Brewers have had a 2023 filled with curveballs. Early on in the year it was clear that consumers would be battling inflation—signaling damp sales as a result. But then came a wave of problems many businesses could not have predicted.

The high price of food and beverage items impacted beer just as much as items like eggs and cheese, setting the tone for the year to come. Nonetheless, 2023 opened strong with big brewers bringing in strong sales in the first quarter, driven by resilient consumer appetite and Chinese New Year activity.

Although the world’s second-largest beer company, Heineken, showed initial signs of cracking with beer sales plunging 3% in the first three months, the group managed to maintain its full-year operating profit expectation, thanks to price increases and premium beer demand.

But new challenges began to emerge when Anheuser-Busch InBev, the Belgian-based owner of Budweiser and Stella Artois beers, found itself in a heated culture war. The controversy resulted in a decline in the sale of its lager and lost Bud Light the status of America’s top-selling beer.

Elsewhere, Copenhagen-based Carlsberg was caught in a tussle with the Russian government which seized its lucrative beer operations in the country.

On top of that, these headwinds come at a time when brewers are trying to make sense of shifting drink preferences, seen in the growing popularity of nonalcoholic beer.

So, how has 2023 shaped up for the world’s biggest brewers?

Backlash and boycotts

In April, American brewing arm Anheuser-Busch’s Bud Light beer became the subject of controversy when a sponsorship with transgender influencer Dylan Mulvaney went awry. An Instagram post by the TikTok star promoting Bud Light attracted backlash and calls for boycott from conservatives, following which AB InBev disavowed the campaign. That sparked criticism from the LGBTQ+ community for the brewer’s lack of support for Mulvaney after the fallout.

The ripple effect of the row led to a 10.5% drop in U.S. sales, worth about $400 million on a year-over-year basis in the April-to-June quarter.

AB InBev’s pain in the U.S. has continued as its Q3 revenues in the region fell 13.5% due to a loss in market share. But as the world’s largest brewer, the company’s business in other regions coupled with price increases helped it draw in $15.6 billion in revenues for that period, up 5% from a year earlier. AB InBev also laid off hundreds of corporate workers across the U.S. to ensure “future long-term success,” the company said.

While the Brussels-listed AB InBev’s earnings have been overshadowed by the disastrous Bud Light ad campaign, some of its challenges, including easing demand due to high inflation, have been shared by its rivals.

Shunning the price rise

Inflation and high production costs meant beers became more expensive in 2023. Some consumers began shunning these brews in favor of cheaper ones, as in the case of Heineken.

The Amstel beer maker saw a 22% drop in operating profits as well as a 5.6% decline in overall year-over-year beer sale volumes for the first half of the year, which Heineken attributed to a price increase and a “challenging economic backdrop” in its earnings report. Volatility in demand from specific regions such as in Vietnam added to the lackluster results.

Consumers have, in some cases, absorbed the price increases, helping brewers make gains even where volumes didn’t deliver. This was seen with AB InBev, wherein revenue managed to swell and offset the slump in volumes. So, even as consumers bought lesser beer, the topline has shown an upward trajectory.

Budget-conscious consumers in a changing landscape

While pricing seems to be a cause for concern among consumers, it has also coincided with the growth of premium beer for big brewers. The pandemic helped cement this trend as consumers confined to their homes sought to create affordable, yet premium experiences for themselves.

Carlsberg is a case in point. The company has had a turbulent few months grappling with the seizure of its Russian business, called Baltika Breweries, by Kremlin authorities. The “stolen” Baltika business, which accounted for nearly 13% of Carlsberg’s group revenue in 2021, could potentially hurt the Danish brewer—the full extent of which will be understood in its year-end results.

“We are taking the full financial hit in this year’s financial accounts so we can, from next year onwards, move on without Russia on the books, which is [a] very, very sad and unfortunate turn of events,” Carlsberg CEO Jacob Aarup-Andersen told Fortune in October, when the company reported strong third-quarter revenues along with a volume drop in beer sales.

Amid uncertainty looming over Carlsberg, the company clocked in strong growth of the premium and alcohol-free beers in its portfolio. AB InBev was no exception to the trend as the premium segment drove Q3 growth across the globe, the company said in its earnings release.

Consumers’ changing preference for alcohol-free beers has also helped create new areas of growth for brewers. No-alcohol beers could also serve as an answer to other trends that could threaten the traditional brewing business as consumers look for healthier alternatives.

Gearing up for 2024

Although inflation shows early signs of abating in some of the world’s biggest economies, beer makers are still under pressure due to elevated production costs. Costs were estimated to be up to 25% higher in mid-2023 compared to 2019, according to Brussels-based industry body the Brewers of Europe. Consequently, beer is likely to get more expensive through next year.

“If we look at the total cost for the company, the total cost of producing beer, we’re seeing that costs continue to go up slightly,” Aarup-Anderson told Fortune on a call in October. “That also means my expectation is that there will be some level of price increase also in 2024, [but] not to the extent that we’ve seen in 2023.”

Margins for brewers could expand as operation costs cool down, which might get prices to stabilize but not reduce.

“Once one of the big three names [AB InBev, Heineken, and Carlsberg] have lifted their prices, they usually never give it back,” Moritz Kronenberger, portfolio manager at Germany’s Union Investment, told Reuters in October.

Economic volatility could also weigh heavily on consumer demand next year, as Heineken said it is keeping an eye on some markets where it saw a remarkable slowdown in 2023.

Pricing aside, 2024 could be a year of expansion—both by region and within beer portfolios. AB InBev announced in July that it would invest €31 million ($34 million) into upgrading some of its Belgian breweries to expand its low- and no-alcohol beer portfolio. Meanwhile, Carlsberg expects to grow in Asian markets and invest further in marketing and branding initiatives.