Covid’s impact on Generation Z, shifted it from a generation of non-drinkers to one with very specific alcohol habits. Knit CEO and founder, Aneesh Dhawan, writes about what it takes to appeal to this market.
Stuck at home and anxiety in the community at an all-time high, it’s no that surprise some people increased their alcohol consumption during the pandemic. Even Generation Z (Gen Z) was not immune to the effects.
Prior to the pandemic Gen Zs were on track to be a generation of non-drinkers.
Nielsen IQ research found that prior to 2020, penetration by the beer market had decreased and Gen Z’s consumption had dropped 20 per cent compared to millennials. And 64 per cent said they expected to reduce their consumption further.
Covid changed that, with the associated struggles and uncertainties leading to a spike in alcohol purchases and consumption. Nielsen reported a 54 per cent increase in national alcoholic beverage consumption at the start of 2020, with a 262 per cent year-over-year increase in online sales alone.
According to our Alcohol and Beverage report, Gen Z’s consumption is up 35 per cent since the start of 2020.
For alcohol brands to appeal to Gen Z consumers in 2023 and beyond, they need to drill down into how the pandemic changed their drinking and purchasing habits and understand what influences their decisions around alcohol.
A budget in mind
There is no one pattern or way of thinking that Gen Zs fall into when it comes to their relationship with alcohol. The Knit report found that 36.6 per cent of respondents claimed to purchase alcohol several times a month, but 20.2 per cent stated they buy alcohol every couple of months – meaning Gen Zs are either steady imbibers or only occasional indulgers.
Regardless of how often they are purchasing alcoholic beverages, one thing is certain – Gen Zs are budget-conscious in their purchases.
The average Gen Z will spend just over $46 a month on alcohol, with most spending on the lower end between $1-20.
Gender also played a role in how much was allocated to alcohol purchases each month. Males indicated they spent an average of almost $69 per month versus females at just under $35 a month.
As a debt-averse and financially curious generation, Gen Z is mindful about how frequently they make alcohol purchases, how much they drink, what brands they are buying, and also where they are going to purchase their alcoholic beverages.
Surprisingly, this digitally native group prefers to make their alcohol purchases offline. In fact, delivery apps and online retailers were the least preferred method of purchase, whereas grocery and liquor stores were the most common places Gen Zs shopped for alcohol.
Since the generation is financially mindful and they don’t have the disposable income to experiment with unfamiliar brands, the majority of Gen Zs prefer to shop based on friends’ recommendations, social proof, and taste rather than fancy packaging or paid influencers.
Moderation generation
Unlike their older counterparts, Gen Z approaches alcohol with a moderation mindset.
According to Knit’s research, Gen Zs tend to drink socially, not to just get drunk. It was a common theme within the research that their relationship with alcohol was thoughtful and socially driven.
Even when selecting a location to imbibe, Gen Zs prefer places that offer opportunities for socialisation that also allow them to save money, leaning into the homebody economy.
What they are drinking also provides brands with some key information. Flavoured malt beverages (FMBs), like hard or spiked seltzers, drive huge interest among these young consumers (69.4 per cent) largely due to the lower carb and calorie count they often tout. However, the most popular alcoholic beverages are liquor and spirits at 74.4 per cent.
Vodka was named the go-to spirit with 88.5 per cent of Gen Zs preferring it over other options. Tequila and mezcal came in second at 71.2 per cent and gin also gained popularity.
With wellness and mental health becoming a bigger priority for Gen Z, there is a subset that chooses to simply abstain from alcohol altogether, or scale back.
They will skip the celebratory drink if it means focusing on their self-care.
Alcohol abstinence is becoming more acceptable among the generation. Nielsen reported a 315 per cent year-over-year increase in online sales of non-alcoholic and low-alcohol alternatives in October 2021.
Gen Zs said the reasons they chose not to drink were because they disliked the taste or smell of alcohol (51.7 per cent), wanted to avoid hangovers (44.8 per cent), or wanted to prevent any long term effects of alcohol (41.4 per cent).
For consideration
When it comes to Gen Z, brands have to rethink their strategy and realign with Gen Z values and goals.
Maybe most importantly, teasing out the difference between peer-to-peer influence and peer pressure will be especially crucial in the alcoholic beverage space.
Understanding Gen Zs’ predisposition to wellness and self-care along with their propensity towards engaging with brands that align with their values means brands will need to lean into community influence, smart messaging, and strategic positioning to win their trust.
This article first appeared in the February-March 2023 edition of Food & Drink Business magazine.
