There are few economic bastions like beer (and to a lesser extent alcohol). The spirit drink par excellence has accompanied humanity as a massive industry for more than 5,400 years, in ancient Sumeria. This great trajectory has meant that, traditionally, it is one of the most resilient businesses that exist, crisis-proof and that, generation after generation, its growth advances with great stability. However, the world’s largest brewers and alcohol producers are experiencing powerful falls in the stock market as their profit forecasts worsen and a double crisis threatens the sector as is rarely remembered.
On the one hand and as a general threat, a younger generation, such as Gen Z, is stopping consuming alcohol as it was done in the past, leaving a feeling in the industry that, little by little, sales are doomed to fall. In the short term, the high inflation of recent years has taken its toll on these products, affecting profitability and alienating customers, who are controlling their expenses more. A lethal combination that was already occurring in 2024, but that in 2025 seems to enter a new phase after last week’s announcement by Constellation Brands, parent company of Corona beer.
The firm collapsed by up to 17% in a single day after launching a profit warning that set off alarms in the sector. “Given the near-term uncertainty about when consumers will return to more normalized spending, we have prudently lowered our growth outlook,” CEO Bill Newlands said in a statement. The company now expects Annual sales grow between 2% and 5%compared to its previous forecast of 4% to 6% growth.
This has only been the latest in a succession of negative announcements for the sector. The company, in fact, 28% has been left on the floor since October, a negative path that it shares with most of its rivals. In the United States, Molson is down 4% this year and reflects a drop of 13% in the last 12 months. The Belgian Ab Inveb, the largest brewer in the world, parent company of Budweiser, Stella Artois or Dorada, falls 4.5% in 2024 and 30% since November. Heineken does the same 14% and Carlsberg 8%. Alcohol companies outside of beer such as the giant Diageo (owner of Cacique, Smirnoff, Baileys, J&B and Johnnie Walker), among others, fall 5% this year and are down 12% in the last 12 months. Pernod Ricard’s annual drop is more pronounced, 27.54%.
The beer and alcohol crisis
The sector is noticing problems in its three main markets. United States, Europe and China. According to the latest data from the International Wine Registry (IWSR), sales volumes have fallen by 3% year-on-year in the first half of 2024, the latest data recorded. To understand the importance of this fall, consumption volumes grew by 2.6% steadily until covid, showing great stability and strength. The two years after the pandemic, consumption skyrocketed by 5% to plummet by 2.9% in 2023. If this trend continues, we would be talking about a radical change that already breaks what they define as “the alcohol supercycle.”
In its latest report on Diageo, Morgan Stanley expressed the problem that the entire sector is experiencing. “The spirits industry faces to risks derived from the drop in alcohol consumption in Western markets,” Morgan Stanley analysts wrote in a report released last Friday. “This is a trend that is gaining popularity, especially among younger consumers who want to improve their health and save money.”
According to the ISWR, the most pressing problems were mainly due to the increase in the prices that companies have had to make in recent years to alleviate both general inflation and problems with the world supply of cereal, which rose sharply after the war in Ukraine. This situation has led consumers to be more selective and reduce their consumption of both beer, wine and of the rest of the spirit drinks. According to its latest outlook report, which includes all mature markets and not just the US, this is a global trend. “An increasing focus on health and consumption at home, combined with a drastic reduction in income, pushed consumers towards a decline in their consumption,” says Nastya Timofeeva, Senior Director of Consumer Insights, IWSR.
“The changing political landscape in many markets further intensified consumer apprehension about the future, finances and spending on alcohol, which It has become a luxury for many” says the report. After economic moderation forced consumers to reduce spending on alcohol, many consumers are now choosing to maintain this new lifestyle. Regarding the future, IWSR believes that “structural changes will continue, but the market can improve with the population’s finances.” The price of a beer in the US has increased by 15% since 2020 according to the association’s data, while in Spain, INE data show that the price per liter was 1.28 euros in 2020 and now they are already at 1.8.
In Europe beer production and sales have fallen by 5% in just two years. Fitch, for its part, believes that companies in the sector will be able to contain losses only through two means. Firstly, betting on greater premium production that generates more profitability. The second option is a pure price increase. These two weapons will allow companies to earn 5% more by the end of 2025 but “the industry is on the limit after two years of price increases, something that will help improve income, but will leave sales under pressure with only a slight recovery”.
“While competition among alcohol brands is becoming increasingly fierce, consumer demand is actually declining”
The agency, in any case, states that “inflation and the increase in the costs of basic products and logistics, generates higher operating expenses due to increased spending on advertising and marketing. These high costs are likely to persist and could reduce profit margins for alcohol producers. This mixed with revenues that are not growing at the expected rate as consumers become more moderate, leaves brewing giants and whiskey producers , Brandy, Vodka… etc, in the face of a really complicated situation.
In China, the worse-than-expected post-pandemic economic rebound has slowed sales of all types of consumption. Remy Cointreau issued a statement after its earnings announcement, explaining that “while competition among alcohol firms is becoming increasingly fierce, consumer demand is actually declining.” In its letter, the firm continued to allege that “this is not only in the US, we are experiencing a recession in the Chinese and Southeast Asian markets.”
ISWR explains that globally it can achieve sustained growth in these more premium brands but at the cost of an already marked slowdown in general sales. With this, a growth of the global alcohol revenues up 3% between 2024 and 2028. “There will be difficulties driven by a deterioration in demand as pressures on the costs of living are affecting consumption.” In Europe, according to the latest InnovaMarkets report
Gen Z drinks less
However, this is only the first act of a general problem. More and more experts and firms assume that adults under 30 years of age come with different habits and drink much less alcohol on average than those who preceded them. According to the latest Gallup report, There has been a 10% decrease in alcohol consumption among adults ages 18 and 34 in the last decade. The latest Berenberg report says that members of Gen Z (1997-2010) drink 20% less than the previous generation (millennials). The latest public study of health habits in the United Kingdom shows that young people under 25 have 26% of abstainers compared to 15% on average.
Mckinsey comments that they explained in a recent report that the reason for this generational change is a paradigm shift that has caused the turnover of the non-alcoholic beverage segment to improve its potential in the US. “Among Generation Z there are more concerns about health“. The latest BMC study explained that the main reason is that young people are starting to consume alcohol later. “In countries where there is more income, the consumption of younger people has been falling as alcohol becomes more common. has become less affordable for them, new policies have been made to avoid purchases and greater awareness has been generated about health and the impact of alcohol.” In particular, this lesser tradition of drinking from a young age would be the key to explaining the change. generational.
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