Total beer volume dropped 1.1% last year to 2.8 billion 2.25-gallon cases, the Beverage Information Group's 2018 Beer Handbook reported. That amounts to a fifth consecutive decline in total U.S. beer consumption.
The biggest losers last year were light beer, with volumes dropping 3.1% in 2017; popular beer, falling 2.5% last year; super-premium and premium beers, down by 3.7%; and malt liquor, sliding by 4.3%, the handbook said.
Craft beer showed the largest jump, growing 4.9% last year to 310 million cases, the handbook noted. Local and regional craft beers have saturated the market, and consumers are trying various brands instead of sticking with a favorite. Imported beers grew by 3.5%, with Mexican imports particularly strong. Flavored malt beverages nudged up 1.3% last year, although growth in that segment has fallen off lately.
These volume declines aren't that surprising given how big beer companies have been performing in the past few years. Even industry giants AB InBev and MolsonCoors have seen their U.S. sales drop in recent quarters.
In the recent past, U.S. beer drinkers have been moving away from domestic lagers and turning to craft beers, Mexican imports and wine and spirits. As a result, total beer shipments dropped by 1.3% last year, with declines coming to major domestic brands — Budweiser (-6.8%), Coors Light (-4.1%), Miller Lite (-2.8%) and the most popular U.S. brand, Bud Light (-5.7%).
On the flip side, alcoholic beverage company Constellation Brands has been doing well with its Mexican beer brands, including Corona and Modelo Especial. The company controls 90% of the premium beer market and reported a healthy volume growth of 8.9% in 2017, leading the industry for a fourth straight year.
Besides imports, brewers have tried to focus on low-calorie and no- or low-alcohol beers in order to capture consumers interested in health and wellness trends. Bud Light, Coors Light and Miller Lite are all reduced-calorie domestic lagers, and Constellation Brands and AB InBev have also rolled out new lower-calorie beers. However, the beer handbook noted, one reason Mexican imports are so popular is their perceived better flavor and quality, which lower-calorie beers don't always deliver. However, in its most recent earnings report, Constellation reported a bump in sales from its new low-calorie Corona Premier.
Other promising areas for the beer industry are taprooms and brewpubs, where sales to customers jumped 24.2% last year, according to The Wall Street Journal. These experience-driven sales, however, may not be enough to stem the tide. U.S. consumers are turning more to wine blends, spirits and cider instead of beer, reports show. According to IWSR market research, tequila and mezcal are tops in this segment, followed by whiskey and vodka. Millennials are fueling some of the change because they tend to like sweeter flavors, as well as spirits and sparkling alcohol.
Beer makers may continue to invest in craft and imported brews as a way to recapture market share, but there's no guarantee today's consumers will remain loyal to brands. A better long-term strategy might be to invest in cannabis-infused beverages, which appear to have a much brighter future than light beer, premium beer or malt liquor products.
According to a new study from A.T. Kearney, 30% of Americans would be willing to try a cannabis-infused nonalcoholic beverage, and 17% would be interested in an alcoholic drink containing the substance. Constellation has already invested in the segment, and Molson Coors appears headed in that direction. It may only be a matter of time before the other big brewers try to boost slumping sales by following suit.