Why Younger Consumers Are Cause for Concern in Alcoholic Beverages Category 

NATIONAL REPORT — There are countless studies examining the shopping behavior of younger generations and the effect on the retail industry. Now, as Generation Z comes of age and millennials continue to wield extraordinary spending power, convenience store retailers need to begin looking at their impact on the beer cave.

"Attracting millennials into the alcoholic beverage category remains a priority for suppliers, distributors and retailers," said Matthew Crompton, client director at Nielsen CGA, a joint venture between Nielsen and CGA Strategy. "From our latest On Premise User Survey, the results are clear in one thing: the millennial age group (21-35) is diverse in itself — with differences that marketers need to take note of, now."

Part of the problem facing the convenience channel is the tendency to pigeonhole all consumers in demographic buckets, without taking into account that not all consumers of similar ages think and act alike. For example, a 21-year-old college student is going to have very different motivations to enter the alcoholic beverage category compared to a 33-year-old father of young children.

In Pooler, Ga.-based Pump-N-Go's experience, the purchasing patterns do differ for younger alcohol buyers — especially those in more affluent areas — from older consumers.

"Craft beer is certainly one of our most viable choices/options for younger consumers," said Yash Desai, president and chief operating officer of Stature Investments and owner of Pump-N-Go, a growing chain of convenience stores across southeast Georgia, currently with 15 locations.

However, there are some similarities in the purchase results of younger adult consumers, too, according to Desai.

"In general, millennials and Gen Z are much more interested in authenticity and making an informed purchasing decision. They will actually study the ingredients, read labels, etc., in the store; and, in fact, have probably read online consumer reviews at home to give them purchasing direction," said Desai. "By the time they make it to the point of transaction, they believe the choice they've made is the best."

Trouble Brewing?

When it comes to Gen Z, it may not be what they are buying that should raise eyebrows, but rather what they are not buying.

A report earlier this year from Berenberg Research found that members of Gen Z are not only drinking less alcohol than the generations before them as they grow older (64 percent of Gen Z respondents said that), but they also expect to drink alcohol less frequently than older generations currently do. 

Dubbing those born between 1995 and 2007 "the sober generation," Mintel's Caleb Bryant said these consumers are more pragmatic and responsible than older generations. In a blog post this spring, Bryant, senior drink analyst at Mintel, cited research that attributes this to a childhood shaped by the threat of terrorism, mass shootings and political unrest.

For example, 67 percent of iGens — what he refers to those born during that time period as — say they avoid unhealthy activities such as excessive drinking and smoking, compared to 56 percent of millennials, according to Mintel's U.S. research on natural consumers.

This presents a hard equation to solve: less consumers in the alcoholic beverage category, yet more players continually entering the space.

"The challenge for both on- and off-premise retailers when it comes to selling the alcoholic beverage category is that competition is now no longer just the other bar/store/restaurant on your street — it is also the coffee shop, juice bar and even the gym," Crompton of Nielsen CGA explained.

Download our full report, "Pouring Over Decisions," by clicking below.