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Between 2021 and 2025, changes in consumption behavior of Generation Z coincide with an estimated decline of US$ 830 billion in the market value of the global alcohol beverage industry, raising alerts among investors, manufacturers, and analysts about a possible long-term structural adjustment in the sector
The global alcohol beverage industry is facing a structural change in demand that partly coincides with the arrival of Generation Z at the legal drinking age in various countries.
The movement appears in opinion polls, public health surveys, and market data: young adults report drinking less frequently than previous cohorts, while the perception of risk, especially to health, grows, and the consumption of alcohol-free alternatives advances.
The most repeated reading in the sector is that this change is already being priced in. One indicator cited by analysts is the decline in the aggregate market value of large listed manufacturers of beer, wine, and spirits since the peak in 2021: a survey by Bloomberg points out that an index with around 50 companies was ~46% below the June 2021 record, with an accumulated loss of around US$ 830 billion in just over four years.
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At the same time, the narrative that “Generation Z destroyed alcohol” requires nuance: there are industry reports indicating that consumption among young adults may fluctuate with income, socialization, and life stage – and that part of this generation has returned to “reengage” after the valley observed in the post-pandemic period.
What Research Shows About Young People Drinking Less
In the U.S. in 2023, the institute showed that adults aged 18 to 34 were less likely to say they drink (in different metrics) than young people from previous decades, while consumption among older individuals increased.
In August 2025, it recorded that only 54% of adults reported consuming alcohol – the lowest level in the institute’s modern historical series – along with an increase in the portion that considers even moderate consumption harmful to health.
On the public health side, federal agencies and academic research help explain why “drinking less” has become more common among adolescents and has spilled over into the transition to adulthood.
A review published in 2021 points out that, since the early 2000s, alcohol use among adolescents has declined in various Western countries, prompting hypotheses about cultural and social changes.
In the U.S., the Monitoring the Future (University of Michigan) survey has shown long-term declines in alcohol use among students, reinforcing that part of Generation Z is entering adulthood with less exposure and less established habits.
There is also a prevalence picture among young adults: the NIAAA, based on the NSDUH, presents recent estimates of binge drinking and heavy use among 18 to 25 years old, offering an annual “scorecard” to track whether the curve decreases, stabilizes, or rises again.
Why Generation Z Drinks Less (And Why This Is Not a Single Reason)
The most well-supported explanations appear as a package of factors — and not as a simple cause.
Health Became a Social Cost and a Perceived Cost
The most cited change is the increased awareness of the effects of alcohol. In January 2025, the U.S. Surgeon General published a study on alcohol and cancer risk, reinforcing the association with multiple types of cancer and recommending public communication actions.
The World Health Organization (WHO), in the European region, has also emphasized that there is no “safe level” when the focus is on carcinogenic risk because the available evidence does not identify a threshold at which risk “turns on”.
This type of message alters the way young people calculate cost-benefit: less room for the idea that “a little drinking is good”, more room for periods of abstinence and occasional consumption.
Socialization Changed: Less “Drinking as a Standard” to Belong
Generation Z socializes differently – more mediated by technology, more fragmented, and with more public recording (stories, photos, videos).
This tends to penalize behaviors with visible effects (loss of control, hangovers, exposure). Gallup observed a significant increase in the view that moderate consumption is harmful to health among young adults, signaling a cultural shift beyond price and access.
Substitution for Other Substances and “New Occasions”
Recent reports and coverage point to partial substitution by cannabis in markets where there is legalization and normalization, in addition to the growth of THC beverages in some places – a change that repositions “relaxation” outside of alcohol.
The Bar Tab Got Heavier and Consumption Became More “Selective”
Inflation, housing costs, and tighter disposable income for young people tend to reduce high-volume consumption, especially outside the home.
Instead of “drinking for drinking’s sake”, there is a growing focus on planned consumption, with less frequency and focus on specific occasions – which is bad for products dependent on high turnover.
The Effect on the Market: Value Decline, Pressure on Wine and Beer, and Migration to “No/Low”
The aggregate loss of market value (US$ 830 billion, as cited by Bloomberg) serves as a financial symbol of this adjustment: investors revised growth and margin expectations for global giants.
From a product perspective, some segments appear to suffer more. In retail analyses, wine has shown significant declines in volume and value in recent periods, while categories with convenience appeal and “ready-to-drink” (RTDs) are competing with alcohol-free options.
At the same time, the industry is trying to capture the change by creating alternatives that preserve social rituals (toasting, bars, gatherings) without ethanol.
The Counterpoint: Not Everything Is Linear Decline and the Sector Bets on “Reengagement”
The industry itself and some consultancies have insisted that Generation Z’s behavior is not homogeneous and may be cyclical: there are indications that, after a low around 2023 in certain segments, some young consumers have started to drink more as in-person events returned and the economy changed.
The IWSR published analyses arguing that legally eligible young adults have returned to going out more and “reengaging” with alcohol, questioning the idea of permanent abandonment. Reuters also reported on this debate, citing survey data indicating an increase in “drank recently” between 2023 and 2025 in some segments.
This matters because it changes the conclusion: it is not necessarily “the end of alcohol”, but rather a change in pattern – less volume, more selectivity, more alternation with abstinence, and greater competition with alcohol-free beverages.
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