Bev-alc industry members continue to tout concerns that Gen Z is drinking less, with many blaming the generation’s increased attention to health and wellness versus previous generations.
However, that narrative is “greatly overblown,” according to Rabobank senior beverage analyst Bourcard Nesin in a recent report from the financial services company.
Nesin turned the narrative on its head, noting that while bev-alc consumption is down for Gen Z consumers – both of legal drinking age (LDA) and underage – their habits could actually be a good thing for the bev-alc industry.
“In particular, we find that Gen Zers’ alcohol consumption will likely increase significantly as they age, such that by their mid-30s, their consumption will be much closer to that of previous generations,” Nesin wrote. “This is an ideal outcome for the alcohol industry, which can celebrate the declines in underage drinking and binge drinking, while still benefiting when Gen Zers reach their more mature and responsible prime spending years.”
Here are highlights from the report:
Gen Z’s Bev-Alc Spending is Low, But It’s Proportional
Earlier this year, the U.S. Bureau of Labor Statistics (BLS) released annual bev-alc spending numbers by generation, shocking many industry members with the realization that Gen Z (those born between 1997 and 2012) spends more than 87% less than the next youngest generation, millennials.
Households led by Gen Z consumers collectively spent $3.6 billion on bev-alc in 2023, compared to $25.5 billion by millennial-led households, $27.5 billion by Gen X households and $25.5 billion by baby boomers.
However, comparisons are misleading, according to Nesin. The data includes all Gen Z consumers, not just LDAs, comparing the bev-alc spending of 13- to 27-year-olds, with the spending of generations made up entirely of LDA consumers. More importantly, less than half of Gen Z consumers “have established an independent household,” so the majority of the generation is not included in the data.
As a result, comparing spending across generations fails to “distinguish between shifts in behavior driven by life stage and shifts in behavior driven by generation,” Nesin wrote. Other life stage factors include many Gen Z consumers are working entry-level jobs or working to obtain college degrees, and “don’t have any money to spend on alcohol.”
“This was also true of millennials, Generation X and baby boomers when they were in their twenties,” Nesin wrote.
What provides a more accurate picture of Gen Z bev-alc spending versus older generations is to look at what percentage of consumers’ income is spent on bev-alc. When doing so, Gen Z doesn’t look that different compared to its counterparts.
As of 2025, Gen Z consumers spend about 0.72% of their after-tax income on bev-alc, in line with millennials (0.72%) and the national average (0.73%). Gen Z consumers spend less of their income on bev-alc versus baby boomers (0.83%), but spend more than Gen X (0.65%).
Where spending has declined is in comparing that percentage to generations when they were of a similar age, as “younger people used to spend a much higher share of their income on alcohol,” Nesin wrote.
Between 2012 and 2013, households led by people under age 30 spent 1.11% of their after-tax income on bev-alc, and 0.68% on non-alcoholic (NA) beverages, Nesin reported, citing BLS data. Between 2022 and 2024, the percentage spent on bev-alc declined to 0.74%, with 0.63% spent on NA beverages.
The decrease isn’t unique to Gen Z, but is steeper than previous generations. Between 2012 and 2013, households led by people over age 30 spent about 0.6% of their after-tax income on bev-alc, and 0.57% on NA beverages. Between 2022 and 2024, the amount spent on bev-alc fell to 0.61%, while spending on NA beverages increased to 0.64%.
Cell Phones a Bigger Factor than Health Concerns
What can be accurately compared among generations is underage drinking, which has declined significantly among Gen Z consumers.
In a 1991 survey by Monitoring the Future, 64.4% of high school seniors reported they “had been drunk at least once in their lifetime.” As of 2024, that percentage had fallen to 33%.
Gen Z’s concerns over the negative effects of bev-alc on their health has been blamed by many for this decline, but that’s not necessarily the case, according to Nesin. The same survey asked respondents whether they perceived a “great harm” from consuming “five or more drinks once or twice each weekend.” Between 2008 and 2019, the percentage of respondents who said yes remained consistent, between 46% and 49%.
Note: In 2021, Monitoring the Future changed its methodology for this part of the survey, so data after is “not comparable,” Nesin noted. For transparency, the percentage of respondents who perceived a risk from 2021 to 2023 was between 34% and 39%.
A bigger influence on Gen Z’s habits is the introduction of cell phone culture, according to Nesin. Most of the decline in underage drinking happened after 2012, with the percentage of high school seniors reporting drinking falling from about 50% in 2012 to 35% a decade later.
2012 was also “about the time when the use of mobile devices became an ubiquitous part of teenage life,” Nesin wrote. The share of the population aged 12 and older who own a smartphone was around 31% in 2011, and increased to 44% in 2012, according to a 2022 report from Edison Research and RaboResearch. As of 2021, that number had increased to 88%.
With increased cell phone use comes numerous hits on bev-alc spending, including:
- A decline in in-person social gatherings now that digital connection is more accessible, in turn affecting the number of occasions young people have to purchase and consume bev-alc;
- The use of location tracking, as “every parent with teenage children can track their location 24 hours per day” thanks to their cell phone, adding more risk to underage gatherings with alcohol;
- And the ease of access to cameras and social media, which increases the risk of an underage person being filmed consuming alcohol and the consequences of being caught, as school administrators – and college admissions teams – can see what young people are doing.
The true impact of cell phones on future bev-alc consumption by Gen Zers is unknown, Nesin noted.
“On one hand, the move away from in-person socialization toward social media seems like a permanent shift with consequences for young people’s well-being that go far beyond alcohol consumption,” he wrote. “If one assumes that this is the factor driving the declines in alcohol use, then future consumption seems unlikely to recover to historic norms as Gen Zers reach their prime spending years.
“However, if the main driver is universal parental surveillance and a loss of privacy making underage drinking a far riskier activity than it was in the past, then that is a condition or restriction that will disappear as Gen Z becomes more independent during later years of adulthood,” he continued. “Ultimately, these facts together suggest that as they age, Gen Z will probably drink less than previous generations, but that gap between Gen Z and other generations will shrink significantly over time.”
Demographic Changes May Have More Long-Lasting Impact
Demographic makeup may impact Gen Z consumers’ bev-alc spending habits more as they age, Nesin wrote.
Gen Z is the most diverse generation to date, with 50% of the generation’s population identifying as white, non-Hispanic, versus 54% of millennials, 59% of Gen X and 71% of baby boomers.
This matters for bev-alc because Black, Asian and Latino consumers historically drink less alcohol than white consumers.
Additionally, there has been a decline in drinking alcohol among young men, who have “driven the vast majority of declines in alcohol consumption among young people over the past 20 years,” Nesin wrote.
According to the National Survey of Drug Use and Heath (NSDUH), since 2019, more women 18-25 years old drink alcohol versus men. The number of men consuming alcohol has also been in decline since 2014, while the number of women consuming alcohol has remained relatively flat.
The shift is likely due to women becoming more educated, and an increase in younger women not getting married, which are both lifestyles that “are very highly correlated with an increase in alcohol consumption,” Nesin wrote.
What should set off alarms for bev-alc industry members is women tend to drink “much less” than men – about half of the amount, depending on race and ethnicity – so “the net effect of this shift … is a decline in overall alcohol consumption.”
Knowledge of demographic shifts in consumers is more important for bev-alc industry members versus any other theories behind why younger people are drinking less, according to Nesin, acknowledging that Gen Z will have the largest impact on which bev-alc segments grow or shrink.
“A major reason Gen Z drinks less is because women and minority groups comprise a massively larger share of consumers who drink alcohol compared to previous generations,” Nesin wrote. “Therefore, successfully marketing to Gen Z requires brands to successfully market to women (women with college degrees, to be precise) and people of color.
“A logical next step, therefore, is for alcohol brands to ensure their organizations hire enough members of these groups (and put them in positions of power) to thoughtfully, effectively and authentically drive innovations in product and marketing that reflect the needs of Gen Z consumers as they reach their mid-20s and 30s. That is, when they can afford to buy what they want.”