Beer Business Blues

The media, both consumer and alcohol industry trade, has been chocked full of stories about the decline and potential demise of beer.

In addition to stories in Beer Business Daily, Buffalo Trace Newsletter and others, notable consumer publications have also had much to say on the subject over the past two weeks. Check out these headlines:

The Atlantic: Why Are American Drinkers Turning Against Beer?

USA Today: 6 sobering reasons why beer makers should worry.

Slate: The Stunning Collapse of Beer in America

Now it’s my turn. What’s the problem? Why is it happening?

What’s the problem?

It all started with the Gallup poll on what Americans drink and prefer. The annual survey revealed two startling facts. First, Americans who drink alcohol are equally likely to say they drink wine and beer most often (35/36% for each type). No big deal, right? But if you go back to 1992, it was 47% for beer and 27% for wine. So, since 1992, beer as a beverage of choice has significantly declined.

Gallup chart

The second problem, and the driver of the overall situation, is that young adults’ booze preferences have shifted away from beer toward wine and liquor.

AgeXType

Why is it happening?

I’ve read dozens of explanations in the press and perhaps as many as hundreds of ideas from readers of this blog. So far as I’m concerned, the reasons have to do with 1) too many choices in and out of beer and 2) changes in alcohol drinking demographics and attitudes.

Let’s start with number two and use liquor as an analogy. When I entered the spirits and wine business in the late 1980s, there were enormous earthquake-like shifts in drinking patterns. The whiskey preferences of the Mad Men era had given way to the surge in white spirits, led by entry level drinkers no longer interested in mimicking the behavior of the past. So, whiskey went away for a while and has only recently begun to return.

In short, changing demographics result in changing values and attitudes and now its beer’s turn. It’s a mistake to assume that the drinking preferences of the past will continue with a new generation.

But wait, there’s more. The real culprit in shifting preferences away from beer is that there are too many choices. From outside the category, the spirits and wine manufacturers have been concentrating on innovation for a decade or more, while the beer players are only now beginning to play catch up. Many products in wine and spirits have fun, lightness in taste and flavor going for them. To a large extent they have moved into the beer space.

Inside the beer category, it’s been the craft people who have shifted tastes and preferences while the big players have clung to the trends of the past. Get over it, big boys, it isn’t about light beer and imports anymore, it’s about crafted beer with unique taste and interesting pedigrees.

Speaking about choices, I can’t help but wonder whether the dizzying array of beer packaging isn’t also an important factor in turning off the consumer. How many choices in ounce sizes do I need? Is it necessary to have pack sizes that run from a 6 pack to 30? No wonder the prices keep going up.

Beer market declines have been going on for some time and are likely to continue. Bottom line – the mainstream beer manufactures need to wake up and smell the malt.

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