Beer Demand Goes Flat As Even Alcoholics Pull Back With Gas Above $4
Beer sales across the U.S. over Memorial Day weekend were troublingly soft, according to a new Goldman report, which attributed the weakness primarily to a "challenging macro backdrop" and unusually cold weather across parts of the Lower 48 states.
The Gulf-related fuel price shock has kept the national average for 87-octane gasoline above the politically sensitive $4-per-gallon threshold for more than 66 days, or roughly two months. Consumers are already pulling back on purchases at gas stations and convenience stores, with the latest evidence showing a sharp slowdown in energy drink sales growth amid rising fuel prices.
The next victim of the fuel price shock, amid a dismal consumer backdrop of sliding personal savings and a fading tax-refund sugar high, appears to be beer - generally considered a consumer staple product. The latest high-frequency data cited by Bonnie Herzog shows beer trends over the Memorial Day weekend were troubling.
"As expected, the challenging macro environment appears to be the largest drag on beer trends - as consumers have less disposable income and are prioritizing more non-discretionary purchases - while unfavorable weather in several parts of the country further pressured consumption patterns with Memorial Day weekend being the wettest and one of the coldest holiday weekends in the past 5 years," Herzog wrote in the note.
Herzog's "Bev Bytes" Beer Distributor Survey covers feedback from roughly 45 beer distributors, representing about 145,000 retail outlets or 23% of U.S. alcohol-selling locations, providing clients with a solid real-time snapshot of beer demand.
That snapshot showed demand remained uneven, with Constellation Brands standing out as a winner, while Heineken, Boston Beer, and Molson Coors lagged behind.
About half of the respondents in the survey said beer sales slowed in April and May compared with the first quarter, citing a softening in consumer spending, unfavorable weather, and category switching to ready-to-drink alcoholic beverages sold pre-mixed in cans or bottles, and/or THC products.
Most notable takeaways from the survey:
1. Nearly half of all distributors indicated that beer category sales decelerated in April/May vs Q1 - citing a pressured consumer backdrop, unfavorable weather, some category switching (e.g., RTDs & THC), a secular shift away from alcohol, and weak marketing;
2. Consumers are facing increased pressure as a result of the challenging macro/operating backdrop - with notable pressure on the Hispanic consumer;
3. Recent volume trends for STZ in May have been encouraging following a relatively weaker Cinco De Mayo;
4. Recent scanner trends appear to be soft for Modelo Especial - though distributors still see further upside and expect the brand to grow this year;
5. Miller Lite & Coors Light remain pressured with further deceleration in April/May vs Q1;
6. Distributors are cautious on Corona but are mostly positive on Sunbrew;
7. Distributors are split if TAP will be able to successfully grow Monaco Cocktails;
8. Most distributors are upbeat about Sun Cruiser - with most expecting trends to accelerate in 2H vs 1H this year, SAM's brand portfolio elsewhere including Twisted & Truly remain pressured; and
9. SAM's recent innovation LYTT is seeing mixed traction - most view this as an interesting concept, but unsure how it would be received by consumers and durability of growth in context of its novelty packaging.
Herzog pointed out that "tempered beer category growth trends over the Memorial Day holiday weekend and lackluster category growth outlook largely come as no surprise, especially considering the challenging macro environment - we take a selective approach to identifying relative winners within the space that we believe are best positioned to outperform."
Beer Stock Coverage:
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STZ - Our 12-month price target of $180 is based on an equal-weighted EV/EBITDA of 10.8x (vs 10.9x prior) and P/E of 13.4x (unchanged), both of which are based on our Q5-Q8 estimates. We slightly lower P/E multiple to reflect macroeconomic and geopolitical pressures affecting the consumer. Risks to our estimates and price target include: Modelo/Corona Extra lose traction with consumers; Corona Light does not stabilize/return to growth; greater than expected spike in input cost inflation or lower productivity savings; STZ fails to build its new brewery in Southeastern Mexico.
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TAP - Our 12-month price target of $50 is based on an EV/EBITDA multiple of 6.1x (weighted 42.5%), P/E of 8.0x (wtd 42.5%), & M&A value based on EV/EBITDA of 9.4x (wtd 15%) all based on our updated Q5-Q8 estimates. Risks include: TAP cedes recent market share gains to Bud Light as that brand recovers; Acceleration plan fails to deliver mgmt's intended transformation across the broader beer/FMB portfolio driving declines in TAP's beer volume and market share (across both core economy SKUs and Above Premium beer/FMB) or consumer preferences shift away from mainstream/budget-priced beer and TAP's Beyond Beer strategy fails to resonate with consumers.
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SAM - Our 12-month price target is $192 and is based on an equal-weighted EV/EBITDA multiple of 8.0x and P/E multiple of 16.6x, both based on our Q5-Q8 estimates. Risks include: hard seltzer category growth accelerates and Truly gains momentum; Truly gains significant share and household penetration; SAM successfully stabilizes the Sam Adams brand; and supply chain capacity constraints for hard seltzer ease.
Professional subscribers can read the full Beer note here at our new Marketdesk.ai portal.
Tyler Durden Thu, 06/04/2026 - 18:00