Set ’em up, Joe, we got a little story we think you should know: Alcohol sales are down.
While Frank Sinatra was drinking to the end of a brief episode, a lot of people seem to be skipping that one for the road.
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A Gallup survey says the percentage of U.S. adults who say they consume alcohol has fallen to 54%, the lowest by one percentage point in the firm’s nearly 90-year trend.
“This coincides with a growing belief among Americans that moderate alcohol consumption is bad for one’s health, now the majority view for the first time,” Gallup said in a statement.
While health and wellness play a significant role, the consultancy Reach3 says “economic factors cannot be ignored.”
“Inflation and the rising cost of living (as well as the threat of tariffs) have made consumers more selective about their discretionary spending,” the firm said.
“Additionally, the increasing availability and acceptance of alternatives like cannabis and nonalcoholic beverages provide consumers with more choices.”
Constellation CEO cites ‘unprecedented volatility’
Constellation Brands (STZ) , home to such names as Corona, Modelo and Robert Mondavi, on Oct. 6 beat Wall Street’s fiscal-second-quarter forecasts while reiterating its earlier lowered full-year guidance due to macroeconomic headwinds.
“We’ve seen unprecedented volatility and there’s very mixed results,” Chief Executive Bill Newlands told analysts during the earnings call. “One of the things that we track very carefully is Zip Code data, and the results that you are seeing in high Hispanic Zip Code areas are significantly worse than what you see in the general market.”
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Hispanic consumers account for roughly half the company’s beer sales, particularly its Modelo brand, which is the most purchased U.S. beer by dollar share.
“We are doing a monthly study of all consumers, both Hispanic and non-Hispanic,” Newlands said. “The thing that has stood out for us is that 80% of surveyed Hispanic and non-Hispanic consumers continue to express concern about the socioeconomic environment we face.”
Newlands noted that 70% of survey respondents said they were specifically concerned about their personal finances.
“We’ve got a consumer base that’s pulling in a bit, and they are not engaging. At the same time, you’re seeing increased loyalty,” he said. “Our loyalty is up with Corona in the general market. Our loyalty is up with Hispanic consumers for Modelo.
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“You know, a lot of people ask the question about Gen Z often. We have twice the share of Gen Z as part of our overall mix versus the industry average.”
Newlands added that the company is “sitting in a good spot as the consumer turns around and gets more comfortable with where they are.”
“At the moment, there’s just a tremendous amount of concern about socioeconomic issues really across the board,” he said. “In our view, that’s the significant thing that’s been challenging both for us and for the category in general.”
Chief Financial Officer Garth Hankinson said that despite the near-term headwinds, “which we see as being primarily cyclical in nature, we’re confident in the longer-term growth trajectory of the portfolio.”
He added that company expects the tariff impact this year to be about $70 million on Constellation’s beer business and about $20 million on the wine business.
The company’s stock is down 35% this year and has fallen nearly 41% from this time in 2024.
Other companies note economic uncertainty
Boston Beer’s (SAM) stock, maker of the Sam Adams brand. has also been seeing red, dropping nearly 27% this year and falling 19% from 12 months ago.
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“There are near term factors such as economic uncertainty and household budget tightening, along with pressure on Hispanic drinkers that are negatively impacting consumer demand across the overall beer industry,” Founder and Chairman C. James Koch told analysts in July. “Additionally, the second quarter had especially poor weather in key selling weeks.”
Despite these industry headwinds, Koch said, the company sees long-term growth opportunities in Beyond Beer — nonbeer alcoholic beverages such as hard seltzers, hard ciders, hard teas and hard lemonades — “which we often call the fourth category.”
“Beyond Beer represents more than 85% of our volume and is outperforming the legacy three categories of beer, wine, and spirits,” he said. “We have strong brands, and over the last year one in three beer-drinking households in the U.S. have purchased at least one Boston beer product from our diverse portfolio.”
Meanwhile, Anheuser-Busch InBev (BUD) , maker of Budweiser, reported a worse-than-feared decline in second-quarter volumes, CNBC reported in July, even as revenue and profits surged.
The world’s largest brewer, which has been closing some of its acquired craft breweries and taprooms, said the drop was led by China, where volumes were down 7.4% and where the company said it was “underperforming the industry.”
Brown-Forman (BF.B) , owner of the Jack Daniels brand, posted mixed results in August with the company noting “a challenging environment.”
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