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Monday, December 08, 2014

Millennials and Beer - The Sky is Not Falling

The Washington Post's Wonkblog has a piece that is creating a bit of discussion amongst beery types: millennials don't like the beer so much.  (It's a post based on old numbers from a Gallup survey--apparently those ignorant of old poll numbers are doomed to repeat them.)  Actually, they do--beer is still millennials' preferred alcoholic drink--they just prefer it less than young people have in decades past.  And, actually, that tracks closely with general trends, too--beer consumption generally has been falling for decades.  We have known for at least five years that fragmentation is the way of the 21st century, as mass markets get ever tinier.

What we really care about is whether millennials are moving away from the craft beer segment.  Gallup's numbers didn't say anything about that, so of course Wonkblog can only offer a bit of throat clearing:
Even the beer world's coveted corner, craft beers, which has been gaining market share for many years now, might be on the verge of hitting their peak. "While we're not there yet, we're definitely approaching bubble territory,"  Spiros Malandrakis, an industry analyst at Euromonitor, said this past summer.
In other words: move along, nothing to see here.  We have known for years that the drinks market is getting more crowded as it matures, and that cider, micro-distilled liquors, and craft beer are increasingly grabbing market share from mass market beer.  Millennials are the first generation to be raised post-mass market, in the fragmented world of the internet.  They divide their love on all matters, not just alcoholic beverages.  That does not mean so few of them like craft beer that they can't support the segment's growth as it doubles or trebles (which would still leave it a decided minority of overall beer sales).

I'm also tired of lazy commentary like Malandrakis'.  His full quote continues: "There can't be a massive craft brewer. That's just an oxymoron. The moment a craft brewer makes beer on a mass scale, it's no longer a craft brewer."  He is a Londoner, and the word "craft brewer" has a different meaning there--so possibly we can chalk this up to cultural misunderstanding.  But on the face of it, that's an absurd statement.  We already have several massive craft breweries, and they are growing impressively.  Aside from a gut feeling he may have, there's nothing in the trends or data to suggest craft brewing is at or near a bubble.  None.  I know people feel that way, but there's no data to support it.

Sales of jug wine constituted two-thirds of the market in 1990 and are marginal now.  If you looked at the sale of good wine in 1995, you might have called it a "bubble," too.  But some times, trends just shift.  Nothing says mass market lagers have to remain popular.

Beer is fine, and millennials drink plenty of it.  In the immortal words of Aaron Rodgers, "r-e-l-a-x."

8 comments:

Pete Dunlop said...

Where do you suppose millennials fits into the beer consumption numbers here in Portland? We know they drink a lot of things other than beer, and we know it's a fickle demographic. But it seems to me they make up a pretty good percentage of beer consumers here.

Alan said...

Why do "we" care one way or the other? I think the view is far more honest about big craft but even then if the kids want to drink wine, more power to them. Real micro beer will remain long after big craft sells out... more.

Alistair Reece said...

"The moment a craft brewer makes beer on a mass scale, it's no longer a craft brewer."

Isn't that basically the line though of the Brewers Association definition of 'craft brewer' if taken to its logical extenstion, not withstanding their habit of upping the limit so that Sam Adams and Sierra Nevada never become 'not-craft brewers'?

Jeff Alworth said...

Pete, one thing I should have mentioned in the article but, in my usual slapdash fashion, forgot was this: millennials are famously promiscuous. The Gallup question asks which is your favorite beverage, which completely hides those drinkers who regularly have cocktails, cider, wine, and beer depending on their mood. I think millennials all drink everything, but just favor one beverage a bit more depending on taste. I know tons of cocktail lovers who still have an IPA from time to time.

Alan, I care about variety, and a robust market for beer has so far assured it. These chicken-little articles suggest that the market may soon contract, which leads to things like consolidation and mass-marketization. But I doubt the premise.

Alistair, it may be the BA's line, but it's at best a fig leaf. The linking of quality and independence and size as dimensions of the definition was doomed and shortsighted from the start. And anyway, few people care about most of that stuff. They care about good beer and maybe local beer. They don't give two figs about size.

Alan said...

Isn't there another reading? It it not correct to say there is a growing difference between the newly developed large craft and traditional macro craft? Each has their positives and negatives but that is separate from the bubble question. It suggests doubts as to large industrial brewers maintaining the connection to anything craft-like in their operation. Quality dulls at scale as the personal relationship becomes abstract, Hardly a "move along, nothing here" observation.

Jeff Alworth said...

I don't pay much attention to the distinction between what some call authentic craft and faux craft. I honestly don't think consumers do. My guess is that if you had a sensitive poll and figured out a way to ask people about Sierra Nevada Pale and Blue Moon, they'd put them in the same category. They'd call it "craft beer." They might also recognize that these companies are different from the local brewery, and have some affection for the latter. But to most people craft means anything that's not a mass market lager.

Alan said...

So you are saying, which is fine, there is only one sort of good beer. I think I don't disagree but I still think three sorts of breweries have developed. I am not saying that, for example, a Stone or Lagunitas doesn't make decent beer even if they are big craft. I think that I prefer macro craft and micro craft, however, as they simply seem to have more reasonable price points and less spin while producing as interesting or more interesting beer.

Jeff said...

...nevermind the small fact that as these 'youngsters' grow older they will already have access to, and knowledge of, a much wider variety of beers than we did 15 years ago (when I was in this age bracket).

I'm still convinced that most of the people who are mono-type drinkers (thinking of Bud/Miller fanboys who walk into a taproom with 50 handles and order a Lite tallboy/bottle, to the chagrin of everybody else sitting at the bar) wouldn't be so devoted if they'd had the chance to try something else - anything else - when they first started drinking. As the old farts move on the majority of consumers in this market will expect and demand the variety we've grown up with. All of this rides on my assumption that the big-brand domestic drinkers just fear change so much they cannot enjoy, or even bring themselves to try, anything else. I'm from and currently live in Iowa, and any time there's a reason to bring beer it's still 9/10 'big' domestic beers that you see in the cooler. Marketing and positioning from the craft brewers will help change that as well, but I believes it's just the act of growing up with these choices that will keep the growth solid.

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