More and more, American drinkers are ignoring beer in favor of other alcohols, at the expense of brewer’s bottom lines.
This could obviously result in a decreased demand for malt barley.
American drinkers are turning away from beer in favor of hard spirits, wine, and coolers.
Anheuser-Busch (the brewers of Budweiser), Molson Coors Brewing Co., and Heineken all reported sharply lower beer demand volumes compared to this time last year.
Executives blamed an usually cold start to 2018 (as compared to 2017), however, alcohol consumption overall has been stalling in recent years. In the battle between brewers, distillers, and winemakers over a shrinking pool of drinkers, beer has been losing out.
Brewers have especially lost drinkers among their core markets: young people.
Millennial drinkers are increasingly choosing spirits, wine, and craft beers.
In 2006, nearly 65% of alcohol consumed by Americans aged 21 to 27 was beer.
By 2016, beer’s ownership of this age group was just 43%.
What’s clear is that despite all the SuperBowl ads and other expensive advertising campaigns, beer is losing out to the lower calorie and carb counts found in hard liquor.
Damn you South Beach diet!
All of this has cost the brewing industry drinkers.
Beer’s share of the total U.S. alcohol market by value has dropped 2.6% in the last 7 years, from 48.2% in 2010 to 45.6% in 2017. Meanwhile, spirit’s share of the total alcohol market has increased from 29.6% to 31.7%, while wine has held steady at 19.7%.
What does this mean for brewers – and malt barley producers?
Well, Anheuser-Busch reported a net profit loss of 28% compared to a year earlier. Whether or not this will translate into decreased demand for malt barley is a situation we will be monitoring closely over the next couple months.
One indicator though of lower demand is indeed the recent closing of the malt barley plant in North Dakota.