Softer than expected Q1 trends have caused distributor sentiment to wane for the beer category, according to survey results from investment banking firm Jefferies.
Jefferies surveyed distributors across sizes, with 61% handling between 1 million and 10 million cases annually, 18% handling fewer than 1 million and 21% handling more than 10 million.
Survey respondents collectively expect 2025 industry volume to decline 2%, down from expectations of down 1% shared in Jefferies’ fall survey.
Three-to-five year projections have also been lowered from the fall, from -0.5%, to -1%, with declines from craft, hard seltzer, “mainstream” beer and hard cider’s decline expected to outpace growth from premium beer, imports, flavored malt beverages (FMBs) and non-alc (NA).
Across beer segments, craft beer is expected to record the largest percentage volume decline in 2025 (-4%), followed by malt-based seltzers (-3%), domestic premium (-2%), hard cider (-1.5%) and “economy” (-0.5%).
Imports were the “largest driver of the lowered 2025 total beer volume outlook,” with the segment, excluding Mexican imports, expected to be flat, while Mexican imports are projected to grow 1%. Volume growth outlook for Mexican imports fell 486 basis points (bps) from Jefferies’ fall survey, the largest sentiment decline, followed by NA beer (-257 bps), domestic super premium (-138 bps), domestic premium (-131 bps), craft (-103 bps), imports excluding Mexico (-50 bps) and cider (-37 bps).
Here is the 3- to 5-year volume outlook for some of the underperforming segments, highlighted by Jefferies:
- Imports, excluding Mexico +0.4% (+0.4% in fall survey);
- Economy +0.1% (-0.1% previously);
- Cider -1% (-1.3% previously);
- Domestic premium -1.4% (-0.6% previously);
- Hard seltzer -2.5% (-2.9% previously);
- Craft -2.8% (-2.1% previously).
NA beer is expected to lead growth (+6%), followed by domestic super premium (+2.5%) and FMBs (+2%).
Survey respondents were also notably more pessimistic about beer’s “share of throat” versus fall survey results. In the fall, 55% of respondents said their expectations for beer’s share in 2025 was about the same as it was 10 years ago, while 24% said expectations are better now and 21% said they are worse. In the latest survey, 55% said they were about the same, but 42% said expectations are worse and only 3% said they are better.
“Beer suppliers need to hope traditional beer trends get better or diversify faster into other categories,” one distributor said, according to the report. “Unlike the non-alc side with Pepsi/Coke/KDP, larger alcohol suppliers seem hesitant to jump into the M&A game on a larger scale.”
The latest projections follow significant industry declines in January and February, with domestic tax paid shipments down 8.7% and 14.9%, respectively, versus 2024. However, March and April showed some improvement, with domestic shipments increasing 0.7% year-over-year (YoY).
Distributors also noted that March and April had improved depletions trends versus January and February, with 46% reporting “better” figures. However, 25% reported “little changed,” 25% said trends were worse and 4% reported things as “much worse.”
Scan data appears to back these sentiments, according to Jefferies. Total beer volume in NIQ-tracked off-premise channels plummeted from -1% in the four-week period (L4W) ending January 25, to -6% in the L4W ending February 22. However, trends improved slightly in the next three periods: -4% in the L4W ending March 22; -4% week-ending April; -3% week-ending May 3.
Meanwhile, distributor sentiment for spirits-based cocktails continues, with respondents expecting 6% volume growth from the segment in 2025, at or above expectations for any beer segment. Over the next three-to-five years, distributors expect 4.3% growth from the segment, just below NA beer expectations (+4.8%).
What could impact beer volume trends is pricing moves. Nearly half (48%) of survey respondents said they expect the pricing and promotion environment to be more competitive this spring, and 3% said it will be “much more” competitive. The remaining respondents said they expect “little change” from the existing environment, with none reporting expectations for it to be less competitive.
“The consumer is getting hammered right now,” one distributor said. “The typical beer consumer doesn’t care about the stock market, but they are worried about the continued (and potential) cost of living increases coming with tariffs. If that consumer does not get some reprieve, it could be a very difficult summer selling season.”
“Until the overall economy stabilizes, I expect more price promotion activity and less price growth than we have seen in recent years,” another distributor said. “Currently sales dollars are under indexing volume trends for the first time in many years.”
The state of the economy is not the only factor, and wholesaler consolidation will also have a role in price actions, according to respondents.
“The creation of mega distributors and increased consolidation will have an impact on consumer pricing, as less competition from a distributor standpoint is an area of concern,” a distributor said.
Jefferies also broke down expectations for large beer suppliers, including Anheuser-Busch InBev (A-B), Constellation, Molson Coors, Heineken, Mark Anthony Brands, Boston Beer and Tilray Brands.
Look for further cover of brand-level projections on Brewbound.com.