Beer Company Stocks Are Falling Because Millennials Are Drinking So Much Less Big Beer

Millennials are much less likely to grab a 24-pack of a popular brand of beer than their predecessors and Wall Street has taken a watchful eye to this downward trend. Major beer brands are taking a hit in their pockets and stocks as millennials choose wine, spirits, craft beer, and marijuana over huge namebrand brews. A new report from Goldman Sachs found that the young crowd is “shifting away from beer” and have since downgraded two beer behemoths because of the trend.

Goldman Sachs released a report which discovered that volume for “core domestic” brands like Bud, Miller, and Coors are expected to be down 3% this year and have been declining every year since 2011. Beer penetration fell 1% in the U.S. market this year, while wine and spirits had no change. Since the 1980s, there has been a 22% decline in beer consumption overall, and at the same time, there was an 18% increase in marijuana consumption. One of the main factors for the significant decrease is that millennials are passing up big beer for craft beer, wine, and liquor. But Gen Xers are also slowly shifting from beer to wine and spirits as well.

The shift in the consumption trend caused Goldman Sachs to downgrade the Boston Beer Company, which includes Sam Adams and Angry Orchard brand hard ciders, and Constellation Brand, which owns brands such as Corona and Modelo. Goldman Sachs downgraded Boston Beer Company from “neutral” to “sell” and Constellation Brands, which has the third-largest market share (7.4 percent) of all major beer suppliers, from “buy” to “neutral.” Boston Beer saw its shares fall 5%, and Constellation Brands slipped 1.3%. This could spell bad economic news for the other big beer brands, since three major brands make up approximately 65% of the total market.

This doesn’t necessarily mean that millennials are drinking less beer, because millennials love craft beer. A study of 10,000 drinkers in the U.S. found that 57% of millennials were weekly craft beer drinkers, in comparison Gen Xers came in at 24 percent, baby boomers at 17 percent, and matures at 2 percent. There was an 8% growth in small craft breweries in the first half of 2016. Sales of craft beer are expected to rise 2.5% in 2017, but even that is way lower than the crazy 17.9% growth that craft beer experienced back in 2011.