This Bud's for You, and Anyone Else Who Will Drink It

This is a sad week for those of you who grew up drinking Budweiser. For the first time in nearly two decades, Molson Coors' (NYSE: TAP  ) Coors Light surpassed Anheuser-Busch InBev's (NYSE: BUD  ) Budweiser for the No. 2 spot in beer consumption in the United States. As reported by the Los Angeles Times, 18.2 million barrels of Coors Light were sold within the U.S. last year, compared to just 17.7 million barrels of Budweiser. Thankfully for the king of beers, Bud Light easily retained the No. 1 spot.

The drop-off in beer volumes really hasn't come as a surprise to anyone. In fact, for Anheuser-Busch's Budweiser, the trend has persisted for a while. Sales volume fell by 4.6% in 2011, which was actually an improvement from the 7% drop in 2010 and the 10% plummet in 2009. Since 1988 Budweiser has averaged an annual volume decline of 4.4%.

What's causing the mass exodus? It's a mixture of more health-conscious consumers and the emergence of high-end craft breweries.

A dramatic rise in obesity rates in the United States over the past decade has prompted food and beverage companies to change the way they market to consumers. McDonald's (NYSE: MCD  ) in 2006 added snack wraps to its menu and expanded its already existing salad line in an attempt to give health-conscious consumers more choices. Likewise, healthier food choices were the motive behind PepsiCo's (NYSE: PEP  ) purchase of Wimm-Bill-Dann's dairy and juice product line in 2010. Pepsi has aimed at tripling in its nutritious food sales by 2020. Budweiser is the lone full-calorie beer still ranked in the top five U.S. beers, but it continues to suffer the stigma of a calorie-counting society.

That's not to say Americans are shunning calorie-ridden beers, just that they're expecting more from them. High-end craft beer has also worked its way into Americans' hearts. Making no apologies for their calorie-count, craft brewers are popping up everywhere, offering consumers a premium taste compared to Budweiser. Boston Beer (NYSE: SAM  ) , probably the most well-known craft brewer, has doubled its revenue since 2005 and is a driving force behind why so many new breweries are popping up each year.

A tertiary factor that I haven't mentioned that could play a role in America's move away from Bud is the fact that the once-iconic beer was purchased by foreign-run InBev in 2008. It's difficult to tell, considering that the drop-off occurred during the height of the financial crisis, but it's certainly worth noting.

So what does this mean for Anheuser-Busch? Not a whole heck of a lot, other than it needs to continue to focus on what's important: Namely, that international growth is its bread-and-butter and low-calorie beer is what's selling. I highlight ed Anheuser-Busch InBev as a stock you could buy right now during the rapid summer sell-off, and I don't think this week's news really changes that assessment. It does, however, spell a continued decline for one of America's iconic beers.

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Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He has tried 968 different beers in his lifetime with the notes to prove it! You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of Molson Coors, Boston Beer, and PepsiCo. Motley Fool newsletter services have recommended buying shares of Molson Coors, Boston Beer, McDonald's, and PepsiCo, as well as creating a diagonal call position in PepsiCo. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy that's one tasty grog of transparency.


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