The Phenomenon From Baby Boomers to Gen Z: A Generational Divide The current decline in alcohol consumption is not a fleeting trend but an accelerating, long-term generational shift. A Gallup poll shows that the percentage of American adults who report drinking alcohol has fallen to 54%, the lowest point in three decades. This trend is particularly pronounced among the younger generation. According to research, the share of adults under age 35 who drink has dropped by 0 percentage points, from 72% in 2001-2003 to 62% in 2021-2023. This suggests that today’s young people are the least frequent drinkers in recent decades. These changes are starkly reflected in consumer spending data. In 2021, U.S. Gen Z consumers spent just over $2.2 billion on alcohol, the lowest amount compared to all other age groups. Further reports reveal that 21.5% of Gen Z abstains from alcohol entirely, while 39% consume it only on occasion. Additionally, Gen Z consumes about one-third less beer and wine than previous generations. These figures not only validate a bar owner’s concerns but also signal that the traditional “party-hard” model is becoming obsolete. This is not a temporary fad but a lasting trend that requires a fundamental business model adjustment. Taking a Different Path: The Unexpected Impact of Economic Factors When exploring the reasons for Gen Z’s reduced drinking, a commonly overlooked factor is the economy. While many attribute the shift to changing values, a senior beverage analyst at a drinks company put it bluntly: “Gen Z ain’t got no money”. Compared to previous generations, today’s young people have lower incomes, less stable employment, and many have yet to reach the legal drinking age. Their disposable income is naturally limited. Interestingly, data indicates that Gen Z spends the same proportion of their after-tax income on alcohol as Millennials did at the same age. This suggests that Gen Z isn’t inherently averse to drinking; rather, they simply have less money to spend. For bar owners, this means the challenge isn’t just about “selling alcohol” but about convincing consumers that, within a limited budget, “going out for a drink” is a worthwhile and high-value experience. This forces businesses to reconsider their value proposition: Are they selling a beverage or an unparalleled social experience?   The Drivers Health Above All: Prioritizing Physical and Mental Well-being Gen Z’s focus on physical and mental health is at an unprecedented level. They are more aware of alcohol’s negative effects than previous generations and see it as a potential health risk. A Gallup poll found that 53% of U.S. adults now believe moderate drinking is harmful to health, a view driven primarily by young people. Two-thirds of respondents aged 8 to 34 hold this view. Crucially, mental health awareness plays a central role in this trend. While Gen Z reports higher rates of anxiety and depression, they are also more willing to seek professional psychological help. They openly discuss their sobriety journeys on social media platforms to manage their emotions and cope with stress. For this generation, alcohol is no longer a tool for “relaxing” or “de-stressing.” Instead, it can be a stumbling block to emotional stability and quality sleep. In fact, 34% of Gen Z cite mental health as a reason for abstaining, and 46% say they are “simply not interested in drinking”. Therefore, bars can no longer position themselves solely as places of “indulgence” but must adapt to consumers’ pursuit of “self-care” and “wellness.” The Digital Footprint and the Desire for “Control” The digital age has fundamentally altered the rules of socializing for young people. The ubiquity of smartphones and social media creates a constant state of digital surveillance. In 1991, 64% of U.S. high school seniors had been drunk at least once, but by 2024, that figure had dropped to just 33%, with two-thirds of the decline occurring after 2012, the year smartphones became widespread. Today, the risk of leaving a “digital footprint” after getting drunk has evolved from a social faux pas into a permanent public record that is impossible to erase. This pushes Gen Z to be more cautious in social settings and to “maintain control and avoid embarrassing moments that might be documented online”. This desire for “control” stands in stark contrast to the “indulgence: mentality of previous generations. If bars continue to promote a “binge drinking” culture, they will be out of sync with Gen Z’s core values. Instead, creating an environment that encourages safe, mindful consumption and offers curated social experiences will meet their new demands. The Shift in Socializing: From “Drinking” to “Doing” Gen Z’s social life is being redefined. They prefer to socialize at home or at friends’ houses rather than at traditional bars and nightclubs. They are actively creating “activity-centered” social patterns, such as escape rooms, rock climbing, pottery classes, or immersive art exhibitions. In addition, “wellness-focused gatherings,” such as yoga classes and “sober raves,” are increasingly popular among Gen Z. These activities all provide an interactive environment for people to connect without relying on alcohol. The bar’s status as a social venue is facing unprecedented competition. It is no longer the only “place to go” and must now compete with a wide range of engaging activities. Successful bars need to transform their space from a simple drinking spot into a social hub that offers unique, non-alcohol-centric experiences. The business model must shift from selling beverages to selling a curated social experience. The Unexpected Impact of Demographics A subtle, but often overlooked, factor is a fundamental demographic shift. Traditionally, men, especially white men, have been the main drivers of alcohol consumption volume. However, their share of the drinking population is declining, being replaced by women and people of color—two groups that have historically consumed less alcohol. Today, women make up most alcohol consumers under the age of 25, and their average consumption is only half that of men. Furthermore, Gen Z is the most racially and ethnically diverse generation in U.S. history. This indicates that even if individual drinking habits within each demographic group remain unchanged, overall, per-capita alcohol consumption is bound to decline due to these population shifts. This is a structural, permanent challenge, not just a change in consumer sentiment. Key Drivers of the Sober Shift Health & Wellness Awareness of negative health effects; connection to anxiety and depression; viewing sobriety as a form of self-care. Economic Factors Lower disposable income; price sensitivity; a desire to save money. Digital Culture Fear of a permanent digital footprint; desire to maintain control; normalization of sober culture on social media. Social Norms & Demographics Shift to activity-centered socializing; rise of non-alcohol-centric events; a demographic shift towards groups who historically drink less (women, people of color).   The Strategy Rethinking the Product: Embracing the “No & Low” Menu Gen Z’s beverage choices reflect their preference for novel flavors and convenience. Studies show that spirits and Ready-to-Drink (RTD) products are the most popular categories among Gen Z, while traditional wine and beer have a mixed outlook. More than half of Gen Z drinkers “often or sometimes” choose non-alcoholic beers, mocktails, or low-ABV cocktails when socializing. Non-alcoholic beers like Heineken 0.0 and Guinness 0.0 are even considered “trendy” brands by Gen Z. Therefore, a bar’s inventory model must expand beyond traditional alcoholic beverages. Bars should position themselves as “beverage destinations,” not merely “alcohol providers.” Specific suggestions include: • Develop a premium mocktail program: Offer complex and visually appealing non-alcoholic cocktails to satisfy Gen Z’s desire for flavor exploration. • Curate a selection of non-alcoholic and low-ABV options: Create a diverse menu of non-alcoholic beers, spirits, and low-alcohol beverages. Highlight “better-for-you” qualities such as natural ingredients, organic fermentation, or functional ingredients like vitamins and adaptogens. By making non-alcoholic beverages a premium, core product line, a bar can directly meet Gen Z’s demand for health, self-care, and flavor innovation. Redefining the Venue: From “Intoxication” to “Experience” The shift in Gen Z’s social patterns requires bars to reimagine their reason for existence. If a bar is just a place for “drinking,” it will be unable to compete with at-home gatherings and new types of event venues. A bar must transform itself from a simple drinking spot into a place that offers a unique social experience. • Host activity-based social events: Organize regular weekly or monthly events centered around activities, such as trivia nights, board game nights, live music performances, or mixology workshops. • Cultivate a “third space” atmosphere: Create an environment that prioritizes community and genuine human connection. Make people feel comfortable and safe, whether they are drinking or not. This atmosphere provides a unique social experience that cannot be replicated at home, offering consumers a valuable reason to go out. Marketing Strategies for the Modern Drinker Traditional top-down advertising is largely ineffective for Gen Z, a generation of digital natives. They place greater trust in recommendations from friends, family, and relevant influencers. Successful marketing must be a two-way conversation that builds an authentic community around the brand. • Embrace a digital-first strategy: Invest heavily in social media platforms like TikTok, Instagram Reels, and YouTube. Produce short, shareable video content, such as 5-second cocktail recipes or fun behind-the-scenes clips. • Collaborate with micro-influencers: Partner with micro-influencers who have authentic niches in areas like mixology, wellness coaching, or food. • Encourage user-generated content (UGC): Create branded hashtags, filters, or remixable music to inspire users to post original content related to the brand. Use an authentic, creative, and inclusive tone, focusing on celebrating human connection and mindful drinking, and avoid outdated “party-hard” or “macho” imagery. The goal of a bar’s marketing should not be to convince Gen Z to drink but to show how the bar’s beverages and atmosphere can enhance the lifestyle they seek—one focused on health, fun, and authentic connection. Gen Z’s Preferred Drink Categories (Alcoholic and Non-Alcoholic) Preferred Categories Spirits (especially white spirits like tequila and flavored vodka), Ready-to-Drink (RTD) canned cocktails, hard seltzers, mocktails, non-alcoholic beers (e.g., Heineken 0.0), adaptogen-infused spritzers. Flavor variety, convenience, health consciousness, self-care, suits at-home socializing. Mixed or Declining Categories Traditional beer, red wine, heavy spirits. Lower consumption among women and people of color; does not align with “health” or “control” narratives; considered less novel in taste than spirits and RTDs. Goliath Consulting Group is a restaurant consultancy group based in Atlanta, Georgia. To learn more about our services including menu development, business strategy, marketing, and restaurant operations, contact us at http://www.goliathconsulting.com or email us at getresults@goliathconsulting.com

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