Behind the Bar The Business of the Bar

How the Spirits Industry Is Connecting with the Next Generation of Drinkers

Reaching Gen Z—and its spending power—holds a specific set of challenges for drinks brands.

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Liquor.com / Laura Sant

Generation Z’s oldest members will turn 25 sometime in 2022. By definition, this means one-third of the generation will be of legal drinking age by the end of the year, a big enough chunk to start digging into the data concerning their drinking habits. It’s critical information for drinks brands to understand: Studies indicate people born between 1996 and 2010 make up a whopping 40% of the general-consumer base, representing over $140 billion worth of spending power. 

For the spirits industry, these metrics represent a near-perpetual growth opportunity, as the laws of time produce fresh consumers every day. At the same time, figuring out how to reach this burgeoning demographic with a bourbon or a canned cocktail, particularly as its members emerge from the shadow of the mighty Millennials, presents several unique challenges. 

What Interests Gen Z?

The spirits industry is still in the getting-to-know-you stage with Gen Z. This is largely due to the generation’s currently small sample size. “It’s important to recognize where we’re at with Gen Z,” explained Casey Nelson, the group brand director at Jack Daniel’s. “[The age of] 25 is the generation’s high end, and we do not do trend analysis for anyone underage, so we’re only talking about a maximum of four years of people that we can research.” 

Still, enough information exists to paint a foundational profile on this relatively new yet burgeoning clientele. One of the biggest takeaways thus far is that strategies that may have worked for Millennials when they became legal drinkers—or any other generation, for that matter—simply won’t work for Gen Z due to the sheer amount of choice on the market now. “When I hit the legal drinking age in the mid-2000s, bourbon and craft beer made up the vast multitude of market space,” says Neal Cohen, the CMO and co-founder of the canned cocktail brand Tip Top Proper Cocktails. “That’s no longer the case.”

The options are nearly overwhelming for the Gen Z drinker: legacy brands that may have been enjoyed by their parents or even grandparents; craft brands that hit the shelves during their teenage years; RTDs that seemingly flooded the market soon after they turned 21, including canned cocktails produced by legacy brands like Jack Daniel’s. These myriad choices practically demand that brands create a memorable marketing strategy that can connect with Gen Z, oftentimes in a way that transcends the juice in the bottle.

This leads to the second key takeaway: When it comes to Gen Z, a brand’s story is crucial. It can’t be any story, either. It must be an authentic account built around real people and free of aspirational fluff. If the narrative highlights charitable activities or engagement in key social responsibility efforts such as sustainability, diversity, and inclusion, even better. Whatever the story ends up being, it has to be one that can be properly vetted and verified through online research—something that tech-savvy Gen Zers have no problem doing. “Gen Z is hardwired to filter through B.S.,” says Rob Cordes, the head of marketing at Garrison Brothers Distillery. “They care about authenticity and a company’s moral footprint, and they also tend to ask more questions about what brands are doing. As a consumer, once you start to go down that path, you can’t go back.”

The desire to tap into Gen Z through these types of tales has already left a profound impact on branding strategy. Last year, Jack Daniel’s launched “Make It Count,” a global ad campaign that stepped away from the brand’s traditional Lynchburg-centric narrative and emphasized personal, purposeful life experiences built around brand consumers. It’s an unprecedented step—“Make It Count” is the company’s first-ever global campaign—but Nelson says shifting the accompanying narrative to align with the times is part of the brand’s legacy.  

“Our brand’s connection to music is a good proxy to show how we’re always evolving,” says Nelson. “In the 1940s and ’50s, we were the brand of Frank Sinatra. In the ’80s, we were the brand of Lemmy [Kilmister from the heavy metal band Motorhead]. In the 21st century, we’re closely associated with country music and hip-hop. Our strong trademark gives us permission to continually modernize our story, and we feel extremely fortunate that we can do this.” 

How Is Gen Z Drinking? 

Gen Z is drinking less than Millennials and other generations thus far, in terms of both frequency and per drinking session, and a bumper crop of headlines promote reports that emphasize precipitous drops in generational drink volume. Yet this doesn’t mean the younger generation is barreling toward teetotalism, as some of the more sensationalized stories suggest. While its members aren’t drinking as much due to reasons including increased health conscientiousness or a desire to protect their image on social media (think “drunk posting”), they are taking a “quality over quantity” approach when they do decide to drink.

This perspective dovetails rather well with the industry’s growing emphasis on spirits premiumization. It also allows brands to lean into some timeless strategies that can organically connect new customers to their labels. For instance, building a strong on-premise presence remains an important part of the outreach strategy. A well-placed bottle on a back bar shelf can still spur an education-fueled conversation between a bartender and a curious guest, and some see this old-school method as particularly effective in introducing their juice to newly minted drinkers. “Gen Z is more culinarily curious,” says Cordes. “They aren’t steak-eaters who are already set in their ways. They’re more open to trying new things, and that includes trying new spirits.” 

Satiating this curiosity also tends to be a solid angle in the RTD sector. This is especially the case when brands promote cost-effectiveness, since Gen Zers, new to the workforce, typically don’t yet earn as much as members of older generations do. “A cocktail at a bar can cost someone $15 or $16, which may be enough of a price barrier for someone from Gen Z to try something new,” says Cohen. “A canned cocktail can cost them only $5 or $6. That may be low enough for them to try. When they do, it can start to become somewhat educational, as they’ll start figuring out their preferences.”

As one might expect from a demographic in their early-to-mid-20s, Gen Zers want to have a good time whenever they do choose to drink. The abundance of spirits and spirits-based options fits this mindset well, particularly within the RTD sector, where convenience couples with cost-effectiveness to make it easy for the burgeoning demographic to cut loose on their own terms. 

This behavior has seemingly come at a cost in other areas of alcohol: Numerous studies indicate Gen Z would rather explore RTDs and different spirits categories than get into beer and wine. This is a trend that some see growing stronger as the generation ages. “Gen Zers may have started out drinking beer, but as their palates continue to mature and more spirits and spirit-based options hit the market, they’re not going back,” says Cohen. “They’re going to continue looking forward, to see where they’re going to go next.”

Where the generation’s members eventually may go is an unknown quantity, and it won’t be fully known for quite some time. Gen Z’s youngest members won’t turn 21 until 2031. What their drinking habits ultimately look like when they reach that threshold, or what the drinking habits of the generation that follows Gen Z may look like, isn’t too much of a concern for most of those in the spirits industry. “For 150 years, we’ve built strategies to remain relevant without alienating old customers,” says Nelson. “We’ll continue to pivot when necessary, but we’re confident we’ll remain relevant in the future.”