Beverage-alcohol consumption habits for younger consumers are undergoing a rate of change much steeper than what industry members have seen in decades past. As values and priorities for Millennial and Gen-Z consumers shift, drinking habits are taking a new form. The result is a need for industry members, brands, and entrepreneurs to understand these demographics, which are claiming increased purchasing power, and meet them where they are.
Park Street University has compiled the latest data and trends in order to compare the beverage habits, practices, and preferences of the Millennial and Gen-Z consumer sets.
One of the most striking macro shifts we’re seeing is a broad reduction in alcohol consumption among younger consumers, with only 62% under the age of 35 identifying as alcohol imbibers compared to 72% a decade ago, according to a recent Gallup Poll.
Millennials tend to drink more alcohol than Gen-Z in general, reporting higher consumption than Gen-Z in all categories except for non-alcoholic cocktails.
Key Drivers of Purchase Decisions
Flavor-Forward Options
Park Street University has long reported on the importance of flavor innovation for brands. A brief look at the beverage-alcohol M&A sector in Park Street’s 2021, 2022, and 2023 reports will reveal that investments in spirits brands are consistently made in brands that prioritize flavor.
Strategic acquirers are investing in flavor with an eye to the future, with the importance of this principle to Millennial and Gen-Z drinkers reiterated by a recent study conducted by Business of Drinks. Of the 1,300 respondents surveyed across the U.S. flavor was consistently cited among their most desired attributes. 80% of millennials confirmed that flavor was either extremely or very important in deciding which beverages to buy, with 75% of Gen-Z agreeing to the same proposition. Flavor even beat out factors like health and eco-friendliness when it comes to desired drink attributes.
When the Gen-Z demographic was asked about their disillusion with the wine segment, a lack of delivery in the flavor department was cited among the prime examples.
Occasion-Based Purchases
One of the most significant differences between Millennials and Gen-Z is how these segments relate to consumption occasions. Millennials were found to be far more likely to pair certain drink categories to specific occasions. Meanwhile, Gen-Z remains far more flexible with this principle, showing a willingness to abandon such conventions and adopt a free-for-all attitude when it comes to pairing drink categories with certain occasions. Gen-Z tend to be comfortable taking soft drinks to dinner while ordering canned cocktails at restaurants. Millennials take a more traditional approach: ordering craft beers at bars, mainstream beers at sporting events, and pairing wine with dinner.
RTDs and canned cocktails have, by far, the most flexible perception of any beverage-alcohol category when it comes to occasions. Nearly 41% of Gen-Z agreed RTDs/canned cocktails are good for different occasions while almost 33% of Millennials thought the same. Soft drinks were also rated similarly high by both generations as occasion flexible, with 36% of each segment agreeing.
More than any other category Millennials identify spirits as an indulgent treat, with 36% agreeing. Wine was perceived as the group’s next most indulgent category at 31%. This aligns with a well-established willingness for consumers to spend on high-quality cocktails when visiting the on-premise. 47% of Millennials see bars as their favorite occasion for spirits use, while 48% like to drink spirits as a relaxing at home. Even this far removed from the start of the pandemic, spirits brands would still do well to emphasize the category’s at-home applications.
Meanwhile, spirits have a perceived flexibility for Gen-Z when it comes to occasions. For all of the survey’s ten listed occasions, at least 26% of the demographic claimed they would drink spirits there.
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Great Deals and Value
Around six in ten survey respondents said that price was either “extremely” or “very important” to them. With Millennials accumulating wealth at a slower rate than older generations and Gen-Z not yet reaching their peak earning years, the importance of this factor can come as no surprise.
On a category basis, beer brands and hard seltzers are perceived as the most value-friendly options for both Millenials and Gen-Z. Around 30% of these two demographics cited beer and hard seltzers as the best value for money. For spirits, 27% of Millennials think the category is good value compared to 22% for Gen-Z. The largest disparity between perceived value for the two segments was in craft beer with only 16% of Gen-Z seeing it as good value compared to almost 25% of Millennials.
Convenience and Availability
The survey also found that the most preferred drinks are the ones that are easiest to find. Ease of purchase came in as the second most important determinant of what drinks people would buy, with 70% of Millennials saying this factor was extremely or very important and 64% of Gen-Z respondents saying the same.
Availability looms large for younger consumers, partially because of their ever-increasing inclinations towards convenience. As a result, big beverage companies with ample shelf space will have the largest influence on shaping drink preferences in the coming years.
By category, RTDs and canned cocktails are the most purchased by modern consumers because of their high availability. 41% of Millennials and 39% of Gen-Z see the category as easy to find and buy.
Recommendations From Friends and Family
There is also a clear social dimension informing how Gen-Z selects products and categories. Both Gen-Z and Millennials are most likely to be influenced based on friend and family recommendations as opposed to apps or social media, especially when it comes to wine. Here, 50% of Millennials look to their friends and family for recommendations while Gen-Z reached 46% for the same metric.
Takeaways from the report can be boiled into a key idea about younger drinkers: they are looking for flavor at value prices and are much more likely to try something if their friends are trying it too.
More Consumer Trend Resources
Adapting to New Generations of Alcohol Drinkers
Tips for Collecting Useful Consumer Data
Getting to Know the Modern Consumer Through Data