Behind the Money

Beer Drinkers Hit Hardest in Weak Economy: Report


If you want your economic situation to improve, maybe you should switch from Coors Light to Chardonnay.

Boxes of Coors Light beer.
Amy Sancetta

A UBS analyst downgraded shares of Molson Coors Brewing , citing slowing sales of its marquee brand to economically-strapped domestic beer drinkers, as well as lost alcohol market share to wine.

“Beer volumes continue to suffer as beer over-indexes to the demographic that has been hardest hit by the recession,” said Kaumil Gajrawala, in a note to clients Tuesday. “Further, domestic premiums continue to lose share to craft beer, wine & spirits, and imports. Even if unemployment trends continue to improve and industry beer volumes were to turn positive, MolsonCoors has limited exposure to the growing segments within alcoholic beverages.”

The U.S. recession officially ended in June 2009, according to the National Bureau of Economic Research. Recent economic data, including a better-than-expected December jobs report, has added to optimism that a domestic recovery is on track.

But perhaps it’s not back on track for everyone. The UBS analyst doesn’t go on to describe the beer drinker “demographic,” but one can assume the report is referring to lower-paying, blue collar jobs.

About 23,000 manufacturing jobs were added in December, according to the Labor Department, but that followed four months of zero growth as other sectors expanded. The unemployment rate for the construction sector is 16 percent, while the jobless rate for financial workers is just 5.6 percent, according to the latest data.

Following a 2 percent decline Tuesday on the UBS downgrade, shares of Molson Coors are off by more than 11 percent over the last 12 months. Meanwhile, spirits and wine maker Constellation Brands is up 9 percent over the same period. Boston Beer, maker of Samuel Adams craft beer, is also up 9 percent.


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