The U.S. alcohol industry is a steady slow-growth market, but consumer tastes have changed since the dawn of the new millennium. That shift is illustrated in the following chart, based on data from the Distilled Spirits Council of the United States.

The U.S. market shares of beer, spirits, and wine between 2000 and 2016.

Data source: Distilled Spirits Council of the United States. Chart by author.

The council attributes the growth of spirits to millennials, who are drinking more whiskey instead of beer. That shift helped boost total shipments of spirits by 2.4% to 220 million cases in 2016.

That change is encouraging for leading spirits makers like Diageo (NYSE:DEO), the maker of Johnnie Walker, and Brown-Forman, which sells Jack Daniels. But it's less encouraging for beer breweries like Anheuser-Busch InBev (NYSE:BUD) and Molson Coors, as they're already struggling with a market shift away from their mainstream brands toward craft beers.

Investors should expect more market consolidation, like AB InBev's takeover of SABMiller for over $100 billion, as well as acquisitions of popular craft beers and high-growth spirit brands (Diageo's recent purchase of George Clooney's Casamigos tequila brand is one prominent example). There will also be continued emphasis on premium brands across the industry.

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