Gen Z is pushing alcohol abstention to new record lows, according to a recent report from NIQ.
But that doesn’t mean the youngest legal-age generation isn’t drinking— they’re just doing it differently, and in an era when there are more beverage alcohol (and replacement) options than ever. Here are the five top takeaways from NIQ’s latest report including the differences between generations, where Gen Z is doing their shopping, what products they’re consuming, and how often they are actually going booze-free.
Gen Z is Diverse
One key consideration when considering the future force in Gen Z’s alcohol purchasing power: diversity.
NIQ defines legal drinking age Gen Z as 21 to 28, with 53% describing themselves as having at least two races (compared to 23% of millennials), 38% as Latino or Hispanic, 32% as Alaska Native or American Indian, and 30% as Black. An analysis of the 2020 census results show that the U.S. population is much more multiracial, and more racially and ethnically diverse than what was measured in the past.
That means the shift to market spirits to a wide audience and to diversify the BevAlc industry itself will need to continue in order for spirit companies to find success with future generations.
Unique Consumption Patterns
What are some of the key differences between Gen Z and the next age group up? Spending power, at least for the moment: Gen Z spends $2 billion on BevAlc, based on the 52 weeks ending July 15 at total U.S. outlets, while millennials (ages 29 to 46) spend $17 billion, the second largest spenders after boomers. Older generations across the board shop most often and spend more.
As for behavior, Gen Z prefers access to products and services such as subscriptions versus ownership, and needs omni channel offerings as offline and online boundaries are less rigid. Consumption is also a means of self-expression — personalized products and aligning with ethics and sustainability values is important.
Family and friend recommendations and sustainability attributes are key when purchasing alcohol, up the most from BevAlc buyers across the board (by 16% and 5.1% respectively). Social media plays a role, but is more of an influence on where they buy than what they buy.
Millennials on the other hand state 60% loyalty to brands if given a consumer-centric experience, but they align with Gen Z on paying a premium for personalized products. Social media for millennials is a major influencer, and products are often purchased via Instagram.
Gen Z Over Indexes with Beyond Beer, Non-Alc
How does Gen Z define ‘drinking’? Compared to other generations, the group purchases over indexed on the emerging third category: cider, hard seltzer and FMBs, followed by tequila, import beer and spirit-based RTDs in the 52 weeks ending July 15.
But in a survey, Gen Z participants also say they drink table or sparkling wine at the same percentage as hard seltzer (34%) and 6% say they drink non-alcoholic beer, wine, and spirits— an over index compared to other generations. The group is seeing lowest buy rates and trips per year across beer, wine and spirits except for RTDs, and their spend trips across the board are lower as they do not have as much discretionary income.
Shopping Leans Towards Mass Merchandisers, Offline
While BevAlc dollars are shared across channels fairly consistently among the different generations, mass merchandisers saw about a 2% rise among Gen Z versus other groups in the 52 week period ending July 15. With 3-5% of BevAlc dollars spent online, Gen Z under indexes at 2%, while millennials are at 4%.
The Non-Alc Generation?
45% of Gen Z survey participants said they never consume alcohol (compared to 36% and 32% of millennials and Gen X), 20% consume once every 2-3 months or less, and 12% said they consume once or twice a month. That 45% is down from over 47% a year ago. As the group begins to grow, consumption patterns will look different from past generations, including entering into BevAlc through non-alcoholic spirits, wine and beer.