Gen Z reshaping alcoholic beverage market with focus on innovation and variety

Generation Z is beginning to influence the alcoholic beverage market significantly. While many Gen Z members are still under 21, this group already accounts for 6% of total alcoholic beverage buyers, according to research by NIQ. Over the next decade, millions more from this generation will enter the market, making it essential for convenience store operators to understand their preferences and behaviors.

Gen Z consumers primarily purchase alcoholic beverages from traditional brick-and-mortar stores, with grocery stores holding 46% of the market share. This presents an opportunity for convenience stores to attract these young shoppers by adapting to their evolving tastes. Variety and innovation are key factors for Gen Z, who seek new flavors, packaging, and product formats. Ready-to-drink (RTD) cocktails, hard seltzers, and flavored malt beverages (FMBs) are particularly popular among this demographic. A Circana report highlights that younger adults are also drawn to soft drink brands entering the alcoholic beverage space.

NIQ's research shows that Gen Zers often consume alcohol in social settings, favoring hard seltzers, RTDs, and FMBs. Hard seltzers are especially popular, with 34% of Gen Z drinkers preferring them. Tia Wines, marketing director for BuzzBallz LLC/Southern Champion, noted that Gen Z is more inclined to try spirit-based seltzers and RTDs than traditional alcoholic beverages. Sean Colman of The Boston Beer Co. also observed that "Beyond Beer" products, such as flavored FMBs and RTDs, are gaining traction. These products now account for about 20% of convenience store sales and nearly half of new entries into the category.

Retailers are noticing these trends in their stores. Benjamin Hoffmeyer of Texas Born (TXB) reported a resurgence in malt beverages and a growing interest in exotic flavors like tropical spiked lemonades and Hispanic-inspired combinations such as pineapple, guava, and hibiscus. He also mentioned increased demand for drinks co-branded with popular names like Topo Chico, Jarritos, and Monster Energy.

The rise of FMBs and RTDs is impacting traditional beer and wine sales. For example, Boston Beer now generates most of its revenue from Beyond Beer products. However, this shift doesn't mean convenience stores should abandon beer and wine. Instead, they should focus on offering the right mix of products. Beer sales remain strong in the convenience channel, with Gen Z consumers showing interest in flavored beers, Mexican imports, and economy brands. Sparkling wines and those with fruity or sweet notes are also popular among this group.

Hoffmeyer noted that import and craft beers are gaining market share as domestic beer sales decline. Younger consumers are drawn to unique flavor profiles, and seasonal craft beer flavors continue to resonate with them. TXB has also seen growth in lighter wines like rosé and high-alcohol wine-based drinks.

While there is a growing trend of Americans drinking less and exploring nonalcoholic options, this movement has yet to make a significant impact in convenience stores. Hoffmeyer mentioned some growth in nonalcoholic beers, but the category remains small.

To stay relevant and attract Gen Z consumers, convenience stores need to adapt their merchandising and marketing strategies. Increasing the visibility of RTDs and other popular products is crucial. BuzzBallz's Wines emphasized the importance of dedicating shelf and cold storage space to these items. Hoffmeyer added that TXB is improving label visibility and grouping similar products together to enhance the shopping experience.

Highlighting new and unique items can also draw in Gen Z shoppers. Hoffmeyer suggested using signage for new products and allocating space in alcohol planograms for seasonal flavors and local craft beers. Limited-time offers have been successful at TXB, as customers enjoy trying different flavors throughout the year.

Another important consideration is the growing influence of female Gen Z shoppers. Sean Colman of Boston Beer pointed out that women now make up about two-thirds of Gen Z beer and Beyond Beer consumers, a significant shift from previous generations. To cater to this demographic, convenience stores should stock inventory that aligns with female shoppers' preferences, particularly in the Beyond Beer category. Female shoppers also tend to make more in-store decisions and have higher expectations for finding their preferred brands.

Store design can also play a role in attracting female Gen Z shoppers. Colman noted that poorly designed beer caves can deter female customers, while a thoughtfully designed space can foster loyalty. By understanding and responding to these trends, convenience stores can position themselves as go-to destinations for young alcoholic beverage consumers.