Per-capita alcohol consumption in the United States has reversed course following decades of steady expansion, entering what is only the third meaningful downturn in the past century. The change has prompted some market participants to assume a permanent contraction in volumes, a stance that has weighed on valuations across publicly traded brewers and distillers.
Barclays challenges the prevailing bearish narrative, arguing that current forecasts that imply indefinitely negative volumes overlook both historical patterns and international comparators. On a like-for-like income basis, Americans consume less alcohol than their counterparts in other wealthy countries, the bank notes. That lower baseline has long reflected structural constraints - for example, a relatively high legal drinking age and widespread car ownership, which together reinforce drink-driving enforcement and limit consumption.
The notion that younger cohorts are principally responsible for the recent drop is, according to Barclays, overemphasized. Consumption among those under 21 has been falling for decades amid tighter enforcement; however, drinking behavior after age 21 remains broadly stable. The recent decline in volumes has not been confined to a single cohort but has extended across age groups.
Other potential drivers of weaker demand appear limited in scope. Barclays assesses the impact of GLP-1 weight-loss medications on alcohol sales as marginal. The bank bases this view in part on the demographic profile of users - skewing older and female - while alcohol consumption is concentrated more heavily among younger men. Similarly, evidence from jurisdictions that have legalized cannabis does not show a consistent substitution effect away from alcohol.
Instead, Barclays points to macroeconomic headwinds as the more plausible near-term explanation. Weaker consumer confidence, higher inflation and elevated interest rates have reduced discretionary spending, and alcohol sits among the more discretionary categories within consumer staples. In that respect, the sector's pullback mirrors declines seen in other non-essential areas of consumer expenditure.
There are early indications that the slide may be stabilizing. Nielsen figures and card spending data point to a pick-up in both volumes and value in January, with growth disproportionately concentrated in premium offerings. If premiumization trends persist, Barclays expects overall U.S. consumption to converge more closely with levels seen among global peers, with spirits positioned to benefit most from a renewed tilt toward higher-end products.
For markets, the distinction between a cyclical setback and a structural shift matters for valuation and sector allocation. The bank's assessment suggests upside if macro conditions normalize and premium demand continues to recover, while the prevailing pessimistic forecasts leave listed beverage names exposed to further multiple compression if sentiment never adjusts.