Brewers Association CEO Bart Watson is championing a report by Bourcard Nesin, Senior Beverage Analyst at Rabobank and host of the Liquid Assets podcast. Watson proclaims:

The next time you see one of those “Gen Z is Killing the Alcohol Industry” headlines, read this first and get armed with some actual data.

The report holds out hope for beleaguered alcoholic beverage companies that the decline in consumption among young people (one we’ve long tracked and see as an opportunity for kombucha) will reverse and Gen-Z will mature into a boozy middle age.

These claims need to be examined. Bottom line: While insights on demographic and economic trends are instructive, we disagree with the claim that today’s youth will abandon wellness. The market opportunity for low- and no-alcohol beverages such as kombucha will expand.

US-centric

The report builds on Bouchard Nesin’s views aired in the Nov 2024 Liquid Assets podcast Is the drop in alcohol sales a permanent problem or a short-term slump? He and his colleague Jim Watson (any relation to Bart?) debate whether the drop in alcoholic beverage consumption, especially among the young, is a short-term blip or the start of a longer structural decline.

Watson notes that demographic and economic changes are structural:

Young people do not have enough money to spend on alcohol. And this is structural. This is the price of housing, the price of colleges and student debt. And you have a structural situation where the next generation of people are developing themselves and their habits, the way previous generations have. And for very good reason, they don’t have the money to spend on it. And that’s baked into the way our economy is shaped right now. And doesn’t seem to be going anywhere and has something that can not only affect young consumers, but more worryingly could be carried through as those consumers age.

Nesin then proposes the rather bizarre theory that this is partly due to excessive parental monitoring:

I personally think there’s a strong case to make…that young people are…merely delaying the adoption of alcohol consumption. I think a lot of it just has to do with the fact that teenagers, which is when a lot of people have their first interaction with alcohol, have trackers, that their parents follow them around on their phones. They know where you are all the time. And they can just like open their phone, look at Google Maps, look at their, you know, that air tag they secretly put into your backpack or told you it was in your backpack. And they can see that you’re not at Kyle’s house, but you’re at Becky’s house. And they’re going to investigate and they’re going to find out what’s up. And so young people just don’t have the ability to misbehave with friends and misbehave in ways that I think we took for granted.

This US-centric view of the world (curiously so, for a bank headquartered in the Netherlands), where the legal drinking age is 21 rather than in the late teens common in the rest of the world, contradicts the economic argument. Underage teens in the States have long found cheap routes to inebriation through White Lightening and keggers, and are savvy enough to leave their backpacks at home when they plan to “misbehave”.

The discussion recognizes that no one knows if Gen Z’s aversion to alcohol will change as the cohort ages:

And we just don’t know whether they will pick up alcohol consumption as they gain wealth or whether those habits they’ve developed over not drinking will stick with them.

Deeper Dive

The April 2025 paper The Real Reasons Generation Z is Drinking Less Alcohol, that so impressed Brewers Association CEO Bart Watson, is promoted by Neison as “perhaps the most important and contrarian report I’ve written in years.”

It’s a data rich, deeper dive into the topic broached in the earlier podcast.

It challenges conventional narratives surrounding Generation Z’s lower alcohol consumption, particularly the notion that it’s primarily driven by health and vanity concerns amplified by social media. While acknowledging Gen Z currently drinks less than previous generations did at the same age, the report argues this is essentially a result of life stage and structural economic factors rather than a fundamental generational rejection of alcohol. Key drivers identified include limited income, reduced in-person social interactions due to increased phone use, greater parental surveillance via technology (extending from backpacks to cell phones), and a significant demographic shift towards groups (women and racial/ethnic minorities) that historically drink less.

Cell phones loom large in the argument:

As their lives move online, young people have fewer in-person social interactions. Since the vast majority of drinking occasions for young people are social ones, fewer hangouts and fewer parties mean less drinking.

Indeed, social isolation has been a feature of American life that afflicted earlier generations. Robert Putnam’s Bowling Alone reported on this pattern in 2000. While the proliferation of screens has exacerbated isolation, no-one argued that Gen-X or Millennials had forgotten how to party.

The report predicts that Gen Z’s alcohol consumption will likely increase significantly as they age and gain financial stability, eventually approaching levels closer to previous generations in their mid-30s. However, the demographic shifts are expected to result in slightly lower overall consumption compared to prior cohorts. The lasting impact of a later introduction to alcohol may mean alcohol plays a less central role in Gen Z’s identity and socialization.

While younger Gen Z individuals have less money, their share of after-tax income spent on alcohol is similar to that of millennials at the same age. The key difference is that all young people now spend a smaller share of their income on alcohol compared to a decade ago.

Health concerns

A core argument the report aims to refute is that the decline in alcohol consumption is because Gen-Z is more health-conscious than previous generations. Ignoring the heightened interest in plant-based diets, sustainable agriculture, exercise, and mindfulness (often supported by health-tracking apps on those darned cell phones!) the Rabobank paper zeros in on the percent of high school seniors who see binge drinking as bad (whether this means they will actually forego the kegger invitation is another matter). This is insufficient evidence that wellness will be abandoned. .

Demographic shifts

The report correctly identifies that a major driver of lower Gen Z alcohol consumption is the changing demographic makeup of the generation. Women now represent the majority of alcohol consumers aged 25 and under, and American women tend to drink less than men.

This is not, however, the case in the UK. The Times reports that British girls outdrink boys — and most of Europe. And the kids in Denmark *really* don’t want to wait until middle age to drink!

Back in the States, Gen Z is significantly more racially and ethnically diverse than previous generations, with larger proportions of Black, Asian, and Latino consumers, who historically drink less alcohol than white consumers. Those groups represent 50% of Gen Z, yet were only 29% of the baby boomer generation.

A lasting impact?

The $64,000 question for the alcohol industry, which includes those well-financed hard kombucha brands still in business, is what happens when Gen-Z leaves school, has more disposable income, and Mom & Dad no longer track their every move (although, you never know…)

For reasons discussed throughout this report, Gen Zers are having their first drink later in life. So even if Gen Z’s lower levels of consumption do not represent a reasoned, deliberate rejection of alcohol for health or moralistic reasons. alcohol is not part of their formative and most impressionable years. This means that, moving forward, they are far less likely to factor alcohol into their conception of identity, socialization, and perception of acceptable behavior…Put simply, at any age, Gen Z will drink less than previous generations.

Europe

The trend away from alcohol is, of course, far broader than this US-centric report addresses. Austria-based Wine Intelligence reports on The decline of alcohol consumption among Gen Z in the UK and Spain. They note “this trend reflects changing social attitudes, growing health consciousness, and economic factors.” In Britain (where the legal drinking age is 18, not 21, and parental supervision possibly less omnipotent), they note:

Nearly two-thirds of 18-24-year-olds express concerns about the emotional toll of alcohol, which may drive them to reduce their intake. This reflects broader public awareness of mental health, particularly in younger generations, who are more inclined to prioritize emotional balance and well-being. Many young adults, around a third of British 18-24 year olds, now abstain from alcohol altogether, and when they do drink, it’s often reserved for special occasions.

This report agrees that social interactions are more frequently online than in-person, and economic factors limit discretionary spending. Nevertheless, a healthy lifestyle is core to Gen-Z’s identity. Concluding:

While there are national differences in drinking habits, the overall trend points towards a more mindful and health-conscious generation across Europe.

Industry response

The drinks business is not bidding farewell to younger consumers without fighting back.

Alcohol advertisers spend more than $2 billion annually marketing their products on television, radio, print, and at live events. Alcopop’s like Mike’s Hard beverages, Twisted Tea, Sparks, Seagram’s Escapes, Smirnoff, and the Bud Light Ritas are marketed to young people. They often come in containers that may look like children’s juice drinks, such as the Texas brand Buzzballs. Buzzballs puts out flavors like “Strawberry Rum Job” and “Forbidden Apple” in a round, ball-shaped container that comes in various colors. Mike’s Harder tied its brand messaging as an edgier, heavier alcoholic beverage into the 2018 release of “Deadpool 2” — a sequel to the popular comic book adaptation.

Kombucha

For brands in the multi-billion-dollar kombucha market, these reports underscore what many already know. Consumers of all ages are looking for alternatives to alcohol. Some are teetotal, others “sober curious”. In minimizing the very real move to a healthy lifestyle, the Rabobank report ignores the message we hear from the customers we meet at farmers’ markets, in cafes, restaurants, and, yes, even bars. Many do still drink, on occasion. But no-al/low-al alternatives are increasingly demanded. Brewers are offering ‘zero’ options.

And kombucha is going mainstream across all generations.