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With all the recent headlines declaring that “Millennials Are Killing the Beer Industry” and “Are Millennials Killing Beer Now?” it’s no small wonder that the internet is in a tizzy about the state of the beer industry. So what’s the skinny? Well, this past week, Goldman Sachs downgraded two beer stocks, Boston Beer and Constellation, based on their performance to date in 2017 as well as citing Nielson data and their own research showing Millennials now prefer wine and spirits to beer. Boston Beer slipped to “sell” from “neutral” and they moved their recommendations on Constellation to “neutral” from “buy.”

Why The Downgrade?

Boston Beer has not had a good couple of years. This year, their shares fell 23% this year alone and Goldman Sachs had this to say, “Despite the Boston Beer Company’s commitment to turn around Sam Adams beer and Angry Orchard cider, we see no improvement in sight and see downside risk to fiscal year 2017 volume guidance.”

Don’t count Ol’ Sam out yet. While this quote was from Monday 7/24, on Friday 7/28, it was reported that Boston Beer has seen a whopping 20% surge in shares based on crushing earnings and revenue expectations in this last quarter. Much of that increase is due to their hard sparkling water and hard ice tea offerings. It was good news for a company who has struggled to stay relevant in a sea of nano-craft breweries offering hyper-local competition.

As for Constellation, it’s unclear as to why they were downgraded. This year, their shares were up 13% (while shares of Boston Beer fell 23% this year), and while they also own Modelo and Corona, they own numerous wine and liquors brands too. So if the reason why they are downgraded is that Millenials are turning to wine and liquor, why would their stock be downgraded? Also, Goldman Sachs lowered its U.S. beer volume forecast and expects sales to decline .7% in 2017, but if they are talking about the whole beer industry, why leave out Big Beer which still sells most of the beer in the United States? In fact, MolsonCoors was mentioned by Market Watch.

“The analyst left shares of Molson Coors Brewing Co. at buy, because “while we see lingering volume risk, undemanding valuation and potential for healthy free cash flow growth warrant a Buy rating with 19% upside, in our view,” said the note.” 

How convenient, but it still doesn’t explain why their beer is more valuable than Constellation’s brands, especially when Constellation has been having a good few years, growth-wise.

Are Millennials Killing Beer?

But let’s get back to the Millennials being the cause of ‘death to beer.’ As much as Goldman Sachs wants you to believe this, it’s just not true. No one is killing anything. Craft beer has seen years of unbridled growth and it’s only natural for this to slow. Furthermore, macro beer sales are down, so the numbers weren’t helped by their huge sway within the beer industry. A recent Gallup poll stated that “Beer Remains the Preferred Alcoholic Beverage in the U.S.” with 40% of Americans who drink alcohol preferring beer, 30% preferring wine and 26% preferring liquor. That’s a pretty comfortable lead and yes, a percentage in any direction can be felt within the industry, but all the hysterics over beer dying need to stop. Furthermore, based on this quote from Goldman Sachs, Millennials wouldn’t be to blame anyway, it would be Gen Xers,

“We view the shift in penetration and consumption trends as driven by a shift in preferences in the younger cohorts,” added Zhuo. “The youngest demographic (<35 year olds) overall penetration rates are not increasing. The 35-44 year old cohort shows a shift away from Beer to Wine & Spirits.”

So, because this youngest demographic (Millennials) show no increase in market penetration, they are killing beer? According to their own data, Gen Xers are the ones shifting to wine and spirits, not Millennials. The whole issue is confusing and the media has had a field day with the idea that Goldman Sachs put out, which is Millennials are to blame for the slow in sales. So before anyone throws up their hands at the state of the beer industry, they need to stop, take a long sip of a cold beer, and breath. Beer is here to stay and while there is always going to be movement in both directions in any industry, nothing is being killed and certainly not by Millennials.