Report indicates demographic and behavioral shifts may flatten alcohol sales in the US for the next 10 years.
Despite the continuing boom of high-end beers, wines and spirits, a leading financial analyst says a correction is coming soon.
According to the report from Berenberg, various age cohorts are finding alcohol less important in their daily lives. Generation Z has an aversion to alcohol, partly as a result of seeing older Millennials showing themselves wasted on social media. Millennials are beginning to settle down, with going out at night and drinking at bars and restaurants seemingly losing its appeal. Generation X and Boomers are aging out of frequent consumption; many Boomers have stopped altogether.
The report breaks down the demographic drivers that are expected to be particularly deleterious for the beer business. Companies may be forced to look for growth in the existing consumer market but the current data suggests that the older generations are unlikely to provide much growth.
Berenberg says US alcohol consumption per capita will drop 0.4% annually and continue to stagnate over the next 10 years, this after US alcohol consumption increased 15%from 2005 to 2015.
A shift in ethnic demographics in the US may also create problems for alcohol marketers: data suggests that the growing Hispanic and African-American populations tend to consume less alcohol than the white population. Meanwhile, the female alcohol market may be peaking. Per capita alcohol consumption within that particular demographic is up by 24% from 2000 to 2015, driven by Millennial females who consume 40% more alcohol per capita than their Gen X predecessors.
Generation Z, born after 1996, are now entering the workforce, and they tend not to consider consuming alcohol in the same light as previous generations. According to Berenberg, Gen Z does not want to appear drunk in ubiquitous selfies and social media posts. The cohort are drinking about 20% less than their Millennial counterparts and are expected to consume alcohol about 10% less per capita than they did between the ages of 18 and 49. Good news for spirit makers, however: Gen Z drinkers prefer spirits over wine or beer.
Millennials are now becoming more health-conscious as they age and are actively limiting alcohol consumption, the report says. Between 35 and 49, they will begin to drink slightly less than their counterparts in Gen X. Millennial beer drinkers are more likely to drink craft beer than any other generation. However, Generation Xers tend to drink more per capita than the Silent and Baby Boomer generations they will replace in the 65-plus cohort.