Beer demand stumbles as gas prices surge, data show

US beer sales fell sharper than expected as new browser data pointed to weakness in the category.

The slowdown is also raising concerns on Wall Street that higher gasoline prices could depress discretionary spending, especially at convenience retail.

Beer, full malt beverages (FMB) and cider volumes fell 6.3% year over year in the week ending May 2, on both a two- and four-week basis, according to data tracked by Nielsen. This is worse than the trends seen between November and mid-April, when category declines were only 3%.

While some volatility in beer sales is expected due to Easter being earlier this year than last year, the breadth of the slowdown could point to broader pressure on U.S. consumers, according to analyst firm Bernstein.

The weakness is most apparent in the convenience channel — chains like 7-Eleven, Wawa. Shell And Exxon – where volumes have fallen roughly 9% year-on-year over the past two weeks since April 26.

Analysts said convenience stores are highly sensitive to gas station traffic and impulse buying associated with commuting and travel. It’s under pressure, with average U.S. gas prices running at about $4.51 per gallon. According to AAA.

“Today we find a negative correlation between the absolute price of gas in a given state and the sequential change in beer/FMB/volume growth,” Bernstein analyst Nadine Sarwat said.

This relationship is becoming more visible in the data, especially in high-cost fuel markets.

Average gasoline prices in the U.S. have increased nearly 52% since the beginning of the Iran conflict, according to AAA data.

Since then, data shows beer volume has fallen in the states with the highest gas prices, with California emerging as the weakest market. The state saw a 16% slowdown in volume between the four weeks following May 2 and the four weeks following April 4; The most expensive fuel market in the country was about $6.16 per gallon. Arizona and Texas also experienced significant slowdowns; volumes fell 10% and almost 7% respectively over the same period; gas prices averaged $4.82 and $4.00 per gallon, respectively.

The weakness appears to be spreading beyond beer, according to Bernstein.

“The increasing weakness in beer/FMB/cider appears to be emerging in other beverage categories as well,” Sarwat said. “Perhaps it signals an intensification of cyclical pressures on the US consumer.”

Beer spending trends follow US data Consumer confidence reached a new record low in May. One-third of respondents to a closely watched University of Michigan survey said gas prices were their biggest concern.