of prioritizing profits over growth, favoring the pursuit of consistent, profitable growth instead; we don’t expect it will change course here. Since the start of fiscal 2023, Kraft Heinz has generated around $2 billion in savings on its way to $2.5 billion by the end of fiscal 2027. We perceive these actions as a way to free up resources to reinvest in its product mix rather than juicing profits, with a focus on more effectively leveraging innovation, boosting marketing spending, and enhancing the returns from its promotional spending. Taken together, we believe these actions will aid its brand standing with consumers and strengthen its retail relationships. We forecast research, development, and marketing to amount to 6%-7% of sales annually for the next 10 years, up from 4%-5% historically.

Read more about The Kraft Heinz here.

Brown-Forman

• Morningstar Price/Fair Value: 0.65
• Morningstar Uncertainty Rating: High
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 3.78%
• Industry: Beverages – Wineries & Distilleries

Brown-Forman is a US-based manufacturer of premium distilled spirits that generates 71% of revenue in the whiskey category, under well-known Tennessee whiskey brand Jack Daniel’s and bourbon brands Woodford Reserve and Old Forester. Trading 35% below our fair value estimate, Brown-Forman has an economic moat rating of wide. We think shares of this stock are worth $37 per share.

We award a wide economic moat rating to Brown-Forman, primarily based on the strong brand intangible assets associated with the spirits maker’s premium American whiskey portfolio that makes up 71% of sales.

With over 150 years of distilling experience specializing in Tennessee whiskey and Kentucky bourbon, Brown-Forman has earned accolades and loyalty from consumers for distinct flavors and consistent quality, building strong brand equity for its core Jack Daniel’s trademark in the US and globally. We are constructive on the growth prospects of the premium spirits maker, as its high-end positioning in the structurally attractive whiskey category (where a multiyear aging process creates significant entry barriers) aligns well with the industry’s premiumization trend. Beyond this, we surmise the firm is poised for volume expansion, thanks to a strong innovation pipeline promising new launches not only in whiskeys and tequilas but also in the attractive fast-growing ready-to-drink category. In particular, close collaboration with wide-moat Coca-Cola for the global launch of the Jack and Coke premix cocktail should allow the distiller to capitalize on demand tailwinds and benefit from Coke’s distribution breadth internationally. Additionally, recent entry into new categories of gin and rum via acquisitions of super-premium brands should broaden the appeal of Brown-Forman’s overall alcohol portfolio and add a new avenue of growth, though the revenue contribution will likely remain small in the near future.

Brown-Forman’s growth outlook is not without risks, though. The distiller and its spirits peers are facing regulatory headwinds in developed countries and rising caution among younger consumers regarding the health impact of alcoholic drinks. While acquisitions can accelerate category diversification, integration missteps may pose a risk. The ongoing trade spats between US and key trading partners such as Canada may also stall Brown Forman’s pace of overseas expansion. That said, we expect the distiller will continue to thrive thanks to its advantaged competitive position and the Brown family’s long-term focus.

Read more about Brown-Forman here.

General Mills

• Morningstar Price/Fair Value: 0.68
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 6.00%
• Industry: Packaged Foods

General Mills is a global packaged-food company that produces snacks, cereal, convenient meals, dough, baking mixes and ingredients, pet food, and superpremium ice cream. The firm earns a narrow economic moat rating, and the shares of its stock look 32% undervalued relative to our $60 fair value estimate.

Supported by near-term investment in narrowing price gaps and new product development, we expect General Mills’ portfolio of strong brands to maintain an intangible edge. This investment helps products sell well, driving traffic that entrenches the company’s relationships with retailers. In many categories, General Mills has not only the top brand but also several leading brands that together create a dominant companywide share. For example, top brand Cheerios holds about 11% of the US ready-to-eat cereal market, contributing to the company’s leading 30% market share in calendar-year 2024, according to Euromonitor.

Cereal has been slowly losing favor on US breakfast tables, but General Mills will remain a share leader in the $11 billion market, which continues to be an important category for retailers. According to Euromonitor, market volumes have shrunk roughly 2 percentage points per year over the past decade through calendar-year 2024 amid shifting favor to protein from carbohydrates and falling dairy consumption. Over that same period, General Mills’ share has held relatively steady, with private label taking share from peers in the current challenging consumer environment.

We think General Mills has done a good job leveraging its strength in cereal to snacks, now its largest single product category at 21% of fiscal 2025 revenue. For example, its Nature Valley brand holds a commanding 23% share in US cereal bars. Combined with convenient meals (14% of fiscal 2025 revenue), dough (12%), baking mixes (10%), and ice cream (4%), General Mills holds leading brands in many grocery store aisles, adding to its importance to retailers.

Pet food (13%) is another important category for General Mills, with Blue Buffalo holding top share in the $42 billion US dog food market and the sixth position in the $18 billion US cat food market. These categories are growing fast, benefiting from growing pet ownership and humanization. General Mills’ pet sales growth will benefit from leveraging its Blue Buffalo brand in its investment into fresh pet food, the fastest-growing subcategory. Overall, we expect growth in pet food to outpace more mature aisles of the grocery store.

Read more about General Mills here.

Constellation Brands

• Morningstar Price/Fair Value: 0.68
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 2.72%
• Industry: Beverages – Brewers

Constellation Brands is the largest provider of alcoholic beverages across the beer, wine, and spirits categories in the US, generating 84% of revenue from Mexican beer imports under top-selling brands such as Modelo and Corona. Trading 32% below our fair value estimate, Constellation Brands has an economic moat rating of wide. We think shares of this stock are worth $220 per share.

Constellation Brands benefits from a Morningstar Economic Moat Rating of wide due to the strong brand equity and tight distributor relations enjoyed by the brewer’s top-selling, imported Mexican beer portfolio.

Constellation has earned its perch as the top player (with a 73% volume share) in the premium import beer niche in the US, thanks to its 2013 acquisition of exclusive distribution rights for Mexican beer brands, including Modelo and Corona, in the country. We give the brewer credit for smart ad campaigns and strong quality control, which have bolstered and reinforced the popularity and premium positioning of its two crown jewel brands. Constellation capitalized on premiumization tailwinds to drive 7% annual beer volume growth between fiscal 2020 and fiscal 2024, bucking the sluggish beer category trends. However, growth stalled amid recent macro headwinds with volumes down an average 4% in the past four quarters.

We expect weak beer demand to persist in the near future, given consumer belt-tightening, especially among the Hispanic cohort to which Constellation has a 40% sales exposure. That said, we remain constructive about the long-term outlook of its beer business, given the strong position of its premium brands, expertise in ramping newer brands including Pacifico and Victoria, and a solid innovation pipeline, including new flavors, nonalcoholic, and lower-calorie beers that resonate with younger drinking-age consumers. The brewer also prudently stepped up activation among non-Hispanic consumers and in on-premises channels, positioning itself for volume reacceleration when the demand environment improves.

Other risks that the firm faces include competitive encroachment from categories adjacent to beer (such as spirits-based ready-to-drink beverages), and craft beer brands that pose a threat at the local and regional level. Also, alcohol content labeling regulations and more health awareness among younger consumers may dampen demand. It has also struggled to turn around its wine and spirits business (16% of sales), but the recent sale of vodka and mass market wine brands should allow it to sharpen its focus on more promising premium offerings.

Read more about Constellation Brands here.

Diageo

• Morningstar Price/Fair Value: 0.69
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 5.19%
• Industry: Beverages – Wineries & Distilleries

Formed in 1997 through the merger of Grand Metropolitan and Guinness, Diageo is the largest distiller globally by sales. Trading 31% below our fair value estimate, Diageo has an economic moat rating of wide. We think shares of this stock are worth $116 per share.

Diageo was formed in 1997 following the merger of Grand Metropolitan and Guinness. Mergers and acquisitions are part of the firm’s fabric, and subsequent transactions have established Diageo as a global industry leader. The largest spirits players have expanded and scaled their portfolios over decades, holding as many as 250 brands, and we believe there is more consolidation to come. Outside the top five firms, the industry is highly fragmented, and regional players often dominate in niche product categories or local markets. These firms present acquisition opportunities for the industry consolidators, including Diageo, to expand their footprint.

The key motivation for Diageo’s acquisition strategy in previous years was to broaden the product portfolio, which is critical in the on-trade channel (bars, restaurants, pubs). Volume in the spirits industry is more cyclical than beer, and with transient trends. For instance, Diageo benefited from the rise in popularity of tequila in previous years. Its broad presence across categories with both global strategic and local niche brands mitigates the risk to volume from shifting consumer preferences. The company is leveraging its portfolio for product innovations in high-growth categories, such as ready-to-drink formats.

Diageo is also focusing on premiumization, which we think will be a long-term tailwind to revenue and margins. We see the long-term secular trend of consumers “drinking less but better” gradually leading to pricing growing ahead of volume in select categories. The way Diageo has laddered the pricing structure of brands such as Johnnie Walker demonstrates that there is a vast scope for premiumizing some of the core brands in the portfolio. Diageo is also shedding noncore brands that are less margin-accretive.

Read more about Diageo here.

Clorox

• Morningstar Price/Fair Value: 0.69
• Morningstar Uncertainty Rating: Medium
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 4.42%
• Industry: Household & Personal Products

Since its inception more than 100 years ago, Clorox has expanded to operate in a variety of consumer product categories, including cleaning supplies, laundry care, trash bags, cat litter, charcoal, food dressings, water filtration products, and natural personal care products. The firm earns a wide economic moat rating, and the shares of its stock look 31% undervalued relative to our $163 fair value estimate.

With its entrenched retail standing and unrelenting focus on investing in its leading brand mix, Clorox has withstood the onslaught of pressures from covid, supply chain angst, rampant inflation, and an August 2023 cybersecurity attack. More recently, it has acknowledged a step-up in industrywide promotional spending, particularly in litter, bags, and wraps. Still, we don’t believe this suggests an irrational competitive landscape or that the firm is pursuing a volume-over-value strategy. Instead, from our perspective, Clorox remains resolute in investing to support the long-term health of the business, ensuring its competitive edge remains intact.

The pandemic buoyed e-commerce adoption, and Clorox realized the need to invest to bolster its digital capabilities, earmarking more than $500 million to accelerate productivity improvements, which we view as prudent. We’re encouraged that Clorox’s strategy remains anchored in bringing consumer-valued innovation to market and touting its fare to consumers, which strikes us as particularly critical against the current backdrop of tepid consumer spending and intense competition. Clorox goes to bat against lower-priced private-label fare in most categories, but we believe investments in innovation and marketing should help its products stand out on the shelf and deter trade down. This underpins our forecast that Clorox will allocate around 13% of sales annually—just over $1 billion—to research, development, and marketing.

Even with these investments, we believe Clorox is on a path to maintaining the mid-40s gross margin that historically characterized the business (up from the low 30s trough in the second quarter of fiscal 2022, when cost inflation proved to be a sizable headwind). And despite the potential hit from tariffs (which management had pegged at $40 million on a 12-month basis, or just a low-single-digit percentage of cost of goods sold), we think Clorox will prudently use a combination of cost-savings endeavors, price pack architecture, and surgical price hikes to dull any lasting hit to the margins.

Read more about Clorox here.

Mondelez International

• Morningstar Price/Fair Value: 0.74
• Morningstar Uncertainty Rating: Low
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 3.61%
• Industry: Confectioners

Mondelez has operated independently since its split from the former Kraft Foods North American grocery business in October 2012. Trading 26% below our fair value estimate, Mondelez International has an economic moat rating of wide. We think shares of this stock are worth $75 per share.

Even amid the recent volatility around cocoa prices, CEO Dirk Van de Put hasn’t wavered from his commitment to drive balanced sales and profit growth at wide-moat Mondelez. As a part of these efforts, it has worked to extend the distribution of its fare, fund investments behind its local and global brands, empower its local leaders, and increase the agility by which it brings innovation to market (aims that are hitting the mark). Against this backdrop, Mondelez targets long-term sales growth of 3%-5% as it seeks to sell its wares across more channels and to reinvest in new products aligned with evolving consumer trends at home and abroad. Further, it has prudently acquired niche brands to expand its category and geographic exposure, and we anticipate it will continue to pursue inorganic targets when the opportunity arises.

But despite efforts to bolster sales, we never expected the pendulum to shift entirely to top-line gains under Van de Put’s watch; instead, based on his tenure at privately held McCain Foods and past rhetoric, we suspected that ensuring such growth was profitable would be the priority. In this context, Mondelez has proven unrelenting in its commitment to remove complexity from its operations by rationalizing its supplier base, parting ways with unprofitable brands, and upgrading its manufacturing facilities. More recently, Mondelez announced a multiyear enterprise resource planning rollout and an effort to automate and optimize its manufacturing and supply chain network in North America, which should unlock additional cost savings (as yet undisclosed). Importantly, we don’t think this will be disruptive to its underlying operations, given its staggered implementation approach.

From where we sit, these savings are unlikely merely to boost profits. In this vein, management has stressed that a portion of any savings realized would be spent supporting its research, development, and marketing endeavors, buttressing the intangible assets underpinning Mondelez’s wide moat. This aligns with our forecast that research, development, and marketing will average nearly 7% of sales over the next 10 years (about $3 billion annually).

Read more about Mondelez International here.

Kimberly-Clark

• Morningstar Price/Fair Value: 0.75
• Morningstar Uncertainty Rating: High
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: 5.12%
• Industry: Household & Personal Products

With more than half its sales from personal care and another third from consumer tissue products, Kimberly-Clark is a leading manufacturer in the tissue and hygiene realm. The firm earns a narrow economic moat rating, and the shares of its stock look 25% undervalued relative to our $133 fair value estimate.

Like its peers, narrow-moat Kimberly-Clark has been faced with numerous challenges, including a tepid economic environment and elevated cost pressures stemming from inflation and tariffs. But we don’t think adding Kenvue’s languishing consumer health brands is the right elixir. This counters Kimberly’s recent bent to focus its resources on its core personal care brands across baby, feminine, and adult care. And it will take significant resources to drive accelerating sales and profits at Kenvue, in our view.

While we’re skeptical that this tie-up will add value in the near term, we posit that Kimberly will employ a prudent playbook to steady Kenvue’s footing, anchored in investing resources in innovation and marketing to ensure its products keep pace with evolving consumer trends, thereby strengthening its brand prowess in both physical and e-commerce outlets. In this context, we’re encouraged that enhancing its value proposition and leveraging consumer insights across geographies and categories has been an area of focus for product development. Beyond countering near-term competitive pressures, we surmise this will prove even more advantageous in the longer term, given the lack of switching costs associated with consumer product offerings.

Supporting this plan, we expect Kimberly to work to extract inefficiencies from its operations (targeting productivity at 6% of adjusted cost of goods sold in fiscal 2025). Additionally, management targets $1.9 billion in cost synergies within three to four years of the transaction’s close, which represents about 15% of Kenvue’s cost of goods sold and operating expenses. Although we recognize the added negotiating leverage the combined business is likely to possess and the opportunity to eliminate duplicative costs from a manufacturing, supply chain, and personnel perspective, we view this target as lofty. However, a portion of any savings realized will likely be funneled into its brands. Our forecast anticipates that 10% of the combined firm’s sales will be allocated to research, development, and marketing annually over the next decade. We view this spending as critical to buttressing its standing with retailers and consumers.

Read more about Kimberly-Clark here.

The Estée Lauder Companies

• Morningstar Price/Fair Value: 0.76
• Morningstar Uncertainty Rating: High
• Morningstar Economic Moat Rating: Wide
• Forward Dividend Yield: 1.53%
• Industry: Household & Personal Products

Estée Lauder is a leader in the global prestige beauty market, participating across skincare (49% of fiscal 2025 sales), makeup (29%), fragrance (17%), and hair care and others (5%). The firm earns a wide economic moat rating, and the shares of its stock look 24% undervalued relative to our $120 fair value estimate.

As a leading provider of premium beauty products, Estée Lauder owns category-leading brands in skin care, cosmetics, and fragrances that underpin its brand intangibles, and it retains preferred vendor status across brick-and-mortar and digital channels. These attributes, coupled with scale-based cost advantages, should augur a long-term competitive edge that enables the firm to deliver excess returns for more than 20 years. As such, we assign Estée Lauder a wide moat.

We see Estée Lauder poised to benefit from premiumization trends, as beauty consumers in developed and emerging markets alike upgrade to perceived higher-quality ingredients, efficacy, and services. Outside its North America home market, the beauty product maker is also well-positioned in Europe, where premium beauty demand has proven resilient over the past decades, as well as in Asia (where skin care accounts for 50% of premium beauty purchases), thanks to highly regarded La Mer and Estée Lauder brands. Under the new management, we expect Estée Lauder to dial up investments in digital engagement via both third-party channels and owned direct-to-consumer sites, to complement its strong ties with brick-and-mortar retailers, keeping Estée Lauder’s brands top of mind for consumers and ensuring its products are easily accessible as beauty users shop across channels.

Despite our sanguine view on Estée Lauder, we see risks on the horizon. The premium pure-play is more exposed to macro cyclicality versus peer L’Oréal (over 40% sales from mass beauty), as evidenced by its recent multiyear challenges in China amid a weak macro backdrop. That said, we remain impressed by its ability to grow share in China, leveraging product innovation and high-touch consumer engagement. Additionally, while adding Sephora US to the distribution of the M.A.C brand should provide a lift, Estée Lauder may need time to refresh its overall cosmetics portfolio, leaving the firm vulnerable to market share loss to rivals such as L’Oréal and LVMH. That said, we view the new management team and the Lauder family as well-equipped to navigate the challenges and position the firm for long-term growth.

Read more about The Estée Lauder Companies here.

The Boston Beer Company

• Morningstar Price/Fair Value: 0.76
• Morningstar Uncertainty Rating: Very High
• Morningstar Economic Moat Rating: Narrow
• Forward Dividend Yield: None
• Industry: Beverages – Brewers

Alcoholic beverages company The Boston Beer Company rounds out our list of best consumer defensive stocks to buy. Boston Beer is a top player in high-end malt beverages and adjacent categories in the US, with strong positions in craft beer, flavored malt beverages, hard cider, and hard seltzer. The stock is 24% undervalued relative to our fair value estimate of $304 per share.

We award a narrow economic moat rating to Boston Beer based on brand awareness and close distributor relations built over the decades, thanks to the firm’s commercial success in various on-trend categories including flavored malt beverages, hard seltzer, and hard cider, which make up an estimated 80% of total volume.

Although much smaller than the beer behemoths, Boston Beer has thrived thanks to a sharp focus on high-end flavored malt beverages benefiting from premiumization trends. In addition, the firm has demonstrated the ability to augment its portfolio with offerings that best align with demand tailwinds and participate early in growth categories to extract a high level of economic profits ahead of competition. This is exemplified by the string of successes with the Twisted Tea, Truly, Angry Orchard, and Samuel Adams brands building and maintaining top volume shares in their respective categories over extended horizons. The strong unit economics and cash flows that have resulted enable the firm to quickly pivot its portfolio and distribution focus as new growth vectors emerge. Its 2016 launch of Truly ahead of the hard seltzer volume takeoff is a case in point. While we acknowledge a lack of switching costs in beverages, we expect Boston Beer’s focus on flavor varieties and healthier ingredients will continue to resonate with consumers’ evolving preferences and support volume expansion.

Even though Boston Beer faces a number of challenges, chief among them the persistent hard seltzer weakness, we believe it has prudently managed the situation with continued investments in branding and production innovation (including refreshed Twisted Tea offerings and recently launched Sun Cruiser), and strong distributor relationships. While we see the proliferation of malt beverages driven by the competitive inroads from premium distillers and soft drink giants as a risk, we expect Boston Beer to defend its competitive edge by differentiating its brands with consumer-centric innovations (based on its category expertise), combined with targeted marketing through digital and traditional media.

Read more about The Boston Beer Company here.

How to Find More of the Best Consumer Defensive Stocks to Buy

Investors who’d like to extend their search for top consumer defensive stocks can do the following:

• Review Morningstar’s comprehensive list of consumer defensive stocks to investigate further.
• Stay up to date on the consumer defensive sector’s performance, key earnings reports, and more with Morningstar’s consumer defensive sector page.
• Read Morningstar’s Guide to Stock Investing to learn how our approach to investing can inform your stock-picking process.
• Use the Morningstar Investor screener to build a shortlist of consumer defensive stocks to research and watch.