Which Side Are You On: Beer, Wine, Cocktails, or Cannabis?

Image Courtesy @elevatorbeer at Unsplash


Beer is still America’s preferred alcoholic beverage – Gallup reports that 42% of all those who consume alcohol, prefer beer. The only time the challengers, Wine (34%) and Liquor (19%) could outpace beer was in 2005, when wine consumption gained a small advantage over beer. However, after this one-time event, beer sustained its position as champion among alcoholic drinks. However, it has been anything but been a smooth ride for big beer brewing companies (let’s call them Big Beer). The industry for alcoholic beverages is currently experiencing profound changes – changing consumer preferences, shifting demographics, a glut of new, innovative drinks. What are you most likely to drink on most occasions? A chilled Bud Lite, a Sauvignon blanc, or a Margarita?


Big Beer’s Volume Crisis. The percentage of people who preferred beer hit an all-time low in 2011. The Wall Street Journal reports that the volume of beer consumed per capita decreased by about 10 liters in the last two decades. Big Beer was the hardest hit. The Atlantic found that cheap beer consumption has decreased consistently since the economic downturn in 2008. The craft beer industry, on the other hand, experienced growth. However, since consumers drink less craft beer per occasion (than mass produced beer), that further triggered the general decline in total volume consumed.

The King of Cocktails.  Did you know that Margarita accounts for one in every three cocktails ordered in the U.S.? The American cocktail culture in the rise in general with a predicted annual growth rate of 2.2%. The Wall Street Journal refers to this as the cocktail renaissance, which started in the early 2000s. The cocktail industry experienced a reinvention with exotic mixtures and new creations. What helped fuel this increase was a not-so-gentle shift in consumer preferences towards spirits.

Multiple Segments, Multiple Strategies.  Though beer still reigns supreme with young while males, many other segments (female consumers, African-American and Hispanic consumers) have increased their consumption of wine, cocktails and other spirits, at the expense at beer. Marketers, of course, are quick to catch on. It’s Jane Walker now, for instance, instead of Johnnie Walker. The biggest spirit maker Diageo launched a special version of its Johnnie Walker Black Label whisky, called Jane Walker, to attract more female customers. To make it more attractive, Diageo donates 1$ for every Jane Walker bottle sold to charities which support women’s causes.

Image Courtesy Justin Aikin at Unsplash

The market for wine in the US is expected to grow and Forbes estimates that Boomers (age 51-68) and Matures (age 69+) will consume more wine than they did in the past. Wine marketers continue to target Millennials (22-38) in a big way but they’re the toughest group to attract long term and are likely to switch between alcoholic beverages than stick to one particular category. They’re also likely to switch to healthier beverages at the expense of alcohol. And yes, even to weed.

Drinks People_Priscilla-Du-Preez-Unsplash
Image Courtesy Priscilla Du Preez at Unsplash


There’s Always China. As growth in the U.S. has plateaued, big beer brewing companies are expanding globally. Heineken struck a multibillion dollar deal with China’s largest brewer, China Resources Beer, in a bid to dominate the world’s largest beer market, China, which consumes twice as much beer as the U.S.  As Big Beer battles play out in China and other Asian markets, it is important to note that the same trends in alcohol consumption, as in the U.S., will soon give these companies a sense of déjà vu. Chinese consumers are consuming more craft beers and slowly shifting to other spirits. For now, there are still many marketing battles to be fought and won by Big Beer.

Let’s Blame the Millennials. Are Millennials to blame for what many expect will be an overall decline in alcohol consumption? Millennials drink less than any other generation before. Instead, they’re switching to cannabis (goodbye, beer belly). The Street reports that as weed consumption spikes among Millennials, alcohol consumption decreases. the slide in overall alcohol consumption is inevitable as more states legalize Marijuana.

Unsplash Ethan Hu @ethanhjy
Image Courtesy Ethan Hu at Unsplash

Investing in the Future. Big Beer isn’t turning a blind eye to the future. The raging trend in new investments is cannabis infused beverages. Constellation Brands, the makers of Corona and Modelo, have invested hundreds of millions of dollars in the Canadian market to make and market THC-infused beverages. Heineken owned Lagunitas is marketing its cannabis-infused sparkling water in California. At zero calories, welcome to the high and mighty, non-alcoholic alternative to beer.

Sources:  The Wall Street Journal a, The Wall Street Journal b, The Washington Post, Gallup, CNBC, The Atlantic, Forbes a, Forbes b, MarketResearch Blog, Decanter, BeverageDaily, The Street