In California, a desperate winemaker sets fire to his vineyards. Over a billion litres of whisky languishes in cases in Scotland, never to be drunk. Closer to home, nearly 50 Australian craft breweries have collapsed over the past three years, while Treasury Wine Estates, the company behind Penfolds, recently recorded a $1 billion loss.
The alcohol industry across the world is facing a moment of decline, driven by changing consumption habits and a generational embrace of wellness culture. Global spirits behemoths such as Pernod Ricard and Diageo are grappling with what analysts term a โbig tobaccoโ moment โ collapsing valuations reflecting a sense that the current trend towards temperance will never turn around.
Much of the blame for this shift is pointed at Gen Z, typecast as either joyless, socially isolated losers or earnestly health-conscious kids determined to break the hedonistic habits of their forebears, depending on who you ask.
While itโs true that people born between 1997 and 2012 are 20 times more likely not to drink than Baby Boomers during the same life stage, it would be both reductive, and existentially risky, for the industry to pin this shift solely on the Zoomers.
In Australia, alcohol consumption has been steadily declining, across pretty much all cohorts, for the past two decades. The local wine industry has also been battered by the increasing uptake of GLP-1 weight loss drugs such as Ozempic among its core demographic of middle-aged drinkers. After years of both sluggish disposable income growth and high inflation, consumers are increasingly turning away from products they view as a luxury. And according to one industry insider, alcohol is simply not a necessity in such an economic environment.
โThe sector likes to say that alcohol is part of Australian life, but if people donโt have money to drink, they donโt drink,โ he said.
Also complicating the picture is the fact that while overall alcohol consumption is declining, we are also seeing a change in when people drink, and what they drink. While beer has struggled, there has been a surge in consumption of ready-to-drink (RTD) pre-mixed beverages such as seltzers and โspikedโ soft drinks, despite the teal independentsโ war on Hard Solo. Australians spent $2.5 billion on RTDs in licensed venues last year, and their popularity among younger consumers seeking a sweeter, sleeker product has become a lifeline for the booze sector.
Some manufacturers are looking towards emerging markets. Those Scottish distillers struggling with their whisky glut are looking hopefully to India, where a younger, growing middle class is shaking aside older generationsโ traditional hostility to drinking.
The local industry believes that punters are centring their drinking on specific occasions, rather than daily consumption.
โIt used to be normal to sink three to four beers before bed after work. Now people are going a few days without drinking, but when they do go out, they say: โIโm going to have a real go at it, have a good time,โโ the industry insider said.
This is a key point. While daily drinking might be falling, even the sober-curious may see alcohol as a social lubricant, strengthening friendships, dissolving grievances and bringing a pop of joy to lifeโs duller moments. A greater awareness of the health risks from excessive consumption hasnโt stopped people from enjoying social drinking.
And itโs why the biggest success stories for the industry have been the brands that have tied drinking to a specific social moment. About a year and a half ago, everyone began drinking Guinness. Social media feeds were flooded with videos of influencers attempting to โsplit the Gโ, where oneโs first sip of a fresh pint of Guinness leaves the remaining liquid exactly in the middle of the company logo on the glass. This is the kind of viral trend that can only really be done at a pub with friends. The company recorded a 13 per cent rise in global sales last year, with 41 million pints sunk in Australia, at a time when beer has struggled.
There is something mildly optimistic about the rise of Guinness. While many well-meaning public health types treat Gen Zโs sobriety as a victory, it is seen as a tragedy by others. It is hard to decouple young peopleโs disinterest in booze from a terror of their looser moments being exposed on social media, from the crushing rates of loneliness, and the fact that nights out that past generations took for granted are now simply far less affordable for 20-somethings.
Never, perhaps, has there been a generation more in need of a drink. Even if it is a viral social media trend thatโs driving them back to the pub.
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Kishor Napier-Raman is a senior business writer for The Sydney Morning Herald and The Age. Previously he worked as a CBD columnist and reporter in the federal parliamentary press gallery.Connect via X or email.From our partners
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