Millennials' drinking habits are causing a crisis for America's most iconic beer brands — and now they're banking on non-alcoholic drinks to survive

  • Anheuser-Busch InBev, the beer giant that makes Budweiser and Bud Light among other popular brands, announced on Thursday that revenues in the United States dropped by 3.1% in the second quarter as its two main brands lost market share. 
  • The beer market is being hit by millennials' shift in drinking habits as they increasingly opt for wine and spirits. Generation Z consumers also tend to favor spirits over beer and are already drinking less than previous generations. 
  • To respond to this, AB InBev is growing its non-alcoholic drinks business. On Thursday, it announced that it would be adding a new executive position at the company — a chief non-alcohol beverage officer — to oversee growth.

Apparently even the "Dilly Dilly" phenomenon isn't enough to entice young Americans to pick up a Bud.

On Thursday, Anheuser-Busch InBev, the beer giant that makes Budweiser and Bud Light, announced that revenues in the United States dropped by 3.1% in the second quarter as its two main brands continued to lose market share. 

Beer is being hit hard by millennials' shift in drinking habits as they increasingly opt for wine and spirits. As a result, beer lost 10% of its market share to wine and hard liquor from 2006 to 2016. Beer penetration fell one percentage point in the US market from 2016 to 2017, while both wine and spirits were unmoved, according to Nielsen data.

It looks as if this trend could be further exacerbated with the next generation of drinkers. A recent report from Berenberg Research found that members of Generation Z also favor more premium drinks such as spirits and wine over beer, and they're already drinking less than their predecessors.  

RELATED: Take a look at America's favorite beer brands of 2017: 

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America's favorite beer brands of 2017
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America's favorite beer brands of 2017
1. Coors
2. Corona
3. Yeungling - Tied
3. Samuel Adams - Tied
4. Michelob 
5. Budweiser
6. Dos Equis
7. Busch 
8. Heineken
9. Stella Artois - Tied
9. Miller - Tied
10. Pabst 
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In response to this, Anheuser-Busch InBev has been rolling out new flavors of lighter and premium beers such as Michelob Ultra Pure Gold, Bud Light Orange, and the Budweiser Reserve series. These beers saw more growth during its most recent quarter.

During its earnings call on Thursday, the company announced that it would be creating a new executive role to head up its non-alcoholic beverages' business and accelerate growth. Lucas Herscovici, currently global marketing VP of strategic functions, will become the company's chief non-alcohol beverages officer. 

The non-alcoholic sector currently accounts for more than 10% of AB InBev's volumes, and it plans for this to grow to 20% of volumes by 2025.

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SEE ALSO: Millennials are dragging down beer sales — but Gen Z marks a 'turning point' that will cause an even bigger problem for the industry

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