Moderation is now firmly embedded in the beverage alcohol marketplace, with IWSR data forecasting no- and low-alcohol volumes to grow by +6% CAGR, 2023 to 2027 across the top 10 markets. This trend is driven mainly by health and lifestyle choices, with consumers opting to drink less alcohol overall, and/or choosing to moderate their frequency/intensity of alcohol consumption.
While it is true that legal-drinking aged (LDA) Gen Z and Millennial consumers are largely driving the moderation trend, there is clear evidence of people drinking less across older generations as well, with the current squeeze on disposable incomes playing a key role.
Two-thirds of adults are moderating their alcohol consumption
According to IWSR data, 64% of consumers across the top 10 (T10*) markets are now claiming to be moderating their alcohol consumption.
However, the proportion of consumers who are moderating rises to 75% among LDA Gen Z consumers and 70% among Millennials – both statistically significant increases on 2022 – compared to 60% of Gen X consumers and 54% of Boomers – both statistically significantly down on 2022.
“More no/low consumers in younger LDA cohorts are moderating in comparison to those in older age groups, who are more likely not to be moderating,” says Susie Goldspink, Head of No/Low-Alcohol Insights, IWSR. “This trend is evident particularly in Australia, Canada, Spain, the UK and the US, while markets like France, Germany and Brazil have a more even distribution among cohorts.”
Approaches to moderation differ amongst consumers – impacting overall volumes, intensity, and/or frequency of alcohol consumption. IWSR consumer research, for example, highlights attitudes such as “drinking on special occasions only” and “going out less”.
For younger LDA no/low-alcohol consumers, the choice to moderate does not necessarily translate to an “all or nothing” approach. These age groups are more likely than older cohorts to switch between alcohol and no-alcohol products either in the same occasion (“blenders”) or across different occasions (“substituters”). More Millennials are becoming ‘substituters’ across the markets studied, with an increase from 41% to 45% in 2023 in the proportion of Millennials drinking no/low on some occasions and full-strength on others.
Millennials are also more likely to choose low-alcohol alternatives when moderating, while Gen Z’s show a higher preference for soft drinks as their alternative. Opting for water is the most popular moderation strategy amongst Boomers.
Moderation by necessity
While LDA Gen Z and Millennial consumers are largely driving the trend for moderation as a lifestyle choice, the high costs of living and lower disposable incomes are prompting consumers of all ages to re-examine their alcohol spend and consumption as a result.
IWSR consumer research conducted in September 2023 shows that ‘economic moderation’ has become the main limiter of alcohol consumption in 11 out of 15 key beverage alcohol markets (T15), up from seven earlier in the year.
“Income pressures now appear to be the main driver of moderation, with consumers also looking to save money by prioritising ‘essential’ spend and going out less,” says Anastasia Timofeeva, Senior Consumer Insights Manager, IWSR. 1 in 5 consumers also say they buy larger formats and/or multi-packs in an effort to stock up when the price is right.
IWSR data on recalled grocery spend in the first half of 2023, shows shoppers are prioritising fresh produce and personal care products over alcohol and other discretionary spending items.
“Alcohol budgets are under pressure in most markets except China, India and Taiwan, with spending more focused on household essentials,” says Timofeeva. “Drinkers in Europe are cutting their spend across most FMCG categories – and, outside Asia, alcohol is one of the first items to be left out of the consumer basket.
“Economic worries, combining with concerns around alcohol, health and lifestyle, are shifting sentiment decisively in favour of ‘less but better’, or simply ‘less’, in most of the T15 markets.”
In many markets, LDA Gen Zs are the demographic who report feeling most affected financially, and are most likely to deploy money-saving strategies (such as changing retailers, buying cheaper online, or not buying at all) than any other age group in their search for the right price. While close to 40% of consumers (of all ages) across the T15 markets say they buy alcohol on promotion, this proportion is even higher amongst LDA Gen Zs.
“Younger age segments over-index in money-saving strategies partly because they are under the most pressure financially, but partly also because they are less loyal to a particular brand, category, and/or channel,” remarks Timofeeva.
Structural vs short-term shifts in behaviour
Uncertainty remains around whether consumers reducing their alcohol intake for economic reasons will increase it again when they feel more financially secure. According to IWSR consumer research from April 2023 (Bevtrac 2023 Wave 1), 24% of abstainers in the US, for example, say they may well return to alcohol, and this subset cites abstaining to save money as a more important driver than is the case for the overall abstainer population.
“IWSR data now shows clear moderation intent across all age demographics in more mature alcohol markets such as the US, and higher levels of abstinence in the younger LDA segments in many global markets,” says Richard Halstead, COO Consumer Insights, IWSR.
Participation rates in alcohol are lower among younger LDA consumers and generally higher among older consumers. However, the overall moderation sentiment isn’t just young people, it’s everyone – partly because of lifestyle, and partly because of economics.
“The moderation trend arises from multiple causes, and manifests in different ways, and our ongoing tracking will help us gain a more granular understanding,” Halstead adds. “But the increasing levels of moderation, particularly in the LDA Gen Z age group, imply that brand owners will need to adapt their long-term strategies to target the more health-conscious consumer. It’s a trend that’s likely to continue, simply because people are changing their lifestyle habits.”
*Note: The T10 no/low-alcohol markets include Australia, Brazil, Canada, France, Germany, Japan, Spain, South Africa, the UK and the US, which combined account for approximately 70% of global no/low-alcohol volumes.
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