Only 54% of drinking-age Americans consume alcohol today, according to a recent poll from Gallup, the lowest proportion since the survey began in 1939. Even those who do drink are partaking less, by a factor of nearly half.
The US is drinking less, and cultural connotations around alcohol consumption have shifted. The number of Americans who see drinking as bad for their health has increased every year since 2016, according to Gallup.
These changes are hurting the country’s biggest alcohol producers, forcing them to find ways to adapt to what might, according to several experts, be the early stages of a tobacco-like sea change for alcohol.
On Coors-maker Molson Coors’ (TAP) most recent earnings call, an analyst buzzed in to ask: Could consumer behavior get worse before it gets better? Or was the distributor seeing any bullish signs?
“Candidly,” CEO Gavin Hattersley said, “we have not seen an improvement in overall consumer confidence or behavior.”
When the country’s drinking giants released their latest earnings, they reported slowdowns in volume growth across the board. Among the largest names in the industry, Molson Coors and Corona distributor Constellation Brands (STZ) took the hardest hits, recording volume declines of 7% and 3.3%, respectively.
Anheuser-Busch (BUD) and Sam Adams parent Boston Beer Company (SAM) fared slightly better, with beer volume declines of 1.9% and 0.8%, respectively.
“The industry,” said Bottle Raiders vice president of marketing Amanda Paul-Garnier, “has never faced as much pressure as it does today.”
In the 1960s, smoking was deeply embedded in American life.
Ads selling cigarettes were regularly slotted into commercial breaks on TV. Restaurants, airplanes, and even hospitals were filled with smoke. Nearly half of the country were regular smokers.
That all changed in January 1964, when Surgeon General Luther Terry released a report that would almost overnight shift Americans’ tobacco habits — the first to make a direct link between smoking and cancer.
It turned out to be a watershed moment for Big Tobacco.
Within five years, Congress had passed a series of laws that required warning labels on all tobacco products and banned cigarette ads throughout broadcast media. The percentage of Americans who smoked had dropped by 5%, according to the American Lung Association.
The alcohol industry is now having to contend with the same health-conscious movement that hit tobacco. In January, former US Surgeon General Vivek Murthy issued a damning report linking alcohol consumption to cancer risk and calling for measures including warning labels on alcoholic drink containers, just like the ones adorning every box of cigarettes sold in the US.
Consuming one drink per day, the report found, raises the risk of alcohol-related cancer by 19% in women and 11.4% in men. Having two drinks per day bumps those figures to 21.8% and 13.1%, respectively.
According to Peter Monti, a professor at Brown University who studies alcohol use and addiction, the public hadn’t previously appreciated that link, but he sees the possibility for that to shift.
“We’ve really reversed attitudes, beliefs, and behavior with respect to tobacco in a way that I think we could for alcohol, as well,” Monti said in January. Moderated drinking, Monti told Yahoo Finance, is “more popular now than ever before.”
Cigarettes being sold at a Manhattan kiosk. (Mary Salen via Getty Images) ·Mary Salen via Getty Images
Culture might already be moving.
The results of the Gallup poll reflect “a shift that has been building in society for quite some time,” Paul-Garnier told Yahoo Finance.
Alcohol consumption has dropped every year since 2022, down from 67% of Americans reporting that they use alcohol to only 54%, according to Gallup.
And the trend isn’t confined to any one demographic.
Only 1 in 2 of the 18- to 34-year-old young adult crowd reported that they drink alcohol, down from 59% in 2023. Consumption levels for both the 35- to 54-year-olds and the 55-plus cohort sit at 56%, down 10 and 5 percentage points, respectively, over the past two years. The drop also holds true across all income levels.
“All signs suggest alcohol is following a trajectory similar to tobacco,” Paul-Garnier said.
And among those who do drink, the frequency with which they do so is falling. Twenty years ago, survey participants who consumed alcohol had an average of 5.1 drinks in the seven days prior to taking the survey. Now, that figure is just over half what it was, at 2.8 drinks.
“Consumers … continue to be social, enjoying their moments,” Anheuser-Busch CEO Michel Doukeris said on the company’s second quarter earnings call. But now, they are “more in control of their entire consumption.”
All of this has forced the largest alcohol distributors to adapt, similar to what smoking giants like Philip Morris (PM) have done by leaning into smoke-free nicotine products like Zyn.
Where once they might have bought a six-pack of beer, alcohol brand leaders said, consumers are increasingly likely to reach for low- or no-ABV options. That’s pushed the biggest distributors to lean into what Molson Coors, Boston Beer, and Anheuser-Busch call “Beyond Beer” — side-offerings such as seltzers and non-alcoholic products — and other products like hemp-derived beverages, Paul-Garnier told Yahoo Finance.
Anheuser-Busch reported revenue from its no-alcohol beer portfolio — led by Corona Cero — up 33%, while its “mega-brands,” such as Corona, Michelob Ultra, and Budweiser, only saw an increase of 5.6%.
Constellation, which is the US distributor for Corona, told investors that its Corona Non-Alcoholic offering is now the second-highest share gainer in the non-alcoholic beer category.
The evidence has led Anheuser-Busch to believe that “non-alcohol beer is a key opportunity to develop the category and drive incremental volume growth,” CEO Doukeris told investors.
Cases of beer are stacked in a Milwaukee liquor store on Nov. 8, 2018. (AP Photo/Ivan Moreno, File) ·ASSOCIATED PRESS
Boston Beer, which co-founder and chairman James Koch told investors is “operating in a challenging and unpredictable macroeconomic environment,” reported perhaps the starkest numbers. The producer’s Beyond Beer portfolio, with brands like Truly seltzers, now makes up 85% of the company’s volume, outperforming beer, wine, and spirits.
“To be honest, yes, three years ago, we probably didn’t look at anything outside of alcohol,” Koch said. “Now, our innovation team is starting to poke at opportunities.”
Jake Conley is a breaking news reporter covering US equities for Yahoo Finance. Follow him on X at @byjakeconley or email him at jake.conley@yahooinc.com.
Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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