The Twentysomething Shift from Hops to Spirits

Advertising Age runs a weekly poll on timely questions in the world of marketing. This week’s question:

CAN THE BEER INDUSTRY'S DECLINE BE TURNED AROUND?

Ad Age provided this background for voters:

Beer sales, which made up 56% of the U.S. market for alcoholic beverages in 1999, slipped to 53.2% by last year and continue to decline as wine and hard liquor sales increase. Future signs for the beer business are not good. A Morgan Stanley study found that spirits – rather than beer – have become the most popular drink choice among the 21-to-27-year-old set. Even worse, say industry analysts, is that years ago brewers generally followed Anheuser-Busch's move away from advertising that differentiated their products and into advertising strategies designed to be light entertainment. But while talking lizards, farting horses and mud-wrestling babes have evoked laughs, they haven't prevented the erosion of beer's market share. Meanwhile, spirits companies' marketing has expanded and is aggressively targeting key demographic groups in a manner that has made cocktails and wine the hip glamour drinks. Symbolizing the cultural sea change that is altering beer's national market potential is this fact: In Chicago between 1990 and 2004 the number of neighborhood tap rooms – beer havens all – has dropped by 60%.

Could the growing wave of twentysomethings switching from beer to spirits be another example of the unconscious influence on younger people being exerted by the New Customer Majority – folks 40 and older who outnumber younger adults by 130 million to 86 million?

In particular, are members of the psychological center of gravity (PCG) transforming the drinking patterns of younger adults?

I wrote about the PCG – the most influential 10-year age cohort on consumer behavior – in this space last September in a 3-part series.

The accompanying chart in this post comes from the September 14 post on the PCG.

As I noted my May 5 2005 post, people generally begin drinking beer less and spirits more as they move beyond their 20s. Two things are working against beer sales growth. First, population growth among twentysomethings is at a crawl. Second, the influence of the PCG – which today consists of people aged 40 to 50 – is unconsciously influencing young adults to move into spirits earlier than in the past.

Thus, I don’t believe brilliant marketing can return beer to sales growth for some time any more than it's likely to return sales growth in carbonated beverages. So buy beer short.

Comments

[Vicki Thomas]

Hello David:
I read with interest your comments on the twentysomething decline of beer drinking in favor of spirits. You also mention the twentysomething decline to a crawl. I am wondering what the statistics are with beer consumption among the growing Hispanic market in the United States that are predominately younger.