Latest / The Demographics Podcast with Fexingo: Aging Populations, Birth Rates, and Economic Impact / How Falling Birth Rates Reshape the Beer Industry
Transcript
- Lucas: Luna, I want to start today with a number that hit me when I was looking at earnings reports from some of the big brewers. US beer consumption per capita has dropped from about 28 gallons per year in 1990 to roughly 24 gallons today. That is a 14 percent slide, and the trend line keeps pointing down. Luna: And that is not because Americans suddenly decided they don't like alcohol. We're seeing the shift play out in different ways across age groups. Lucas: Exactly. The headline story is demographic. Birth rates have been falling for decades, which means the core drinking-age cohort — the 21-to-35 year olds — is shrinking as a share of the population. Meanwhile, the over-50 crowd is growing, and they drink differently than they did in their twenties. Luna: This feels like a perfect episode 100 topic because it's a concrete industry that's being reshaped by a force we talk about all the time. If walking through the economy with us has made something click, it's because we deliberately don't run ads on these episodes. We want the conversation to be clean. If you want to support that choice, the link is buy me a coffee dot com slash fexingo. Lucas: Yeah, it's a small way to keep this ad-free and entirely focused on the data. And today's data is really telling. So what exactly happens when a brewer realizes that its historical customer — the 24-year-old guy crushing a six-pack of cheap lager — is a shrinking demographic? Luna: You start seeing products that look nothing like the old lineup. Take Molson Coors. In early 2025 they launched 'Blue Moon LightSky,' a citrus wheat ale with just 4 percent alcohol by volume. That's significantly lower than a typical craft IPA, which runs 6 to 7 percent. Lucas: And they positioned it explicitly for the older drinker. In their investor materials, they talked about 'right-sizing alcohol content for the over-45 palate.' They know that someone in their fifties still wants flavor and a social drink, but they don't want the hangover or the calorie load. LightSky is 95 calories. Luna: Let's put that in context. Twenty years ago, the strategy would have been to double down on light lagers like Miller Lite or Coors Light. But those brands have been declining for years. The younger drinkers who are left are not buying them in the same volume. Lucas: Right. The 21-to-35 cohort is about 10 percent smaller than it was in 2000, just because of the birth rate decline. And within that smaller group, preferences have fragmented. A lot of them are choosing hard seltzers, ready to drink cocktails, or even cannabis beverages where those are legal. Beer's share of total alcohol consumption has fallen from about 56 percent in 2000 to under 48 percent now. Luna: So the brewers are caught between two trends. The shrinking young cohort doesn't want their core product, and the growing older cohort wants something different from what they used to sell. That's a tough spot. Lucas: And it shows up in the numbers. Anheuser-Busch InBev's US revenue has been flat to down for several years. In their most recent annual report, they cited 'changing demographics and consumption occasions' as a risk factor. That's corporate-speak for 'there just aren't as many young beer drinkers as there used to be.' Luna: Not every brewer is suffering equally. The craft segment, which was booming for years, has also hit a wall. Total craft beer volume grew only about 1 percent in 2025, and some of the bigger craft players like Boston Beer Company have reported declines. Lucas: Because craft beer's core customer was also younger and more experimental. The median craft drinker is around 35. As that group ages, they still buy craft, but they buy less of it. And the next generation is smaller in number. It is a demographic squeeze from both ends. Luna: What about non-alcoholic beer? That seems like a natural play for an aging population. People who still want the taste and the ritual but without the alcohol. Lucas: Non-alcoholic beer is actually one of the few growth segments in the industry. It grew about 8 percent in 2025, though from a small base. Heineken's 0.0 brand is now available in over 90 countries, and Athletic Brewing, which is purely non-alcoholic, has become a major player. In 2024 they opened a second brewery in Connecticut to keep up with demand. Luna: That makes demographic sense. Older drinkers are more health-conscious, and they also might be on medications that don't mix well with alcohol. The same trend is driving lower-alcohol wines and spirits. Lucas: But here's the twist. The non-alcoholic segment is still tiny — maybe 2 percent of total beer volume. It's not going to replace the lost volume from declining lager sales anytime soon. So the brewers are also trying to premiumize. They're selling smaller volumes at higher prices. Luna: That's the 'drink less, but drink better' philosophy. And it works if the older demographic has higher disposable income, which many do. But it also changes the entire business model. Lucas: Exactly. The old model was high volume, low margin, mass distribution. The new model is lower volume, higher margin, targeted brands. That is a completely different set of capabilities. It requires different marketing, different packaging, different retail relationships. Luna: And it's not just the big brewers. Small craft breweries are also feeling the shift. A lot of them built taprooms that relied on the 20-something crowd hanging out for hours. That crowd is smaller now, and they have more options for social drinking. Lucas: Some brewers are responding by turning taprooms into more family-friendly or older-skewing spaces. They're adding food, hosting trivia nights earlier in the evening, creating seating that's more comfortable. It's a subtle demographic pivot. Luna: Let's look at one more number. Beer consumption among the 60-plus age group has actually increased slightly over the past decade. That group now accounts for over 20 percent of total beer volume. So the industry is following the gray dollar. Lucas: And the gray dollar is growing because that population is growing. The US Census projects that by 2030, one in five Americans will be over 65. For the beer industry, that's not a niche market anymore. That's the mainstream. Luna: So what does that mean for the next wave of product development? I saw that Constellation Brands is testing a line of 'agave-based light beers' — basically a beer-cocktail hybrid — that they're positioning for the over-40 drinker. Lucas: That's exactly the kind of innovation we're going to see more of. Products that blur the line between beer and a ready to drink cocktail. Lower alcohol, more flavor variety, better ingredients. And they're going to be priced at a premium. Luna: It's a fascinating case study in how a demographic shift ripples through an entire industry. Not just in who buys, but in what they buy, where they buy it, and how much they pay. Lucas: And the beer industry is just one example. We could do the same analysis for wine, for spirits, for coffee, for just about any consumer good where age is a major factor in consumption. Luna: The big question for investors and entrepreneurs is whether the industry can adapt fast enough. Because the demographic trend is not going to reverse. Birth rates are not bouncing back. Lucas: No, they're not. And that means the beer industry of 2040 is going to look very different from the beer industry of 2000. Fewer drinkers, older palates, smaller volumes, higher prices, and a lot more experimentation with what beer even is. Luna: I'm curious if the industry will eventually consolidate even further. If the growth is only in premium and non-alcoholic, maybe the middle market — the standard lager — just shrinks away. Lucas: That's already happening. Look at the shelf space in any grocery store. The mass-market lagers have been losing shelf space to craft, imported, and non-alcoholic options for years. The demographic math just accelerates that. Luna: So here's a final question to leave listeners with: as birth rates continue to fall, will beer eventually become a luxury good — something that only a smaller, more affluent population can afford in its premium form? Lucas: That's a provocative thought. And it might not be far off. If volume continues to decline and brewers keep premiumizing, the cheap six-pack of lager could become a relic. Much like the demographic forces that made it so popular in the first place.