US: Big Beer is in a squeeze, and millennials are to blame
Millennials are creating a mounting crisis for some of the most iconic beer brands in America.
Drinkers picked beer less than half of the time when deciding on an alcoholic beverage in 2017, the Wall Street Journal reports, citing the trade group Beer Institute. With beer being picked just 49.7% of the time, the beverage has taken a significant tumble from 60.8% in the mid-1990s.
Some of the most iconic beer brands in the US are being hit hardest by the shift.
Just recently, Molson Coors has reported that sales decreased for the fourth straight quarter, with Coors Light’s decline contributing to the slump. The volume of Heineken sold in the US declined in the high-single digits in the first half of the year, the company also announced.
AB InBev has just reported that US revenues dropped 3.1% in the second quarter, with Budweiser and Bud Light continuing to lose market share.
Millennials have created a boozy crisis
The beer industry has been plagued by what analysts have characterised as a relative lack of interest among millennials.
Beer penetration fell one percentage point in the US market from 2016 to 2017, while both wine and spirits were unmoved, according to Nielsen data. And, beer lost 10% of its market share to wine and hard liquor from 2006 to 2016.
Millennials seem to be especially uninterested in big beer brands like Bud Light, Budweiser, and Miller Light.
Budweiser, once the best-selling beer in America, was knocked off the list of the three best-selling brands tracked by Beer Marketer’s Insights last year, for the first time since the 1970s.
According to UBS data, millennials were less likely to recommend Budweiser than the general population.
The problem doesn’t seem likely to get any better with Gen Z, the generation following millennials. A report from Berenberg Research found that Gen Z promises to be the first generation to prefer spirits (like vodka or gin) and wine to beer.
It appears brand loyalty isn’t what it once was, as millennials who drink craft beer try an average of 5.1 different brands per month (with 15 percent of those people trying more than 10 different brands of beer in the same amount of time).
When there are more than 5,000 breweries to choose from in the US alone (compared to less than 100 in the 1980s), it’s no wonder the generation is branching out.
Searching for a saviour
“Beer makers may be spurred to pursue deals in the cannabis space as research shows alcohol sales have slumped in American states where marijuana is legal.”
With some of the biggest names in beer taking a tumble, beer giants are looking for creative solutions to boost sales.
AB InBev recently announced it would create an executive role to head up its non-alcoholic-beverages business and accelerate growth.
Non-alcoholic drinks make up more than 10% of the company’s sales by volume, with AB InBev planning to grow that figure to 20% by 2025.
Molson Coors, meanwhile, is taking a slightly different approach to non-alcoholic beverages. The company has announced plans to enter into a joint venture with The Hydropothecary Corporation to produce non-alcoholic, cannabis-infused beverages.
The move follows Corona parent company Constellation Brands acquiring a 9.9% stake in Canadian marijuana producer, Canopy Growth, for $191-million in October 2017.
Source: Forbes, Brobible.com
Trackback from your site.