Gen Z Alcohol Trends Report Paints Complicated Picture for Craft Beer
The global COVID-19 pandemic has been among the most disruptive events in the history of craft beer. Thousands of breweries have had to make fundamental, business-altering decisions on the fly. As craft beer emerges from the COVID years, breweries will have to reassess the consumer landscape and adjust their businesses. A crucial piece of the puzzle is the arrival of Generation Z as legal drinkers. A recent study from Gen Z marketing research firm Knit suggests that “Zoomers” are not the teetotalers they were pre-pandemic, but that craft brewers will need to work hard to make inroads with them.
The study interviewed and surveyed almost 400 Gen Z adults ages 21-25 about their alcohol consumption and purchasing trends. Gen Z is the most racially and ethnically diverse generation in American history. They are also the first digitally-native cohort of young adults. Before the pandemic, Zoomers had developed a reputation as “Generation Moderation.” Gen Z adults were drinking 20% less than the preceding Millennial generation and only 15% identified as weekly drinkers. The beer industry already felt the brunt of this dryness in 2017 when Nielsen reported that beer market penetration decreased by 1%. This was the largest plunge in a decade-long decline and was linked to the oldest Gen Z members coming of drinking age.
Dry No More
Fortunately for craft beer, the Knit study finds that fears of a teetotalling generation can safely be put to rest. Almost two years into the pandemic, 35.5% of those surveyed said they were drinking more than they did pre-pandemic, 41.9% drank the same amount, and 17.7% were drinking less. This change also carried a gender component. 40% of women surveyed were drinking more while 50% of men were drinking the same amount. Purchasing frequency reflected the upward trend in drinking. Almost 60% of all participants purchasing alcohol at least once a month.
Unsurprisingly, Gen Z’s purchasing trends reflect a movement away from draft and premised consumption. 55% of regular drinkers surveyed shop for alcohol at the grocery store, closely followed by 54% at liquor stores. Zoomers haven’t totally turned their backs on bars and taprooms: 51% regularly purchase drinks at those venues and restaurants. Even with more than half of young drinkers still consuming in-person, the data suggests that beer-t0-go and packaged products are essential for growth.
No Delivery Fees, Please
More interesting is the digitally-native generation’s disinterest in shopping online. While online alcohol sales across all consumers leapt to a 262% year-over-year increase in 2020, Zoomers clearly prefer to shop in-person. Remarkably, less than 8% of Gen Z drinkers purchase alcohol online or through deliver services. Knit attributes this miniscule number to a few factors. Local laws often limit delivery options. Many colleges and towns have restrictions on alcohol delivery to campuses. Previous Knit research identified that Gen Z is also more budget-conscious and debt-averse than preceding generations.
Gen Z’s thrift is borne out in their monthly alcohol budget: an average of $46.30. This average is heavily inflated by a few heavy spenders. More than 50% of those surveyed spent less than $40 per month on alcohol. Gen Z men spend almost twice as much on alcohol on average as women. An even wider discrepancy exists between racial groups. African-American Zoomers spent almost 30% more on alcohol than Whites, 50% more than Hispanics, and almost three times as much as Asian-Americans. Competitive pricing and value relative to price point are an essential differentiator for craft brewers trying to appeal to the group.
From Their Friend’s Lips to Craft Beers
Despite their emphasis on value and cost-savings, Gen Z focuses first and foremost on taste. Almost 70% of those surveyed identified taste as a top consideration in their purchases. Price is still a key factor at 65%, but a surprisingly strong element for Zoomers is word-of-mouth recommendations. Suggestions from people Gen Z knows and trusts were important for 39% of those surveyed. Knit’s research shows that digital advertising through influencers and sponsored posts makes more of an impression on Millennials than Gen Z. Branding is a virtual nonfactor for college-aged Zoomers, but is significant for the cohort who are already in the workforce. 28% of working Gen Zs cite packaging as a significant decision point. The statistics suggest that compelling can art might be more important than a strong social media presence for bringing young drinkers to craft beer.
When asked why they drink, Gen Z’s answers suggest that their increase in drinking post-pandemic is less about fitting than it is about connecting with other. Having fun, socializing, and celebrating special occasions each topped 70% when survey participants were asked to select all reasons they drink. Around fifty percent identified getting buzzed, relaxation, and flavor as reasons, and a mere 11% cited “fitting in” as a cause for drinking. The takeaway? Peer-to-peer influence is an essential part of Gen Z’s drinking culture, but peer pressure has taken a total backseat. This is in large part because Gen Z’s social drinking is increasingly happening at small gatherings at their home (28.5% of respondents’ top place to drink) or a friend’s party (the preferred locale for 31.2% of respondents). These environments are conducive to good times and less social pressure than a public setting.
The Young and The Sessionable
Gen Z’s emphasis on house parties and private gatherings also seems to factor into their taste in beer. More than half of beer drinkers in the research group identified approachable, session-ready beers as their favorite types to drink. Lagers, ales, and pilsners were popular with more than 50% of Gen Z beer drinkers, and wheat beers were not far behind at 48% popularity. Porters and stouts were far less of a favorite at 24.5%.
Before craft brewers rush out to order lager yeast and pilsner malts, the Knit study identified a significant gap in stylistic preference between male and female drinkers and different racial groups. The men surveyed strongly preferred lagers and pilsners to the women, who preferred ales and wheat beers. Beer was the second-most popular category of alcohol among men after hard liquor, but was dead last among women. Beer was also the least popular category for African-American and Asian-American drinkers. White and Asian drinkers preferred lagers to all other beer categories, while Hispanics ranked pilsners as their favorite type of beer and African-Americans overwhelmingly chose wheat beers.
Beer is Lagering Behind
Overshadowing the intriguing statistics about Gen Z’s beer preferences is the fact that beer overall is fading in popularity behind other types of alcohol. Less than fifty percent of study subjects identified beer as one of their favorite alcoholic beverages, and it ranked fourth out of four categories. Liquor and spirits won out with 75% popularity. Flavored Malt Beverages were almost as popular at 70%. Gen Z’s arrival at drinking age has largely coincided with the rise of FMBs, especially hard seltzers. When asked to identify a favorite brand of alcohol without any prompting, 16.6% of participants identified White Claw, tying with Austin’s own Tito’s Vodka as the most popular by far. Truly Hard Seltzer came in fourth at 9.5%.
While the proliferation of macro-brewed FSMs at the top of the charts might seem worrisome to craft brewers, the overall list of favorite brands has more room for optimism. Of the seventy favorite alcohol makers survey participants identified, 17 (26%) were brewers and 8 (11%) were craft breweries as defined by the Brewers Association.
The big takeaways? Generation Z are bigger drinkers than they were three years ago. They are more interested in off-premise consumption than previous generations. They like lighter, easier-drinking beer styles when they like beer at all. Working Zoomers respond to strong branding and value pricing. Fortunately, beer to go, the lager renaissance, and artful packaging are trending through craft beer.
Readers interested in more details can find the full study here.