Beer Stocks Are Facing an Economic Hangover as Consumers Swap Cold Ones for Colon Cleanses

"You can't do this to me... do you know how much I've sacrificed?!?"

That’s pretty much the collective cry of the alcohol industry right now.  In a surprising turn of events, beer companies are experiencing an existential crisis “to the likes of which we’ve never seen.” It’s the equivalent of a crack dealer going out of business because the junkies cleaned themselves up and stopped buying the “good stuff.” Alcohol companies are in full freakout mode because sales of booze are tanking, and reportedly it’s because people are drinking less than ever before, maybe in history. (Sure, our generation might be hopelessly addicted to TikTok reels and Instagram memes, but at least we’ve proved we can put down the beer can).

The numbers are uglier than any beer exec would ever imagine. According to Gallup, only 54% of U.S. adults now say they drink alcohol… the lowest since they started tracking in 1939. That’s down from 62% just last year, and 67% in 2022. It’s like America woke up with a collective hangover and decided, “Nope, we’re done here.” Even the people still drinking are cutting way back. Two decades ago, the average drinker knocked back 5.1 drinks a week. Today they’re only crushing 2.8 cans.

Now while it’s funny to watch from the cheap seats, Wall Street isn’t cracking a smile. Molson Coors, the folks behind Coors Light and Miller Lite, are down 7% this year, with beer volumes falling by the same amount. CEO Gavin Hattersley pretty much threw his hands up on the last earnings call, saying, “We have not seen an improvement in overall consumer confidence or behavior.” Another way to put it: the fridge is stocked, but nobody’s showing up to drink. Constellation Brands (the Corona and Modelo squad) is getting it even worse. Their stock is down 24% year-to-date with sales volumes off 3.3%. Imagine being the exec who has to stand in front of Morgan Stanley and Bank of America analysts and admit, “Yeah… turns out people don’t like beer anymore.” That’s like Netflix announcing, “Actually, nobody wants to watch the new season of Stranger Things.”

(Source: TheStreet)

The scariest part for beer companies is we’ve seen this movie before, just in a different aisle of the convenience store. Back in the 1960s, nearly half of America smoked. People lit up everywhere… restaurants, airplanes, even hospital waiting rooms. Then came 1964, when the Surgeon General dropped the bomb linking cigarettes to cancer, and smoking rates eventually cratered by 73%. Compare that to today, and alcohol looks like it’s standing in the exact same crosshairs. The current Surgeon General has already called booze the third leading preventable cause of cancer, and new reports say 53% of Americans now believe even moderate drinking is bad for you… up from just 28% in 2018. That glass of red wine that used to be marketed as “heart healthy” now comes with the energy of, “Yeah, this might shave five years off your life.”

So what’s Big Beer doing? Well, as you’d expect… mostly panicking and throwing spaghetti at the wall to see what sticks. They’ve decided if people don’t want beer, they’ll just start selling… literally anything else with bubbles. Anheuser-Busch is chest-thumping about its “non-alcoholic portfolio” growing 33%... which to the naked eye looks impressive (until you realize it’s mostly people buying Corona Cero once, deciding it tastes like sadness, and never touching it again). Boston Beer has gone full identity crisis, with 85% of its sales now coming from seltzers and side hustles (they’re essentially an energy drink company with a Sam Adams logo sticker on the side). Molson Coors is taking it a step further and experimenting with hemp beverages, because at this point, why not? When the keg’s dry, you start grasping at straws.

Unfortunately (for them) investors aren’t buying the act.  Beer stocks were supposed to be safe, boring consumer staples… like dish soap or toilet paper. Instead, TAP is stuck around $52 a share, down 7%. STZ is chilling in the $160s, down 24%.

Beer stocks promised, “I’ll be your rock in every recession,” but right now (in the weirdest plot twist since McDonald’s tried selling kale) they’re the ones down bad while overpriced probiotic soda brands like Poppi are out here printing cash like they’re the new Coca-Cola.

At the time of publishing this article, Stocks.News holds positions in Netflix, McDonald’s, and Coca-Cola as mentioned in the article.