The past week saw numerous headlines about the beer industry’s recognition that it has lost its iron grip on a key demographic group: young adult consumers. While we called that out earlier this year, the candid comments made by several speakers at last week’s National Beer Wholesalers Association annual meeting in New Orleans point to heightened concern about the current situation and future prospects for the major domestic brands.
They have reason to be so concerned. The drink portfolio of today’s young adult consumers ranges from moonshine to malbec, from PBR in a can to Samuel Adams Utopias in a tasting glass, with a dirty martini and some type of cider-and-Fireball combination thrown in for fun. Bottom line: The consumer group once owned by the major brewers now spreads the love among spirits, wine and beer, and beverage selection is driven not only by cost (this is an economically squeezed group), but also by occasion, desired flavor attributes, food and the suggestions of those around them.
Beer has not lost the Millennial generation, however, and the industry does have a good grip on the Gen Zers now coming into legal age. These are the consumers who are driving the trends evident in our BeerTAB and BarTAB reports: craft beer’s continued growth, imported beer’s upward trajectory, the expansion of select super-premium domestic brands and the ongoing appeal of retro-hip brands.
The difference is that the beer industry as a whole—not just the major brewers—now competes with spirits and wine both in the retail store and at the bar. Beer is not really losing young consumers; it’s just earning fewer of the cohort’s occasions.
The consumer’s moment of truth in the what-to-drink decision is the new point of competition, and spirits and wine brands are scoring more wins with young adults than ever before. Beer remains the most-consumed adult beverage, even by Millennial and Gen Z consumers. Beer brands and styles that deliver on the attributes—which vary by occasion—that these consumers seek will earn more wins. Understanding the dynamics of the occasion is crucial to earning the occasion. In today’s environment, no marketer should take a consumer group for granted.