Consumer sentiment hits a record low — and beer is paying the price
Convenience stores, bars say consumers are cutting back their beer budgets
The University of Michigan’s preliminary May consumer sentiment index slid to 48.2, a fresh all-time low and below the 49.7 reading economists had expected, The Wall Street Journal reported last week. The Journal said the dip undercut even April’s record-low print, and that “rising gasoline prices intensified worries regarding the U.S. economy.”
The fingerprints of that pessimism are now showing up in volume data for one of the most price-elastic discretionary purchases in the store. Nielsen data covering the week ending May 2 showed sales of beer, flavored malt beverages and cider down 6.3 percent year over year on a two- and four-week trailing basis, CNBC reported.
Beer sales had already slipped about 3 percent between November and mid-April. Bernstein analysts found convenience-store chains saw sales drop roughly 9 percent year over year in the two weeks after April 26.
California — where gas pump prices are the highest in the nation — had the steepest fall, with beer volume down 16 percent over the four weeks ending May 2; Arizona’s volume was off 10 percent. AB InBev’s Michelob Ultra has held volume steady, but Bud Light and Budweiser are facing double-digit declines, CNBC said, and Constellation Brands is taking share.
Nadine Sarwat, the Bernstein analyst, drew a tidy line from the gas pump to the cooler. “We observe a negative correlation between the current gas prices in a state and the sequential trend in beer/FMB/cider growth,” she told CNBC. “The additional weakness in beer/FMB/cider seems to be emerging in other beverage categories as well, potentially indicating increasing cyclical pressures on the U.S. consumer.”
The University of Michigan survey CNBC cited found that one-third of respondents named gasoline as their biggest economic concern.
The bigger picture
Read together, the week’s stories sketch the same economy from five angles. Diplomatically, the United States got the most it was going to get out of Beijing — a Hormuz statement, a private no-arms pledge from Xi, an expression of Chinese interest in buying more American oil. None of it has reopened the strait, and ships are still being attacked at sea.
Statistically, the consumer kept buying in April for the third month in a row. Operationally, Walmart admitted what cardholders are about to see at the register, and a federal appeals court let the tariffs that drive those prices keep running.
Aerially, the jet fuel that vacationers will need in July is being rationed today. And behaviorally, sentiment is now lower than it was during the 2008 financial crisis or the 2022 inflation peak, and Americans, finally, are quietly putting a six-pack back on the shelf.
The summit produced words; the spreadsheet is still doing its own talking.