2020 a strange year for beer

U.S. beer consumption rose a modest but encouraging 0.6% in 2019, and the U.S. beer industry was hopeful that 2020 would see similar results. Then the coronavirus pandemic hit, leading to widespread concerns that the industry would be devastated.

The truth is more complicated, with some sectors of the industry hurt badly and others holding up relatively well, said Lester Jones, chief economist of the National Beer Wholesalers Association.

"The reality for the beer industry is, we're down. I have it (consumption) down 2.2% through September," Jones said. But, "2020 may end up looking a lot like 2019 (in terms of consumption). The difference is, we'll have different people drinking different beers in different places."

But that's nothing new. "The alcohol beverage market has been about innovation and evolution of American consumers looking for different drinks in different places. COVID has just sped that up," Jones said.

Jones spoke Dec. 10 at the annual Prairie Grains Conference in Grand Forks, N.D. The event, hosted by a number of North Dakota and Minnesota commodity and general farm groups, was held online this year, with all the sessions on one day instead of the normal two.

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Jones frequently speaks at the annual event, which draws barley growers from North Dakota and northwest Minnesota. Malting barley is used in most, though not all, beer.
The pandemic's effects were a huge part of Jones' presentation this year.

"Obviously we're in a big economic recession in 2020," Jones said. But helping to offset that, "We've done a lot of economic stimulus. We've spent trillions of dollars" through various government programs and "all that money flows into the market."

The current economic recession is a hospitality-driven recession, which is unique, said Jones, predicting that the beer industry's struggles in the hospitality sector will continue well into 2021.

The beer industry sales is 10% draft beer, while 18% is sold on premises. Jones said both categories have been hurt badly by pandemic-related restrictions.

But innovation and new trade channels (e-commerce) help to boost beer sales in other categories, Jones said.

Long-term, big-picture trends also continue to drive the U.S. beer market.

Perhaps most importantly, younger adult Americans on balance are drinking less beer, while Americans in their mid-70s and older are drinking more. Jones said that reflects the larger number of young adults living at home with aging parents.

Fewer young Americans will be entering the market in coming years, which will work against beer consumption. On the other hand, Americans now in their 20s generally will make more money as they age, increasing their disposable income, Jones said.

There are other challenges, too, Jones said. They include that some health agencies are recommending less alcohol consumption, and revenue-starved state and local governments may try to boost their alcohol taxes.

"If you think about where we're headed, there are threats and opportunities," Jones said.