Disrupting a status quo that has been in place for generations, the kids are at it again.
An FKD Feature exclusive

Major beer brands are struggling. The culprit? Millennials.

Recently, Goldman Sachs has downgraded both Boston Beer Company (parent company of Samuel Adams) and Constellation Brand Inc (Parent company of more than 50 alcoholic beverage brands including Corona and Modelo) because of a decrease in sales. Millennials seem to drink more than Gen Xers, but they prefer wine and spirits over beer.

According to Nielsen ratings, beer penetration fell 1 percent in the U.S. market during the past year, while both wine’s and spirits’ market share showed no significant change.

But if trends are to be believed, wine consumption is on the rise, especially in the youth market that Big Beer desperately needs to win over in order to maintain sales long-term.

Millennials love wine

In 2015, millennials consumed 159.6 million cases of wine — 42 percent of all wine drunk, more than any other generation. And millennials are drinking more often as well.  Less than 8 percent of adults over 21 were high-frequency wine drinkers in 2005. By 2010, that number had increased to nearly 13 percent because of millennials coming of age. Millennials are drinking so much wine, in fact, they are changing how it is sold.

The young, heavy-drinking consumer used to be the assumed market for well-known cheap beers, but Big Beer is having a hard time courting millennial customers in recent years. Cheap beers aren’t as cheap as they used to be; increasing manufacturing costs and inflation have dramatically affected prices in the last 20 years, and the lack of competitive pricing is leading some millennials to consider value over cost.

Individualized tastes

The youth market seems to show an increasing preference for small, local brand craft beers to big brands that many consider corporate and inauthentic. Craft beers and wines offer a greater variety of options to find something that feels like a more uniquely personal choice.

Takeaway

Goldman Sachs expects the overall beer market in the U.S. to decline 0.7 percent this year. Big beer companies need to step up their game in order to court the youth market. If they aren’t able to capture a strong millennial customer base soon, as millennials age, Big Beer is going to really have problems.

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Posted 08.08.2017 - 01:39 pm EST