For millennials, marijuana and wine are in, beer is out. This generation would rather toke than chug. This post from The Fresh Toast highlights why weed usage rose while alcohol’s use declined.
Contrary to popular beliefs regarding subpar dining restaurants and avocado toast, millennials are not ruining everything. Instead millennials as a generation have demonstrated a changing value system, one not predicated on tradition. These cultural items don’t have value just because your elders say they do.
One shifting millennial lifestyle change focuses on beer. As the New York Post wrote, “Millennials more and more want to get wasted in style.” This trend has cost major American breweries dollars, as Goldman Sachs downgraded Boston Beer Company and Constellation Company this week. As Goldman reported, this comes as millennials opt for wine and spirts rather than beer.
This comes months after Cowen lowered its rating on Molson Coors, citing increased marijuana usage that would replace beer consumption as a factor. In that same report, Cowen noted that alcohol consumption declined amongst 18-to-25-year-olds while marijuana usage rose.
Goldman downgrading Boston Beer and Constellation seems to fall in line with that trend.
“As we explored back in 2014, we expected a cyclical rebound in total alcohol consumption post-recession,” wrote chief analyst Freda Zhuo in a note obtained by CNBC. “The cause [for shifts in beer and wine market penetration] is younger groups shifting away from beer.”
While the craft beer industry continues to expand its volume production, it has noticeably slowed from the explosive boom seen just a few years ago. The Brewers’ Association noted that mid-year production growth rose just 5% in 2017. To compare, the craft beer industry had a 16% production growth in 2015.
Marijuana legalization seems to have played a factor in both cases. As Cowen analyst Vivien Azer wroteback in April, “Coming out of the recession, alcohol’s recovery has been uneven, while cannabis incidence (and legal sales) have both risen markedly. We believe this sets up the alcoholic beverage category for another cycle of falling per capita consumption. With cannabis adoption accelerating, alcohol volumes will remain under pressure.”