The numbers don’t lie. Americans are drinking less beer and after many years of substantial growth, the industry is mired in a bear market.
Macro domestic brews, such as Budweiser, Coors Light and Miller Light, once dominated the U.S. beverage market. The craft beer revolution carved a chunk out of their slice of the massive slice of pie. But beer sales continue to decline while alternatives are spiking.
What Americans Are Drinking
Many drinkers find their beer to be stale when compared to emerging, innovative new brands and creative concepts emerging from other places. And so those drinkers craving variety, are seeking out these other boozy drinks which include premium liquor, canned wine, spiked seltzers, and pre-made bottled cocktails.
But that’s not all. In 2018, alcohol consumption in the United States dropped for the third-straight year, according to IWSR Drinks Market Analysis. And beer takes the blame as sales of a case of beer declined 1.5%. And over the past five years, U.S. beer volume declined 2.4%.
And that trend doesn’t seem to be changing. Sales of domestic have dropped 4.6% over the past year according to Nielsen. Microbrew and craft beers are also in a minor slump, down 0.4%, despite Big Beer companies like Anheuser-Busch InBev scooping them up left and right. For example, AB InBev just purchased Craft Brew Alliance, whose brands include Kona, Redhook, and Wyndwood.
But people are still drinking — a lot. Alternative drink categories that both firms tracked have all grown. With the beer industry being left behind, here’s what people are drinking instead:
Perhaps no other alcoholic drinks had more of a breakout year than White Claw because people are seeking drinks lower in sugar and calories. The hard seltzer brand exploded over the summer and shows no signs of slowing down. Sales cracked $1.2 billion for the previous 52 weeks ending on October 5th — a nearly 200% jump in growth year-over-year.
Although White Claw remains the United States’ top-selling spiked seltzer brand, rival brands have also found success. Truly, which is produced Boston Beer Company, is also growing in popularity.
Analysts at Guggenheim said in a recent report that Truly is driving “more than 100% of the company’s retail growth” and is helping the company, which produces the Samuel Adams Boston Lager, beer-proof itself. In contrast, the company’s flagship beer brand, Samuel Adams, sales fell 11% and the flagship beer obtained from the company’s merger with Dogfish Head Craft Brewery, 60 Minute IPA, fell 14% for a 12-week period ending on November 2nd, according to Guggenheim.
The popularity of hard seltzers has also caught on with Anheuser-Busch InBev. It has two well-established brands, Bon & Viv and the beer-and-fruit flavored Natural Light seltzer, with plans to add a third based off its Bud Light brand. Bud Light Seltzer “falls in a spot in between our other seltzer brands,” meaning it will be more expensive than Natural Light and cheaper than Bon & Viv. It’s scheduled to launch in early 2020.
The portability and attractive price point of canned wine has helped sparked a new trend. Nielsen reports a 73% jump in sales between October 2018 and October 2019, totaling $54 million.
Seattle-based Precept Wine has helped grow the space with its line of brands, including selling its popular House Wine in a can in 2017. CEO and founder Andrew Browne said that the idea came from its customers seeking portable wine for social events, like boating and tailgating.
The company said its canned wines sales are doubling the industry growth average, according to data it obtained from Nielsen. It has expanded its line of canned drinks to a wine spritzer brand, called Day Drinking with country brand Little Big Town.
It’s mulling an expansion of flavors, including fruit flavors and sangria. Precept Wine is projecting to sell 300,000 cases of all of its canned wine brands by end of year.
Growth in the sector has also attracted the attention of AB InBev. In July, the brewer bought Babe Wine, a company co-founded by popular Instagram influencer Josh “The Fat Jewish” Ostrovsky and brothers David Oliver Cohen and Tanner Cohen. They are the writers behind the Babe Walker @whitegrlproblem Twitter account.
Babe sells its pinot grigio, rosé and red wines in cans. Though terms of the purchase were not disclosed, a source close to the deal stated it’s AB InBev’s biggest investment in wine to date.
Popular overseas, the pre-made cocktail trend is finally hitting the states. A mix of established alcohol companies and startups are looking to enter the growing space. Sales of prepared cocktails, which includes drinks in glass, canned and plastic bottles, jumped 17% to $323 million between October 2018 and October 2019, according to Nielsen.
Haus — a startup that aims to be the “Warby Parker of alcohol” — is one stylish direct-to-consumer brand that entered the sector this year. Haus co-founder and co-CEO Helena Price Hambrecht said their bottled cocktail company was created for what a new generation of drinkers want — a drink with natural ingredients and lower alcohol content.
“They’re perfect as a cocktail base or on their own, and they’re designed for the generation that loves the social ritual of gathering, but wants a little less booze,” she said of the brand’s drinks that have a third of alcohol content of hard liquor. Haus sells two drinks: Citrus Flower and Bitter Clove, each costing $35 per bottle.
The company declined to disclose specific sales numbers, but said it has received “several thousand” orders since launching in June.
Spirits from whiskey to tequila grew for the ninth straight year in 2018, according to the Distilled Spirits Council, a national trade organization that represents distilled spirits makers in the US.
The trend is still growing this year, according to Nielsen. Spirits sales grew 6% to $15 billion from October 2018 to October 2019, according to Nielsen. Tequila grew the most at 13%, whiskey was in second at nearly 8% and vodka jumped 3%.
Jack Daniels-maker Brown-Forman continued to have a strong year. In its most recent earnings report, its portfolio of super-premium American whiskeys, including Woodford Reserve, Jack Daniel’s Single Barrel and Gentleman Jack and its tequila brands, led by Herradura, all had double digit percentage increases.
CFO Jane Morreau said in its earnings call that the company expects to deliver another year of “solid results.”