Beer before liquor? Not for millennials.
The makers of Corona, Modelo and Samuel Adams are seeing especially declining sales thanks to a shift in taste by younger generations.
On Monday, Goldman Sachs downgraded Boston Beer Company (Samuel Adams, Angry Orchard) from “neutral” to “sell” and Constellation Brands (Corona, Modelo) from “buy” to “neutral.”
It also projects the overall beer market in the US to decline by 0.7 percent in 2017.
By contrast, penetration of wine and spirit sales held steady in 2016, and marijuana use is on the rise.
“We view the shift in penetration and consumption trends as driven by a shift in preferences in the younger cohorts,” chief Goldman Sachs analyst Freda Zhuo wrote Monday. “The youngest demographic (younger than 35 years old) overall penetration rates are not increasing. The 35- to 44-year-old cohort shows a shift away from Beer to Wine & Spirits.”
This April, the financial firm Cowen lowered its stock rating for Molson Coors, saying sales will suffer as a result of increasing marijuana use.
Cowen analyst Vivien Azer cited a “notable inverse correlation with cannabis use” during the three most recent cycles of alcohol consumption.
In Washington state, marijuana sales eclipsed $200 million in a single quarter for the first time in 2016, rivaling revenue for hard liquor with nearly $212 million in sales, not including paraphernalia.
Spirits sales in Washington — which don’t include beer or wine — in the same period totaled almost $249 million.
Alcohol consumption in the 18- to 25-year-old demographic has declined for five straight years through 2015 as marijuana use increased, according to Azer.