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Higher gas prices, which have surged by about 52 percent since the start of the Iranwar, are draining demand for beer as American consumers continue to tighten discretionary spending, according to new data.
Beer, malt beverage and cider sales volumes fell 6.3 percent in the four weeks ending May 2, Nielsen reports. The steepest declines came from convenience stores and gas stations such as 7-Eleven, Wawa, Shell, and Exxon, where volumes are down about 9 percent year over year for the two weeks since April 26.
This is a clear step down from earlier in the year, when declines were only around 3 percent between November and mid-April, according to the data, as fuel costs weigh on impulse purchases.
“We find a negative correlation between the absolute price of gas in a given state today and the sequential change in beer/FMB/volume growth,” Bernstein analyst Nadine Sarwat told CNBC.
California saw the biggest drop in beer sales in the country, with volumes falling 16 percent, according to Nielsen. The decline lines up with the state’s persistently high gas prices, which average about $6.147 per gallon, driven by higher taxes and stricter fuel rules requiring a special cleaner-burning blend.
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Outside of California, Arizona and Texas also saw notable declines in beer sales, down about 10 percent and nearly 7 percent, respectively, over the same period.
At the same time, the Midwest is taking the brunt of soaring gas prices in the country amid the Iran-related oil shock, with Ohio leading the increase at roughly 72 percent since the conflict began 10 weeks ago, about double California’s rise, according to Bloomberg. Indiana, Illinois, Michigan and Wisconsin are also seeing steep jumps as fuel inflation spreads across the region.
Analysts say convenience stores are especially affected because they depend on commuter traffic and impulse purchases, both of which are slowing as average U.S. gas prices hover around $4.52 per gallon and have risen around 52 percent since the start of the Iran war, according to AAA data.
The surge in gas prices also comes at a time when younger generations are consuming less alcohol than their elders. A Gallup survey from August found only about 50 percent of adults ages 18 to 34 drink, down from 59 percent in 2023.
That decline is helping push the national drinking rate to a record-low 54 percent, with many respondents pointing to health concerns as a key reason for cutting back or avoiding alcohol.
For the first time in Gallup’s data, a majority of Americans, 53 percent, said moderate drinking is bad for health, up from 45 percent a year ago and 28 percent in 2018. Just 6 percent say it’s beneficial, while 37 percent say it makes no difference.
