The Death of Beer?

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In an earlier post, I noted that beer consumption outside the craft sector was down significantly. It's a point worth elaborating on, because there is solid evidence that a big change is afoot in American alcohol consumption.

According to a recent article in Ad Age, sales of Bud Light are down 5.3 percent in 2010, while Miller Lite is down 7.5 percent. In fact, only four of the top 30 brands saw sales increase. These are not slight changes. For an industry that relies on slow and steady annual growth, they represent a full-blown crisis.

Ad Age, and the brewing industry, pin the blame on the economy—the target audience, 21- to 35-year-olds, are being hit hardest by unemployment, they say, so they have less to spend on booze. To back that up, Ad Age points to increased sales of the cheap stuff, like PBR and Yuengling, and it explains away the craft numbers by arguing that buyers are "saving their consumption for a special occasion by splurging on craft-style beers."

Maybe. But there's a larger story here. Follow any dude in oversized glasses into a bar, and you'll see why PBR and Yuengling are doing alright—they've spent serious time and money positioning themselves as the hipster drink of choice. Yes, they're cheaper than Bud Light, but by the slightest of margins. Hardly enough to explain the difference in sales.

Instead, consider the longer term: according to the Distilled Spirits Council's Industry Review Tables for 2010, for the last decade beer revenues and market share have declined steadily when compared to spirits and wine. By volume, Americans drank 4.5 percent less beer in 2009 than they did in 2000, but they drank 1.7 percent more spirits and 2.8 percent more wine. And that's for beer overall—including the explosion in demand for craft brews.

Why? One obvious guess is that America is becoming a more bourgeois place. Even as income inequality grows, fewer people work traditional working-class jobs or identify themselves as blue-collar, the typical base community for the beer industry. Simply put, fewer Americans think of themselves as the sort of folks who drink beer.

Moreover, consumers crave innovation, whether it's the newest club or the newest fashion trend. The same goes for alcohol. And where has the innovation been? In wine, where American vintners have secured a reputation among the best in the world. In spirits—pick your story: cocktail culture, the return of whiskey, or the explosion in vodka consumption. And in niche beer sales: craft on the one hand, hipster-oriented marketing by certain brands on the other. But for the big, traditional American brewers, the most innovation we've seen has been in the stale reshuffling of the same tired ad campaigns. (Drinkability, anyone?)

And maybe, just maybe, there's another reason: that as wine, spirits, and craft beer promise variety and taste, drinkers are finally realizing what the rest of the world has been telling us for decades—mainstream American beer is awful. And with more options available these days, it will take more than bikini-clad models and talking dogs to convince us otherwise.