Dive Brief:

Net sales for Molson Coors Brewing fell 2.1% to $2.88 billion during the third quarter, compared to $2.94 billion for the same period last year, the company said in a statement. Income dropped 4% to $289.7 million versus $300.3 million.

International net sales increased 96.7% during the third quarter, to $65.7 million, while those in the U.S. declined 5.5% to $1.89 billion, the company reported. Beer volume was 26.3 million hectoliters, a drop of 4.8%. The company said it was adversely impacted by reductions in wholesaler inventories, contract brewing and brand volumes.

"Despite challenging market conditions in North America, we remain on track to deliver our 2017 business and financial plans and exceed our original cost savings targets and cash flow goals, as well as maintain our investment-grade debt ratings," Mark Hunter, the company's president and CEO, said in a statement.

Dive Insight:

The brewing giant's third-quarter results echo recent problems facing competitors Boston Beer and AB InBev. Innovations and overseas sales may help prop up the bottom line, but when the core business in this country is in a slump — and Molson Coors draws nearly 70% of its revenue from the U.S. — it's clear significant challenges remain.

The beer industry is digesting a pair of acquisitions last year that further consolidated 90% of the U.S. domestic production around two major players — AB InBev and Molson Coors. The remainder largely falls to a collection of craft breweries.

The problem for major beer producers is simple: A growing number of alcohol drinkers, particularly millennials, have gravitated toward trendier craft brews with bold flavors and catchy names such as Brew Free! or Die IPA and Hoptimus Prime. In addition, a growing number of drinkers are turning to spirits and mixed drinks in place of beer, which saw volumes drop 1.8% around the world in 2016, according to IWSR.

To help keep pace, both Molson Coors and AB InBev have acquired craft beer companies. Last year, Molson Coors' U.S. division, MillerCoors, acquired Revolver Brewing Co. and purchased a majority stake in Terrapin Brewing Co. These acquisitions, however, comprise just a fraction of the brewing giant's overall business. There's also evidence that craft beer sales are slowing.

Given these changing dynamics, Molson Coors is seeing challenges in its core business. While the company's worldwide beer volume increased after adding its Miller global brand business, the closely followed metric dropped 4.8% during the third quarter, even though net sales per hectoliter rose. Molson Coors did see positive growth in Europe, where brand volume increased 9.5% for the third quarter, plus a 1% sales bump in Canada. While helpful, it's not enough to compensate for the problems it is facing in the U.S., its core market.

The maker of Miller Genuine Draft, Miller Lite and Coors Lite, among other products, is facing the same headwinds as its competitors and, barring more acquisitions in the industry or shifting consumption trends among millennials, the situation isn't likely to improve. While the beer giants digest their 2016 deals, it's only a matter of time before further transactions taken place. Still, with fewer companies left, and antitrust issues to consider, it's going to become harder for deals to be consummated even if they make financial sense.