According to Forbes, the fast-growing ‘NoLo’ movement (no and low alcohol) is driving the demand for alternatives to alcoholic beverages. It’s fortunate that we’re here with a much-loved spring mocktail for the millennials and Gen-Z’s who are generally drinking less. Data-approved! Buzz60’s Chloe Hurst highlights…
Beer and hot dogs are as patriotic as it gets. But when you open the cooler at your summer barbecue, you could be seeing fewer brews, with alternatives like spiked seltzers, canned cocktails, and hard teas stealing their space.
You can attribute this trend to the younger generation: The youngest cohort of legal-aged drinkers from Gen Z, which covers the ages from 21 to 26, are “drinking completely differently than any other generation we’ve seen before,” according to NIQ’s Kaleigh Theriault.
“They’re relatively new to their drinking, and when they are choosing alcohol, they are leaning toward those flavor-forward categories,” Theriault, an associate director of beverage alcohol thought leadership at the consumer intelligence company, told CNN.
Corona is hoping to attract Gen Z drinkers with its new “Sunbrew Citrus Cerveza” beer.
Beverages created by smaller companies are controlling the landscape. E. & J. Gallo Winery’s High Noon dominates the spirit-based cocktail category; White Claw from Mark Anthony Brands remains the top-selling spiked seltzer; and newer entrants, including punchier drinks that mix liquor with an iced tea or lemonade such as Surfside, a two-year-old brand, are rapidly gaining ground.
That’s a problem for Big Beer, which is dealing with flat sales, declining volume and a fickle generation of younger drinkers who are completely ditching the bottle or preferring anything but a regular beer.
In response, Miller Lite-maker Molson Coors Beverage Company, Modelo-brewer Constellation Brands and heavyweight Anheuser-Busch InBev are among the larger brewers expanding beyond beer and diversifying their portfolio with flavorful concoctions.
Fruit, in particular, has been a focus area because “it’s something that the consumer seems to be drawn to right now and they want to drink something really good,” Theriault said. “Those flavors offer that.”
Constellation turned to TikTok for inspiration for its newest beer, which is lightly based on the “Corona Sunrise” cocktail — a mixture of tequila, a Corona, orange juice, grenadine, plus a splash of lime juice. It has taken off on the video-sharing app, with the most-watched tutorial racking up nearly 14 million views.
Since it’s unlawful to sell a beer mixed with a spirit, Corona spun up its own version to hopefully appeal to younger drinkers: the “Sunbrew Citrus Cerveza,” which is brewed with orange and lime peels and blended with the same juices and mixed with a Corona Extra to mirror the sweet flavor of the cocktail counterpart.
“This new brew was created with the flavor-seeking Gen Z audience in mind, a group of drinkers known for their experimentation and mixing,” noted Saúl Trejo, director of brand marketing at Corona, in a press release. For now, the drink is only available in the northeastern US before possibly expanding nationwide depending on sales.
Sunbrew fits into Constellation’s portfolio with a few other Gen Z-angled beverages like Fresca Mixed and its malt-based beverages, Corona Refresca and Modelo Spiked Aguas Frescas, both of which also have fruity flavors and are selling well for the company.
TikTok has also influenced Molson Coors for one of its newest boozy beverages called “Happy Thursday.” The shtick? It’s a non-carbonated drink because “bloating that may come from carbonation is considered a top barrier” for younger drinkers and the trend of “decarbonizing” drinks is blowing up on the app.
The “smooth, bubble-free” drink comes in four fruit flavors, including strawberry and black cherry, and also meets another need for Gen Z since it’s low in alcohol content at 4.4% by volume. It also has bright packaging designed to “pop on social media,” the brewer notes.
Launched less than three months ago, sales and distribution are both growing and feedback has been “extremely positive” for Happy Thursday, the company said on its blog. The company could shed more light on its sales during its next earnings report in August.
Happy Thursday fits into the company’s strategy that began in 2019 when Molson Coors tweaked its name to encompass its growing portfolio of beverages besides beer. That now includes hard iced tea, energy drinks and its Simply Spiked lineup. Last year, it acquired Blue Run Spirits, a cult favorite high-end bourbon and rye whiskey brand, in light of US spirit sales surpassing beer sales.
“Suppliers, in order to stay relevant, have to evolve and follow where the consumer is trending — and right now the consumer wants flavor,” NIQ’s Theriault said about their pivots. “Innovation is really important in the alcohol industry and ensuring that innovation is tied to the consumer trends is what’s right for business.”
Canned cocktails and spirits-based beverages have also helped Anheuser-Busch’s bottom line in the US, especially in light of the collapsing sales of Bud Light. Its aptly titled “Beyond Beer” category is currently a $1.5 billion part of its global business and is helping attract younger, legally aged drinkers.
NÜTRL, a flavorful lineup of vodka seltzers, and Cutwater Spirits canned cocktails are two standouts. An Anheuser-Busch spokesperson told CNN that Cutwater, which has a collection of canned rum mai tais, vodka mules and tequila palomas, has “steadily grown dollar sales double digits for five consecutive years” and jumped an additional 23% in sales this year.
Still, it’s not all rosy for Anheuser-Busch, especially if a drink has the Bud Light name attached. Bud Light Seltzer sales are down 50%, according to trade publication Brewbound, outpacing a larger decline in malt-based seltzers as drinkers shift toward spirit-based drinks. The company launched a new advertising campaign in 2023 just a few weeks before the Dylan Mulvaney controversy derailed its parent brand’s sales.
Despite younger drinkers’ hesitance with buying beer and flat sales, Big Beer companies aren’t facing an existential threat. In fact, it’s the exact opposite, according to one expert.
“Young drinkers can now find just about any kind of drink in just about any kind of flavor practically whenever they want, and they get to choose from the most diverse collection of beverages that has ever existed — with and without alcohol,” Bryan Roth, an analyst for Feel Goods Company and editor of the alcohol beverage newsletter, Sightlines+, told CNN.
“These long-tenured and often historic companies are adapting to the market. What makes it particularly exciting is that consumers are more often leading the way,” he added.
The media is having a hard time nailing down the financial vibes of the youngest generation of consumers—Gen Z. You might see Gen Z described as financially unsure and insecure, knee deep in debt or even more spendy and carefree than the avocado toast generation that preceded them.
Despite the commentary, however, Experian data shows that by and large, Generation Z’s debt is increasing at the same rate as other generations’. As part of our ongoing review of consumer debt and credit in the United States, Experian took a look at the leading edge of Generation Z, who were between 18 and 26 years old in the third quarter (Q3) 2023. This analysis lays out some of the facts from aggregated Experian data, along with some context, to explain what’s happening in the wallets of younger consumers.
Gen Z isn’t falling into more debt than others, according to Experian data. Nor are comparisons to millennials at their age particularly apt, as 15 years ago the economic and credit landscape (both still reeling from the Great Recession) meant a different experience for both borrowers and lenders than what consumers face in the 2020s. Now, inflation and cost of living are contributing to increased debt balances—for Gen Z as well as for all consumers.
For some types of consumer debt, Gen Z balances are about half that of the overall consumer population. Even average student loan balances, a category you might think the youngest generation must have more of than other cohorts, is only half the U.S. average. (Think about how long and expensive grad school can be to explain the difference.)
It’s the big-ticket items, including a car and a house, that Gen Z can’t dodge. Among young consumers with an auto loan, the average balance of $20,305 is similar to the $23,792 national average. And among the few members of Generation Z who’ve recently bought their (presumably) first home, they’re carrying nearly as much mortgage debt as other homeowners.
The average FICO Score among Generation Z was 680 in Q3 2023. While this score puts them 35 points short of the national average credit score of 715, it lands them in the “good” FICO Score range, which starts at 670.
There’s no evidence, and little reason, to expect that one generation is more or less responsible with their credit than others, and that includes Generation Z. Factors that could cause average credit scores to drop are largely economically driven, and right now unemployment rates have been at or near the record low rates: less than 5% in nearly every state, and 3.9% nationwide. Unless unemployment rates somehow impact one generation more than another—extremely unlikely—there’s no reason to expect that one generation will zig while all the other zag.
However, that’s not to say the economic challenges each generation faces are the same—far from it. FICO Scores are a measure to assess risk, but not wealth.
As of Q3 2023, 86% of Gen Z consumers who have a credit score have at least one credit card, according to Experian data. And they’re beginning to use some of the credit extended to them.
Although inflation contributed to higher balances for U.S. consumers of all ages, the year-over-year increase is typically going to be greater for those starting from zero, as many Gen Zers obtaining their first credit card are doing. Even so, Generation Z’s balances grew just as much as other working-age consumers—millennials and Generation X. Consumers of any age who manage their credit responsibly can expect their credit limits to increase over time.
Gen Zers in the more populous states of California, New York and Texas carry higher credit card balances than others. And as rent continues to rise, it’s taking a larger bite of take-home income.
At least drivers have more selection in choosing their ride, as used car prices are falling, inventory levels are mostly back to normal, and dealers are offering incentives like low-cost financing for some new models.
A glance in the rear-view mirror, however, shows that car loans recently made are costing consumers more across the board. Car prices, and the cost of the attendant car loans often used to purchase vehicles, have still increased for all consumers in the past year, more or less equally across all generations.
Generation Z will need all the savings they can get, however, as auto insurance premiums continue to skyrocket. Insurance rates climbed more than 22% in the past year, according to U.S. Bureau of Labor Statistics data, and inexperienced younger drivers are generally the costliest to insure.
Although more members of Generation Z are pursuing the trades, more than half of Gen Z have entered the realm of higher education, according to Pew Research data. And compared with other generations, Generation Z student debt is much smaller thus far. That will change in the upcoming years, as some continue advanced degree studies, a more costly education than pursuing an undergraduate degree.
Most Gen Z borrowers planning to pursue advanced degrees have yet to enter a program or complete their graduate studies. Graduate-level education is often more expensive and can result in more student loan debt than undergraduate education, with borrowers typically not on track to begin to repay until their late 20s or early 30s.
While the average student loan balances of Generation Z are expected to increase in the future, these consumers will have more tools to manage monthly payments from the very start of their repayments, unlike other generations before them. Once fully implemented, it’s expected that a combination of income-based repayment plans and loan forgiveness programs for public service will help ease the burdens of education debt.
The way consumers spend their hard-earned money is changing for everyone, not just for Generation Z. (When’s the last time you wrote a check?) However, Gen Z is more keen than others to embrace electronic payments as well as new types of alternative credit that’s been cracked open by technological advances like buy now, pay later (BNPL) plans.
Generation Z is associated the most with BNPL, but their older brothers and sisters may be catching up. According to alternative credit provider Afterpay, three-quarters of both Gen Zers and millennials reported using buy now, pay later in the past month, versus only about half of Generation X.
Although some among the youngest consumer generation have bought a home of their own in the past couple years, mortgage payments are as high for them as they are for older recent homebuyers who likely have more discretionary income.
More likely, they rent. Some 70% of all rental households are millennials or Gen Z, according to Experian’s State of the U.S. Rental market report. Rental prices—where most young people first begin their financial journeys—are still increasing faster than the rate of overall inflation in most markets. One consequence: More young adults live with their parents or others (roommates) than they did 30 years ago, according to data collected by the Urban Institute.
As for Gen Z homeowners, many are facing additional challenges relative to other homeowners: higher borrowing costs. Nearly half are paying more than 5% annually in interest. Besides the larger monthly mortgage payments this implies, it also means that equity accumulates more slowly for these homeowners than others.
There is an upside, though. If mortgage rates fall far enough, there will be a ready-made market of Gen Zers willing to refinance their mortgages, activity that’s barely occurring today.
While mortgage rates and few homes to choose from are placing homeownership out of reach for many, regardless of age, reporting rental payments to credit bureaus could help a renter’s credit score in the meantime. As Generation Z are the generation most likely to rent, as well as most likely in need to thicken their credit file and potentially improve their credit score, having rents reported to credit bureaus is perhaps more important for those just starting on their financial journeys. Alas, adoption among property owners has been slow, and smaller landlords may not be as likely to report on time payments to credit bureaus.
If there’s one myth to bust about young people, it’s that they’re forever optimistic. According to a survey recently published by consultancy Deloitte, more than half of Gen Z report living paycheck to paycheck, and only 1 in 3 say the overall economic and social situation will improve in the coming year—a polite way of saying most don’t think things are getting better anytime soon.
Methodology: The analysis results provided are based on an Experian-created statistically relevant aggregate sampling of our consumer credit database that may include use of the FICO Score 8 version. Different sampling parameters may generate different findings compared with other similar analysis. Analyzed credit data did not contain personal identification information. Metro areas group counties and cities into specific geographic areas for population censuses and compilations of related statistical data.
This story was produced by Experian and reviewed and distributed by Stacker Media.
According to Forbes, the fast-growing ‘NoLo’ movement (no and low alcohol) is driving the demand for alternatives to alcoholic beverages. Luck…
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