Thinking of opening a bar? You might want to cut back on the beer.
Goldman Sachs recently downgraded the stocks of two major brewers–Boston Beer Company (the makers of Sam Adams and Angry Orchard cider) and Constellation Brands (the third-largest beer company in the United States, and one known for importing Corona and Modelo)–due to “sluggish sales,” according to this CNBC report. The culprit seems to be the 35-44 set.
Apparently, some people aren’t drinking as much beer as they used to. The data shows they now prefer wine and spirits instead. Research firm Nielsen showed a slight decline in beer penetration across the United States compared to 2016, although wine and spirits penetration stayed about the same. But Goldman’s research revealed a shift away from beer to wine and spirits among those 35-44.
The beer business seems to be fizzling elsewhere too. As reported last month by the BBC, the International Wine and Spirits Record revealed a decline in beer sales worldwide, even though global gross domestic product increased 3.5 percent in 2016 and economic growth “usually correlates with increased alcohol consumption.” China saw its sales of beer fall 4.2 percent, Brazil’s declined 5.3 percent and even Russia’s beer sales declined almost 8 percent.
Oh by the way, it’s not just wine and spirits that are catching consumers’ attention. Let’s not forget the growing legalization trend of marijuana too. According to the CNBC report, there was a “notable inverse correlation with cannabis use” as more people apparently turned to weed over alcohol.
Goldman Sachs is predicting a sales decline in the overall U.S. beer market in 2017 and, as a result, both Boston Beer and Constellation Brands have seen a drop in their respective share prices. If you’re one of the tens of thousands of bar and restaurant owners across the country, I strongly recommend a reevaluation of your liquor inventories.
An earlier version of this story incorrectly attributed the trend to millennials. They represent only a portion of the age cohort that has seen a drop in beer consumption. The story and headline have been updated.