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Spending pressures are dividing beer drinking habits, further clouding the outlook for brewers already battling declining sales volumes.
Drinkers are increasingly bypassing once-loved core beer brands and instead opting for premium or economy alternatives, Danish brewer Carlsberg said Thursday, as beermakers confront wider pressures on the drinks sector.
“We do see a continued bifurcation in terms of preferences,” CEO Aarup-Andersen told CNBC’s “Squawk Box Europe” on Thursday.
“People look either for the premium brand or the economy brand. So what will get squeezed a little bit in an environment like this is actually the core brands in the middle,” he added.
Beermakers have been battling several consecutive quarters of declining volume growth, as consumers have pushed back against higher prices and veered toward alternatives.
Carlsberg, the world’s third-largest brewer, on Thursday became the latest to report lower second-quarter volume growth. Organic volumes dipped 1.7% over the three-month period, including the recent loss of its San Miguel brand, even as demand for its premium and alcohol-free products grew.
That comes after Budweiser-maker AB InBev, the world’s largest brewer, last month posted a worse-than-feared 1.9% year-on-year decline in second-quarter volumes and Heineken‘s volumes dipped 0.4% over the period.
“The global consumer is having a bit of a spending pause … so the volumes do not flow in the way they did a couple of years ago,” Aarup-Andersen noted.
AB InBev’s CEO Michel Doukeris nevertheless said last month that the company’s continued revenue and operating profit growth pointed to the “resilience of the beer category,” and Heineken’s CEO Dolf van den Brink cited resilience in its geographical footprint.
Drinking habits splinter
Beermakers have been somewhat sheltered from recent pressures on the drinks industry, particularly a downturn in spirits consumption and ongoing U.S. tariff headwinds.
Brewers, which typically rely on local production, are under less pressure to relocate their manufacturing stateside — even as they face higher aluminum levies on beer cans.
Still, broader macroeconomic headwinds threaten to hurt drinking habits and wider consumer spending.
Carlsberg’s CEO said Thursday that the group’s core brands — which include its namesake Danish brew as well as Tuborg and Kronenbourg — are being most hit by “a consumer that is holding back.”
He said he does not expect those economic headwinds to dissipate this year, but nevertheless noted a willingness among consumers to spend selectively on high-end treat products.
“It’s core beer that’s going backwards while our growth categories are actually showing growth,” he said.
Meantime, the CEO added that at-home consumption is gaining more ground as ongoing hikes in the price of a pint are making boozing in bars and restaurants less palatable.
“What we have been seeing over a number of quarters is that the on-trade, so bars and restaurants, are suffering right now,” he said.
“It’s the off-trade — supermarkets and retail — that’s winning at the expense of on-trade. It’s not dramatic but it’s been a sliding scale.”