- Many consumers, particularly millennials and centennials, have started to perceive beer as stale and unhealthy, which has led to a decline in sales in the face of a growing demand for alternatives.
- As alcohol is going out of fashion for young generations, some of the world’s biggest beer makers such as Anheuser-Busch and Heineken have tried to position themselves as leaders in the non-alcoholic beer market.
- The media’s attention is also focused on the craft beer market, which has peaked thanks to increasing consumer demand, with industry giants aggressively seeking to capitalise on the movement by launching their own microbreweries or making deals with existing ones.
Beer’s leading position in the US beverage market seems to be under threat as sales are declining and the number of new breweries is starting to plateau while alternatives are spiking. For a growing number of consumers, the beer offered by industry giants is now something stale, especially in the context of emerging brands offering more exciting products like premium liquor, canned wine, spiked seltzers and pre-made bottled cocktails.
Even though the trend is visible across all generations, millennials are driving much of it: according to a recent Nielsen Homescan Generations study, beer share loss totalled 2.1% among millennials, 4.7% among Gen X and 2.7% among Baby Boomers. Beer penetration fell one percentage point in the US market from 2016 to 2017, while both wine and spirits were unmoved.
The media’s explanations for these trends range from increasingly health-conscious consumers eager to avoid beer bellies to the rise of social media, which has discouraged young adults from drinking alcohol in excessive quantities.
The big beer players such as Anheuser-Busch and MillerCoors bore the brunt of the decline while craft breweries have remained a key driver influencing the market mainly due to the introduction of new flavours which appeal to younger consumers. Against this backdrop, Big Beer continues to invest significantly in promoting its brands across television, radio, print, cinema and outdoor media.
The twists and turns of the beer market have become the focal point of attention for many specialised and daily outlets. The media’s focus on the shifting tastes of millennials and the developments in the craft sector made ‘Market and consumer trends‘ the main topic in the media conversation around beer in the top-tier English-language publications from October 2018 to December 2019.
A number of publications pointed out that millennials and Gen Z are more likely than older generations to prefer wine and spirits over beer, choosing beer less than half of the time when deciding on an alcoholic beverage. Moreover, Gen Z is poised to be the first generation to prefer spirits, like vodka or gin, and wine to beer.
The main reason behind millennials’ preferences also fell under the ‘Health and wellness‘ topic, as a sizeable percentage of them in the US and UK are drinking less beer because of calorie counts and health concerns. A study conducted by Bank of America Merrill Lynch made headlines for revealing that 31% of millennials said they are drinking less, up from 21% in 2018, and 37% of the abstainers said they were ditching beer because they think it would make them fat.
Such findings corroborate the fact that young generations are increasingly health-conscious: influenced by viral trends on Instagram and YouTube, they are not simply buying products but rather making lifestyle statements. These generations also take a more proactive approach to healthy eating, take the time to research before they eat out. A recent report by Nielsen showed that 41% of Generation Z and 32% of Millennials would “pay a premium for sustainably sourced ingredients”, leading to the popularity of the ‘better for you’ brands.
This has resulted in a big increase in the number of alcohol-free or low alcohol beers being available – another major development within the ‘Market and consumer trends‘ topic. In the UK, for instance, sales of low and alcohol-free beers jumped 28% in the year to February 2019, compared with the previous 12 months, and in Germany, as many as one in 15 beers sold is now estimated to be alcohol-free.
However, the media debate isn’t that clear-cut: even though many reports focused on millennials’ health concerns, the ‘Health and wellness‘ topic also featured articles praising the benefits of drinking beer, with titles such as “7 science-backed reasons beer may be good for you“, “Certain beers are ‘very good for you’ and improve gut health, according to a Dutch scientist” and “Beer has better health benefits than milk. You can read that again“.
A strong coverage driver for such articles with such sentiments was a study by Amsterdam University which concluded that certain beers could be considered “very healthy” thanks to the amount of gut-friendly bacteria they contain. This finding complemented other oft-repeated health benefits of moderate beer consumption such as lowering the risk of diabetes and the risk of cardiovascular diseases, increasing bone density, boosting cognitive functions and reducing inflammation.
The changing consumer tastes have heralded a new wave of innovation in the beer industry and a growing amount of coverage within the ‘Product innovation‘ topic. The top-trending articles reported on the launch of a number of marijuana-infused products, prompted by the legalisation of recreational marijuana in California and Canada.
For example, Heineken introduced a range of marijuana sparkling water, while Corona-parent Constellation Brands, the largest beer import company measured by sales, became the largest stakeholder in Canadian pot cultivator Canopy Growth.
Commentators remarked that large companies are still cautious, especially since cannabis is not yet legalised across all US states, which gives smaller firms the opportunity to explore the market. Many articles emphasised that cannabis drinks don’t give hangovers and lack the high-calorie count of traditional wine or beer.
The growing interest in the new trend brings growing investments, and namely, this is the second major topic in the coverage, with the top trending articles citing financial reports and giving predictions about the development of valuable stocks. The Viridian Cannabis Deal Tracker found that the cannabis market received $1.23 billion in investments in the first five weeks of 2018, up from $178 million in 2017 – a nearly 600% investment growth.
Apart from Heineken and Constellation Brands, other firms whose activities received media attention include Koios Beverage, which formed a wholly-owned subsidiary to produce cannabis beverages and will target medical cannabis consumers. In addition, Blue Moon Brewing Company introduced a line of cannabis-infused non-alcoholic craft beer beverages.
Meanwhile, ‘Sustainability‘ has become a major topic for the beer sector, as with the food and drink industry as a whole. A specific coverage driver here is the use of single-use plastic, an issue of growing importance for high-profile media publications. In line with the increasing focus on broader themes such as climate change and global warming, the media conversation around plastic pollution is becoming livelier and livelier, fuelling an ever-dynamic discussion on social media.
The vibrant media debate has long-reaching reputation implications for food & drink giants such as Coca-Cola, PepsiCo and Nestlé, retail corporations like Amazon, Walmart and Flipkart, consumer goods companies including Unilever and Procter & Gamble, and hotel chains such as Marriott, InterContinental and Hilton.
In the media conversation around beer, the most often mentioned company within the ‘Sustainability‘ topic was global beer producer Diageo, the maker of Guinness, which announced that it will invest $20.96 million to cut the amount of plastic it used in beer packaging and it will use “100% recyclable and biodegradable cardboard” in its multipacks of beer.
Carlsberg announced plans to replace the rings with recyclable glue and to develop a range of beer bottles made from paper, unveiling two prototypes for what it claims will be the world’s first paper beer bottle made from sustainably-sourced wood fibre.
The efforts are part of Carlsberg‘s wider sustainability goals to achieve zero carbon emissions and a 30% cut in its full value chain CO2 footprint by 2030. In the meantime, Corona has also started piloting plastic-free six-pack rings made from plant-based biodegradable fibres.
We recently published a 30-page analysis report which looks into the topics and brands driving coverage around single-use plastic, the key messages pertaining to the top brands in the media discussion, and the influencers in traditional and social media.
Reports and analyses within the ‘Business strategies‘ topic generally focused on the long-running consolidation cycle in the beer sector that started in the 1970s with the purchase of Miller Brewing by Phillip Morris and that has begun to trouble economists.
The top-trending news within that topic was the merger between Boston Beer Company and Delaware-based Dogfish Head Brewing, the second and thirteenth largest U.S. craft brewers respectively, which announced on that they will combine in a deal valued at approximately $300 million to bring together “more than half a century of craft brewing expertise”. Another craft beer brewery, New Belgium Brewing, was sold to a subsidiary of Japan’s Kirin Holdings.
Crafty and healthy
In fact, the developments in the craft beer market got the bulk of media attention in our sample research period:
Commentators have pointed out that like in almost every economic sector, ranging from entertainment and advertising to pharma and tech, monopolies control a prodigious share of the market. In beer, two companies – Anheuser-Busch and MillerCoors – controlled nearly 90% of production as recently as 2012.
And while sales shrink for each of the most mainstream beers (Anheuser-Busch’s Budweiser and Bud Light, and MillerCoors’ Coors Light and Miller Lite), the craft beer market has peaked, driven by consumer demand. In the US, there are more than 7,480 active craft breweries, 1,016 more than last year, adding $79.1 billion to the economy in 2018 and providing more than 550,000 total jobs, according to a brewing industry trade group.
For some commentators, craft breweries are a useful indicator of economic and social vitality and have become a nation-wide version of local branding. Craft beer is largely perceived to be of higher quality than commercial beer due to the raw materials used for brewing and its overall quality.
Brands are tapping into consumers’ perception of the “naturalness” of food and drinks, which has evolved from a focus on sanitation to added ingredients like preservatives, flavours and sweeteners. The ever-increasing health awareness among consumers, coupled with the rise of the organic food industry, has put the notion of “naturalness” in the centre of many debates around the food and drink industry.
The media conversation around craft beer encompassed various trends in the business, partly because there’s no consensus about what “craft beer” actually means or what kind of criteria must be met. There have been heated debates between the Campaign for Real Ale (CAMRA) and Scottish company BrewDog, and efforts by some major players to lead the discussion on the definition and values of craft beer, leading some journalists to conclude that craft beer is having an identity crisis.
In the meantime, beer industry giants have aggressively sought to capitalise on the craft beer movement by launching their own microbreweries or making deals with existing ones and marketing them separately. Thus, there has also been a debate about whether the products of a craft brewery sold to a big corporation would still qualify as “craft”.
A widely covered event in this context was Anheuser-Busch buying all remaining outstanding shares of Portland-based brewing company Craft Brew Alliance in order to tap strong consumer interest in the craft movement. Anheuser-Busch CEO Michel Doukeris emphasised that his company “has a long track record of working with its craft partners to help make the U.S. beer category stronger and more vibrant”.
Reports about both craft and commercial beer concentrated more heavily on ales rather than lagers:
Another major media focus is the growing demand for low-alcohol beer, which is identified as one of the key trends that will gain traction in the market amid congratulatory headlines, new products and renewed marketing pushes. Labels like “sober curious” are becoming more popular, and some pundits have identified non-alcoholic beer as one of the top trends for 2020, with more than 1.2 million #soberlife Instagram posts and more than 500,000 #soberissexy posts.
Anheuser-Busch created an executive role to head up its nonalcoholic-beverages business and accelerate growth. While nonalcoholic drinks make up more than 10% of the company’s sales by volume, AB plans to grow that figure to 20% by 2025 while facing challenges by Heineken, Carlsberg, Asahi and Molson Coors. The company has also been investing more heavily in a message of moderation with its “Drink Wiser” campaign.
For “Dry January”, Heineken’s 0.0 brand introduced a special “Dry Pack” with a can for every day of the month. Guinness also launched a campaign promoting sobriety by introducing its “Guinness Clear” product, which contains just water. In the meantime, Molson Coors entered into a joint venture with The Hydropothecary Corporation to produce non-alcoholic, cannabis-infused beverages.
Craft brewers are also getting into the game: for example, Scotland-based BrewDog has introduced low-alcohol Nanny State pale ale, while UK start-up Big Drop Brewing Co, whose slogan is “To drink. Not to be drunk.”, has had market success with a stout containing 0.5% alcohol.
Such developments have helped make Anheuser-Busch, Heineken and Molson Coors the most often mentioned companies in the media discussion around beer:
Anheuser-Busch is still perceived to be the king of beers, controlling 41% of the market, but hard seltzer is a big focus right now. Apart from being mentioned for its efforts on the craft and non-alcoholic fronts, the brewer of Budweiser and Bud Light was also subject to media analyses for its plans to win back drinkers by marketing new products from DIY cocktails to craft beer for women.
A venture which attracted much media attention was its $100 million investment planned for the booming hard seltzer market and the launch of its new Bud Light Seltzer. Alongside Constellation Brands, the company admitted that summer beer sales were hurt by the seltzer craze, but also said that the trend was good in the long run as it tries to appeal to a diverse group of customers.
Perhaps more worryingly, Anheuser-Busch saw more than $13 billion wiped off its market value, after a profit warning and weaker-than-expected third-quarter earnings growth sparked by reduced demand for its beer in Brazil and South Korea. It also sold its Australian subsidiary Carlton & United Breweries to Asahi for $11 billion and raising about $5.6 billion for a second attempt to float part of its Asian business.
Heineken, the world’s second-largest brewer, dominated the conversation around non-alcoholic beer, with its ‘Say Yes’ campaign aiming to overcome taste and legacy issues, work with on- and off-trade to stock the range and increase visibility and to educate consumers. It strived to position its no-alcohol product as a complementary product, not a replacement of its core offering,
The company featured prominently in most articles on the non-alcoholic beer trend, for example Financial Times‘ “Brewers acquire a taste for non-alcoholic beer“, Entrepreneur‘s “2020 Will Be the Year of Non-Alcoholic Beer” and CBS‘ “Sober curious” Americans are reshaping nightlife: “I actually have more fun without alcohol“.
In addition, Heineken Malaysia launched a three-week social media campaign themed “When You Drive, Never Drink” to promote responsible drinking and to educate consumers. It also used the help of social media influencers Dennis Yin and Olivia Shyan to boost awareness and engagement.
Molson Coors, the parent of MillerCoors, gained media attention for laying off 500 workers worldwide and restructuring its operations as it faces declining beer sales, dropping the MillerCoors brand name and the word “Brewing” from its full name in order to rebrand itself to a “beverage company,” not just a beer one amid declining beer sales.
The company also acquired a minority stake in L.A. Libations, an incubator that specializes in emerging non-alcoholic beverages. CEO Gavin Hattersley stated that the company is at an inflection point: “We can continue down the path we’ve been on for several years now, or we can make the significant and difficult changes necessary to get back on the right track.”
In addition to its sustainability efforts, Carlsberg was mentioned for its brand changes as well, in its case for changing its recipe in the UK after saying it’s listened to customers who have slammed the quality of the pilsner on social media. It changed its ad slogan from “Probably the best beer in the world” to “Probably NOT the best beer in the world” in a bold PR move to launch “its most honest consumer campaign“.
The companies in our research sample strived to address the trends set by millennials and Gen Z in one way or another. As these generations are expected to be the biggest food and beverage spenders in 10 years, with their purchasing power projected to reach $1.4 trillion, the change in consumer tastes is bound to continue.
Players in the beer sector might be well-advised to follow the developments in other segments of the food and drink industry which have been influenced by the growing popularity of the health and wellness trend – for instance, the meat substitutes market, which is gaining momentum driven by heated debates in the media, and the plant-based beverages market, which is estimated to increase by leaps and bounds thanks to quirky campaigns, strong visual identities and compelling messages about health and the environment.