The industry should stop blaming generational differences for its woes and instead look to properly understand its upcoming customer base
Some years ago, I wrote a piece for Drinks Retailing called The Millennial Bug, defending Millennials against charges that they were destroying the wine industry. They didn’t. In the six years since, we’ve grown up, bought houses, had kids and started buying more wine – as I predicted. In fact, some reports show Millennials now buy more wine than Gen X. The faction that once blamed Millennials for the woes of the industry has now inevitably turned its attention to the generation below: Gen Z
Although there are clearly issues to address with the challenges of a new generation coming through, it was a relief to see some sense emerge in an April report by Rabobank, titled The Real Reasons Gen Z is Drinking Less. The report points to “a failure among journalists and industry analysts to distinguish between shifts in behaviour caused by life stage and shifts in behaviour caused by generation”. In other words, many of the supposed problems Gen Z are causing aren’t to do with them being born between 1997 and 2012, but because they are in their twenties. The oldest Gen Z won’t turn 30 until 2027.
There is a crucial difference between generational conditions, such as reliance on dating apps, or stage of-life conditions, such as being young and more interested in sex than terroir. Getting this muddled directs the industry to worry about the wrong things. If you think the problem with Gen Z is that they’re health obsessed, rather than that they’re young and poor, you’re going to come up with solutions to the wrong problems.
Just as with Millennials before them, those in the Gen Z cohort don’t have much money, security or space. Their twenties will be focused on building a career, meeting a partner and paying their extortionate rent before they start to think about building a wine cellar or dropping £120 on a sommelier pairing. The basic structural factors that shaped young people’s consumption a decade ago have remained – or worsened – for the same age groups today, regardless of what generation they belong to.
It’s true that some of Gen Z’s problems are unique. Most people learn to socialise and drink as adults at university – an experience Gen Z missed out on because of Covid. That reflects in the data and will leave a long tail of people who never learned to drink socially and who are now coming into the workforce. But that was a one-off shock and needs to be treated as such.
The good news is that many of the issues are industry driven and therefore within the industry’s power to address. Prices have risen steadily – not just due to inflation, costs and duty, but also because of premiumisation and wine-subsidised business models. Wages, adjusted for inflation, have flatlined since 2008. Meanwhile, a glass of Vinho Verde in a restaurant now costs what Champagne did a decade ago. Rather than scapegoat a younger generation, the industry needs to get real about the effect this is having on the ground.
But there is hope. When you look at the share of after-tax income spent on alcohol, Gen Z (somehow) still matches Millennials and Boomers – and even exceeds Gen X. Spirits are doing well, too, with Diageo reporting that Gen Z is entering the category faster than Millennials did during the gin boom. It’s important brands and retailers who seek to engage Gen Z focus less on dubious insights drawn from Instagram and more on income, demographics and real cultural context. Gen Z may turn out to be quite good customers further down the line – but not if the industry keeps treating them as the problem rather than the solution.
