Gen Z consumers, born between 1997 and 2012, are changing the scope of the alcoholic beverage market. Nearly one-third, 27% of the generation, claim they never drink — something the industry is quickly attempting to contend with. Traditional giants in the alcohol space are branching out and delving into creative products and nonalcoholic offerings.
“I’ve spoken to all the alcohol players for decades, and when I speak to them these days, very rarely do they want to talk about alcohol,” Spiros Malandrakis, the head alcohol industry researcher at Euromonitor International, told Food Dive. “They all have this ultimate goal of becoming total beverage companies.”
Despite this greater interest in abstaining, according to Civic Science data released in July, the generation has a range of dynamic drinking behaviors.
Moderation is taking more precedence among young consumers that do decide to indulge. According to Mintel data published in June, 40% of 16 to 24-year-old consumers reported limiting their alcohol consumption in the last year. Common reasons given for cutting back include wanting to reduce “hang-xiety”, the negative effects of a hangover on mental health.
Nearly half of adults between 21 and 24 years old reported consuming alcohol daily or weekly, the research group found. This data was actually higher than those over 25 saying they consume alcohol regularly.
The concept of “damp drinking” — making an effort to limit alcohol consumption without cutting it out entirely — has been a viral topic on social media, particularly TikTok, in recent years. A Morning Consult survey published in May found 1 in 3 young drinkers had heard of the concept, and over half of those consumers are willing to try it.
Young consumers reshape the beverage landscape
The types of alcohol Gen Z is taking an interest in is changing expectations. According to a Berenberg Research report shared by Business Insider in May, a greater majority of consumers preferred spirits like gin or vodka to beer and wine. Low- and no-alcohol beverages are continuing to grow in popularity, reaching $11 billion in sales in 2022 according to IWSR, which noted earlier this year that the category still has room to grow.
Gen Z is also seeking more unique, global tastes from their alcoholic beverages, including ones originating in Asia and South America, according to a report from flavors company T. Hasegawa.
Hard seltzer has seen its sales level out after booming in 2019 — with brands like White Claw and Boston Beer’s Truly outlasting other players in the space — but the category remains profitable, worth over $17 billion in 2023 according to Statista.
The RTD category is evolving as beverage makers seek to capture the quickly evolving tastes of younger consumers. In March 2024, Molson Coors will debut Happy Thursday, a line of non-carbonated spiked refreshers — which it created using insights from a panel of Gen Z consumers — to establish an offering that helps drinkers avoid bloating and burning.
Malandrakis said experimentation and variety are the defining characteristics of young consumers’ drinking behavior.
“Gen Z is brand and category promiscuous when it comes to alcoholic beverages, compared to consumers in the past who were wedded to specific categories and continued drinking the same whiskey or beer for decades,” Malandrakis said.
Gen Z’s different approach follows the cyclical nature of generations seeking to differ their taste and style from their predecessors. This happened before with drinks like coolers, which shot to popularity among young people in the 80’s and 90’s, according to Malandrakis.
“The whole millennial hipster community was associated with the rise of craft beer, but now these hipsters have kids, and it’s not as cool to them,” Malandrakis said.
The beverage category is ballooning with a mix of alcoholic and non-alcoholic RTD cocktails.
Molson Coors also released Roxie, a line of nonalcoholic RTD cocktails, earlier this year. Boston Beer is aiming to capitalize on cannabis as an alternative to drinking for some younger consumers, with its THC-infused iced tea brand TeaPot which debuted in 2022.
Soda giant Coca-Cola has capitalized on the desire for spirits-based drinks with an array of spiked offerings in the past two years, including Topo Chico Hard Seltzer, a Jack Daniel’s and Coke RTD cocktail and a newly announced Absolut Vodka and Sprite cocktail which will debut in 2024.
Malandrakis predicts nonalcoholic cocktails will continue to gain steam in the U.S. in the next few years, following Europe, where they are a staple of young consumers’ consumption.
“Gen Z is playing on many different chess boards, and you have to meet them where they are,” Malandrakis said. “I think this great convergence, or the blurring of category lines where alcoholic players are entering the nonalcoholic arena, will continue to be the name of the game.”