Image: Customer buying beer
AP
U.S. domestic beer shipments fell 2.7 percent in May, compared to the prior year.
updated 6/24/2011 2:49:12 PM ET 2011-06-24T18:49:12

The U.S. beer market still hasn't gotten that fizz back, according to one UBS analyst.

Beer makers have seen their domestic sales volume slump for some time as the tough economy took an added toll on its core customers. That key market of men 21-34 years old has been hard hit by high unemployment that have cut into their buying power.

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Companies have raised prices to offset slower sales and the market will eventually recover, said analyst Jason DeRise. But beer makers need that volume recovery for long-term survival. And right now it's not there: U.S. domestic beer shipments fell 2.7 percent in May, compared to the prior year.

In a note to investors, DeRise said he expects Anheuser-Busch's U.S. sales volume to fall for the year and to be flat in 2011. However, he reiterated a "Buy" rating on the parent company's stock as he sees it as undervalued.

Story: The economic forces behind the rising cost of beer

Shares of Anheuser-Busch Inbev SA have traded between $47.65 and $64.77 during the past 52 weeks and were trading at $55.91 in afternoon trading Friday.

DeRise also lowered sales volume forecasts for MillerCoors for 2011 and 2012. He now expects volume declines of 0.8 percent and 2.1 percent for the respective years, down from earlier expecations of 1 percent growth in 2011 and flat volume growth in 2012. He lowered his earnings expectations for its parent company Molson Coors Brewing Co. to $3.71 per share for the year, down from $3.76 and 2012 estimate to $4.13, down from $4.20.

Beer sales should pick up in 2012 while those higher prices stick, DeRise said, which would drive strong profit growth.

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