U.S. Beer Consumption Continues Decline

Consumers gravitate toward wine and spirits innovations, says Beverage Information Group

NORWALK, Conn. -- Heightened competition from other beverage alcohol segments, high unemployment rates among core consumers and a struggling economy contributed to another year of declines for the beer industry, according to the recently released Beverage Information Group's 2012 Beer Handbook.

It said that the overall beer industry lost 35.6 million 2.25 gallon cases--a 1.3% decline--to end the year at 2.787 billion cases.

Consumers are gravitating to the wine and spirits industries with their new product offerings such as flavored vodkas, category-crossing whiskey liqueurs, sweet reds and high-end blends, it said.

Meanwhile, domestic beer saw declines due to its lack of innovation and ability to connect with consumers, Beverage Information Group said. With the largest segment, light beer, losing 39.2 million 2.25-gallon cases, the other beer segments could not make up for the loss. The craft and imported beer segments' continued success helped to offset some of the overall industries' declines, but could not fix the problem, it said.

According to the Beer Handbook, imported beer also saw an increase of 1.3% in 2011, and it is projected to climb. Consumers are increasingly drawn to imports due to the wide variety of high-end products available, as consumers are trading back up to more premium brands, said the report.

The Beverage Information Group  said it expects the growth in the craft and imported beer categories seen over the years to continue, with imports projected to grow at a slightly slower rate. It remains to be seen if they can offset the declines in the domestic categories, it said. Unemployment rates, economic uncertainty, rising commodity and fuel costs all impact beer pricing structure and, therefore, volume.

"We are looking to the craft segment to continue to spur growth in the beer industry," said Adam Rogers, senior analyst for the Beverage Information Group, Norwalk, Conn. "Consumer interest is at its peak and there is unlimited potential for growth as more craft brewers enter the marketplace."