Less Thrilling

The result was that after decades of success selling a cold one to the baby boomers, the big brewers hardly noticed 10 years ago when boomers' tastes started to change as they approached 50.

"There was a general assumption -- that is proving somewhat erroneous -- that the baby boomers would continue with the consumption patterns that they established in their youth," said Benj Steinman, editor of Beer Marketer's Insights, an industry trade publication. "Instead, they're doing more like what prior generations did as they got older, and switching their drinking habits to wine and spirits."

Older drinkers have always favored hard liquor and wine, primarily because it's less filling -- simply less liquid -- for the same effect, Steinman said. Helping the wine industry, too, has been a run of press supporting the positive health effects of red wine and moderate alcohol consumption in general.

In and of itself, this trend would not be especially troublesome for beer, but it has happened at the same time that beer has lost its edge among younger drinkers as well.

The beer companies had always counted on the "echo boom" -- the children of the baby boom -- to provide the next wave of 21- to 27-year-oldbuyers. But these young adults turned out to have a much different view of themselves and their choices, from the particular coffee drinks they prefer at Starbucks to the bottled water they tote around to the alcoholic beverages they start ordering. Increasingly, these younger drinkers have been turning to a variety of cocktails -- appletini, anyone? -- drinks that say more about who they are than does a simple bottle of beer.

"Young adults are a generation of people who can alter pretty much everything, or at least customize everything to their lifestyle. And beer is beer," said Neal Stewart, marketing director for the Pabst Brewing Co., the nation's fourth-biggest beer producer. "There's different flavors and brands, but with a mixed drink you can customize that a million different ways."

The liquor industry has capitalized on this trend by aggressively marketing to younger drinkers with ads that tout the cool and sexy aspects of a mixed drink. They've pushed especially hard to market to consumers in bars and restaurants as well, while the beer industry took that vital avenue of business development for granted.

It's the Weather

A convergence of cultural and economic forces have also conspired to depress beer sales. After hovering at around 1 percent growth, or a little less, for several years, U.S. shipments of beer dropped 0.5 percent in 2003, rose slightly in 2004, but fell 1.2 percent in the first six months of this year, according to Beer Marketer's Insights.

Beer industry executives say sales have been hurt by a decline in disposable income among lower-income consumers, especially since the rise in gasoline prices and decline in blue-collar employment, long a target market.

"If you look at our key demographic of 21- to 34-year-olds, there are more kids going to college, they have college debt, more young people have credit cards, there are higher gas prices," said Jeff Becker, president of the Beer Institute, an industry trade group. "That beer at the end of the day has become a luxury."

Becker even pulled out a classic excuse from the retail industry: the weather. "We've had some of the wettest weather at key times for us that we've seen in the past decade," he said. "When it's too hot or too cold or rainy, it does affect people's beer consumption."

(On the other hand, Steinman said beer suppliers in Houston were reporting the best sales ever just before the arrival of Hurricane Rita.)