Editor’s note: The following is a thought leadership post by Kaleigh Theriault, director of beverage-alcohol thought leadership at market research firm NIQ.
Alcoholic beverages are feeling a squeeze, and not of the lime variety. Beer and alcohol businesses are facing economic pressures from tariffs, shifts in consumer spending, and health and wellness trends — yet many opportunities for growth remain, particularly among Gen Z (21+) consumers, the newest group to reach the legal drinking age (LDA).
In total, NielsenIQ (NIQ) data shows off-premise alcohol sales (beer, wine and spirits) have been stagnant, registering nearly a 1% drop in sales in 2024 compared to the previous year. Total sales surpassed $112 billion, but volume is shrinking, particularly in beer (down nearly 3%) and wine (down almost 5%) for the same 52 weeks.
It is apparent consumer tendencies are changing around alcohol consumption, driven by a trend toward more moderation, a larger focus on health and wellness, and the impacts of inflation. How can alcohol and beer brands, specifically, respond?
Moderation Means More Opportunity in Non-Alcohol
Over the past few years, beer and alcohol consumption has slowed, but consumers are still finding occasions to drink. According to a 2024 Gallup Survey, 58% of consumers said they drink alcohol on occasion, one of the lowest response rates over the decades-long study. However, the survey also showed that six-in-10 consumers drink, meaning alcohol sales are safe from evaporating but leaning more into a period of moderation.
So, if consumers are trending toward more moderation, brands may want to continue to grow their adult non-alcoholic (NA) businesses. NIQ data highlights:
- Off-premise adult NA (ANA) beverage dollar sales reached $844 million, up 26% year-over-year, for the 52-week period ending February 1, and gained nearly a 1% share of the total alcohol space.
- By the end of 2025, NA beer, wine, and spirits will exceed $1 billion in off-premise sales.
- 93% of consumers who buy ANA offerings also purchase alcoholic beverages
Brands that continue to innovate in the NA space can boost stagnant alcohol sales and gain loyal consumers by providing both the beer they like and a complementary NA option.
Oh Oh Oh Ozempic and GLP-1s Influence Alcohol
A cousin to moderation is the conversation around consumers focusing more on health and wellness, which could lead to less alcohol consumption. The U.S. government is playing a role, too. The former U.S. Surgeon General issued an advisory in January that asked for an updated label on alcoholic beverages to highlight the risk of cancer.
Additionally, the USDA Dietary Guidelines for Americans recommend adult men limit alcoholic drinks to two or fewer a day and women one drink a day. Though neither of these recommendations is official, consumers are aware of them, due to media coverage and governmental materials.
Another trend in the health space is a rise in consumers using GLP-1 weight loss drugs, which often lead to a reduced consumption of alcohol upon starting treatment. NIQ data notes that GLP-1 user households represent less than 10% of beverage-alcohol dollar sales, and less than 4% of beverage-alcohol dollar sales among households that use GLP-1s for weight-loss only.
The trend is notable for beer and alcohol brands as the numbers could fluctuate if health insurance providers ease restrictions around the drug, expanding access for more Americans.
Economic Pressures Are Real
While 64% of beverage-alcohol dollar sales in the U.S. represent domestically produced products, prices on imported beer, wine, and spirits are higher due to the premium nature of imported alcohol. In fact, imported beer’s case price premiums are 30% higher than case prices of domestic beer, as of the end of January, per NIQ. In spirits, the price difference is even higher: 89%.
More than eight-in-10 consumers said they feel they are in a vulnerable financial position, and that can impact alcohol purchases. However, the other 20% of consumers that are financially stable, plus the “cautious middle,” are purchasing the bulk of alcohol.
Beer prices continue to remain high from the past couple years of price increases, evident in the stark inflation rates over the last few years, whereas wine and spirits prices have experienced a slower rate of inflation. Combining moderation with economic pressures, alcohol brands are feeling a squeeze, but opportunities remain in NA beverages and how they market to Gen Z consumers who are now of legal drinking age.
Gen Z Drinkers Showcase New Opportunities
This year, more than 60% of the global population will be millennials or younger, so a new group of alcohol-consuming shoppers will be on the market. Studying the demographic, broad trends do take shape in their alcohol consumption habits including:
- Innovative flavors;
- Better-for-you products like NA and low-alcohol products;
- Dynamic packaging and variety packs catch the attention of Gen Z shoppers;
- Even high ABV products are finding success with Gen Z for high-energy occasions.
Not surprisingly, as Gen Z consumers are digitally native, social media carries an influence on where they should buy alcohol, although they interestingly under index in e-commerce purchasing. NIQ data shows that Gen Z shoppers are an impressionable group, swayed by social media content and influencers, as well as recommendations from close friends, family or bartenders. Almost 30% of LDA Gen Z shoppers say they consider the opinions of family and friends when purchasing alcohol.
As with other trends in the alcohol landscape, Gen Z shoppers are becoming more health-conscious and seeking NA offerings, creating more opportunities for brands to innovate in the low-alcohol and NA market.
Beer and Alcohol Brands Meet Consumer Demands
Even as consumers consider healthier lifestyles and wrestle with financial concerns, consumption of beer and alcohol isn’t going anywhere. Brands have been launching innovative RTD drinks and developing NA beers and products. As companies strengthen their positions in the low- and NA categories, total alcohol sales should nudge beyond the stagnation that’s been happening across alcohol.
Beer brands that battle pricing with campaigns highlighting social gatherings and design exciting flavor hybrids in dynamic packages can gain an edge with new LDA Gen Z LDA consumers . There are plenty of opportunities on the table in alcohol, and as one of the most innovative sectors, companies are expected to meet the challenge.