Young people aren't drinking less because they're health nuts—they're just broke. New data shows Gen Z spends 30% less of their income on alcohol than millennials did at the same age. Is this the end of premiumization or just the beginning?
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Speaker 1 (00:03):
There's more opportunity to market to women
with a college degree.
They have money to spend and Ithink in a lot of ways, because
identity is complicated andfluid.
Marketing to women isn't goingto alienate boys and the example
I would use there is hardseltzers.
Speaker 2 (00:19):
Hello friends, old and new, and welcome to Drinks
with Caroline.
I'm so happy you've joined mefor what I believe will be
another stimulating conversationwith an industry expert,
founder or otherwise fabulousperson in the consumer industry.
Good morning, burkhard, andwelcome to Drinks with Caroline.
(00:40):
I would like, for my listeners,to introduce Burkhard Nessin,
who is an industry analyst inthe beverage sector at Rubber
Bank and has put out aground-shaking report on Gen Z
and drinking habits, and what Ilove about Burkhard is that he
comes out of the academic fieldand has written a very
(01:02):
data-driven report with somesurprising conclusions.
So, burkhard, before I let youtake it away, just one last
thing.
You co-host a great podcastcalled Liquid Assets with some
of your colleagues at Rabobank.
I've really been enjoyinglistening to that, and please
fill us in on some of thefindings from your newest report
(01:25):
.
Speaker 1 (01:25):
Thank you for mentioning liquid assets and, if
I'm not mistaken, we're tryingto get you on the show to talk
about what it means to be a goodboard member.
Maybe we'll get that on.
And thanks for talking aboutthe report.
I've been doing my job forseven or eight years now and
written a lot of stuff.
Maybe one other report I'vewritten has broken through the
way this one has, and I thinkthe reason it's broken through
(01:47):
and the reason that a lot ofyour listeners might have read
this is because there's realmeat on that bone.
The inspiration for the report,which is about Gen Z they're
drinking, but I think it's amuch bigger conversation about
what it means to be a kid thesedays and how that influences
behavior in a much larger lookat demographics.
A lot of the writing about GenZ is simplistic, it's high level
(02:08):
and it's way too broad.
I don't think that it'sactually actionable to say young
people care about health, thehealth and wellness generation,
and I actually don't think thatis even the right way to think
about that.
I actually don't think, even atthat high level, saying that
Gen Z is all about health andwellness is all that correct.
Speaker 2 (02:27):
Phenomenal.
Yes, I love the fact you'restirring the pot and doing it
with data.
So could we touch on some ofyour key findings?
And you have some great chartsthroughout the report.
We're not going to share thosehere, but I think if you could
just start with the firstfinding and maybe walk us
through the other key items, andI'm sure we'll have a lot to
(02:48):
talk about as you do that.
Speaker 1 (02:50):
Yeah, the report was inspired.
A shout out to Lawson Whitingyou were an equity analyst,
carolyn right, yes, yes I amproudly not an equity analyst.
I will avoid reading publiccompany reports as often as
possible because I tend to findthem to be quite boring, but
also that the informationdelivered by public companies
tend to be evasive.
Right, they'll say all thesecomplicated words, but they're
(03:13):
actually not saying that much.
But I really appreciated LawsonWhiting's approach to the way
he conducted his calls, becauseI felt like they were actually
informative and earnest attemptsto deliver clear information.
So shout out to him and who'she with.
So he's the CEO of Brown Foreman, the owner of famous American
bourbon brand Jack Daniels,among many other things.
So an executive who actuallydigs deep and comes out with new
(03:36):
and interesting information toshare with the street, yeah,
which I just was appreciative ofbecause it was a more
interesting call, and heactually said something to the
effect of we're, as an industry,so freaked out about Gen Z and
the fact they'll never drinkalcohol, and we have some
internal research showing that abig part of that is just they
don't have any money.
And I said, is that trueEssentially?
(03:57):
And I just tried to do thislittle fact checking and the
answer is yeah, he's kind ofright.
Gen Z is essentially poor.
Speaker 2 (04:05):
I think you used the word broke.
Speaker 1 (04:07):
Broke, yeah, but I also would just add that you
know Gen Z is broke, but so wasI when I was in my twenties, and
so were you when you were inyour twenties.
I remember bouncing a checktrying to buy rice in college.
I was paying with a check.
I'm still in my thirties, so itprobably was a me thing, not a
society thing, to not have adebit card, at least at that
point in my life.
Speaker 2 (04:26):
Oh yeah, I would freewheel downhill to save gas
money.
Speaker 1 (04:30):
Yeah, exactly, it was an interesting time, but there
was a shop in thrift stores.
You know, I didn't have anyincome right because I was at
school, like it was just tight.
And so I think, really one ofthe big insights, that I really
wanted to help the industry andreally any industry I write
about beverage, alcohol mostlybut any industry needs to
understand that young people maydesire premium stuff, but
(04:51):
they're broke, and so it's not aunique thing to Gen Z, but
they're certainly not having themoney.
And as these people get olderand they get college degrees and
college degrees are ostensiblyvery useful because as long as
the future earnings of thatdegree are greater than the debt
you incur to get it, then it'sa very smart thing to do.
And so as people get thosedegrees which they can't get
(05:13):
until they're their mid-20s in alot of cases, and get deeper
into their careers and get pastthat debt, they don't have the
money to buy the stuff they want.
Speaker 2 (05:20):
Right and, as you said, that's always been true.
But there's something differentnow.
Speaker 1 (05:25):
Yes, I'll get to that , but I do want to reinforce
this idea that, like what andI'll ask you this because it's a
fun quiz question what is themost important driver of brand
loyalty?
Like from an economistperspective, like, what is the
number one thing that drivesbrand loyalty from a consumer
demographic characteristic?
Speaker 2 (05:44):
In the beverage business.
I think about the badge valueof what you carry.
Speaker 1 (05:48):
It's a trick question , because the answer is income.
If you have enough money to buywhat you want, you buy what you
want.
And a case I always use as anexample is like I don't ever buy
a different brand of toiletpaper.
I always buy the exact sametoilet paper because I don't
care what the next brand is onsale.
My price elasticity is out ofcontrol because I have enough
money to buy my favorite brand,and so as you get older, your
(06:11):
brand loyalty increases.
Maybe not because you just buywhat you want and young people
don't have the money to buy whatthey want, and as they get
older, that will happen.
But as I dug a little deeperinto this and said, yeah, young
people are poor and I thinkthat's really important to
strategy for companies, becausethey need to understand that,
hey, these people are lookingfor value.
They're just not going to beable to afford that fancy
non-alcoholic drink.
(06:31):
If they're drinking alcohol,they're probably looking for
something that's affordable andalso serves their actual, the
way they drink, which is mostlypartying.
But if you dig deeper, youactually see that there is
something unique to Gen Z.
It's not just that they're poor, but they're spending the same
amount of income on alcohol asprevious.
Speaker 2 (06:48):
Why is it if this, as always, is being driven by
economics?
They don't have much money.
Why aren't value brands doingbetter and why does the
premiumization trend continue?
Does it mean that companieshave missed the opportunity to
make the value brands more cooland more applicable?
Speaker 1 (07:07):
I think so.
The great example is somethinglike wine, where they've
continued to struggle withengaging younger consumers, and
one of the things that's widelyunderstood in that business is
the wine industry has failed todevelop products at lower price
points that have appeal, andyoung people don't want to go
work for the wine brands thatare affordable.
Right, you know, reallycreative, smart people don't
want to work for dead and boringbrands and they're not
(07:30):
necessarily getting theopportunity to do interesting
stuff with those brands anyways.
Speaker 2 (07:34):
That's a really interesting point.
So exactly where there is theneed for youth and creativity
and new ways of thinking are thebrands people don't want to go
and work for.
Speaker 1 (07:46):
Everyone wants value and I really tend to find the
products that outperform in themarket.
We had Liquid Death on ourpodcast and you know, I know
they were a premium water brand,but I actually went and saw the
price after we spoke to themand I was like, wait, what?
This is premium, like $1.50 fora can.
And it was an amazingrealization that it's like
(08:07):
actually, no, it's pretty darnaffordable, especially because
what I'm drinking right now islike a sparkling hop tea that
costs $3 a can and it's justexpensive, right.
A 20-year-old me just wouldn'tbe able to buy that.
And so, yes, young people arebuying expensive things and
splurging on stuff, but if youwant to build habits with people
when somebody's lifelongsupport, and you want to do that
(08:30):
when they're young, you need tomake it affordable so that they
can not just buy it once butbuy it again and again.
And I just really get frustratedwith all the innovation is
tending in our industry to comefrom these high cost per serving
products that are reallypremium and kind of weird and
often like lower alcohol, and Ijust go like that's not what
young people need, and I thinkthe industry ends up looking at
(08:52):
these high level numbers andsaying you know, hey, young
people are drinking less alcohol, which is true, and they want
more premium products.
Let's give them something lowalcohol and high cost and it's
like.
Well, these people are poor and, yes, fewer young people are
drinking than 10 or 15 years ago, but those that do drink still
drink like twice a week anddrink it in the context of a
party, which means they stillwant to like.
(09:14):
They're not necessarilydrinking a glass of wine with
dinner, right, the occasion isquite a different one, and I
think a lot of executives justforget to remember what it was
like to be in their 20s.
Speaker 2 (09:23):
Yeah, very good point yeah.
Speaker 1 (09:25):
And that's a real problem.
Speaker 2 (09:27):
So what's happened to underage drinking?
Speaker 1 (09:29):
In this report I dived into the question of
underage drinking, and whatinspired that was the fact that
I'd done this research to showthat Gen Z's got less money, but
then not only they have lessmoney, but they're spending
about the same share of thatincome on alcohol as millennials
and boomers at this time.
But millennials, when they werethe age of Gen Z, were spending
(09:51):
about 30% more of their incomeon alcohol than Gen Z is, and so
the question is why?
What is the driver behind that?
And I think one of the bigdrivers is that young people are
delaying or this generation,which is a continuation of a
trend before that, are startingto drink alcohol later in life
(10:13):
that underage drinking hasfallen off a cliff.
I mean like a cliff that thenumber of high school seniors,
according to US government data,that get drunk has gone down by
half in just a couple ofdecades.
So half of the number of highschoolers that do the survey are
drinking compared to the early90s.
Speaker 2 (10:31):
So that's a win.
I mean, that's a nationalhealth win and probably
international health win.
Speaker 1 (10:37):
Like this is the problem, so writing about this
was deeply uncomfortable.
I write about the industry andI have an academic background.
I by virtue of not being anequity analyst my compensation
isn't tied to the bank doingbusiness with beverage companies
, right so I feel like I have alittle more objectivity right,
where I can write about stuffthat I'm not an industry
(10:58):
advocate.
I feel like I'm an industryobserver, and so writing about
underage drinking is really hardto do, because I think you're
right the industry.
What should you do aboutunderage drinking?
Nothing.
You should continue tocelebrate and tell people that
are underage not to drink.
That is very simple.
The driver of those declinesand, perhaps, more disturbingly,
the drivers of the decline inunderage drinking are likely
(11:30):
things that are having profoundand negative effects on young
people's lives.
Speaker 2 (11:34):
That's a pretty different twist on things.
So, yes, please share with us,ricard.
Speaker 1 (11:40):
When it comes to why is underage drinking declining,
I think a lot of it has to dowith technology and really what
it means to be a kid.
So one part of that isunderstanding that underage
drinking isn't the only thinggoing down.
Young people are having, again,a weird thing to talk about,
but young people are having lesssex, they're doing fewer drugs,
they're drinking less alcohol,and yet the probability of
(12:03):
having a major depressiveepisode in your teens,
especially for girls, is higher,has like doubled in the last 10
or 15 years.
And though I think every publichealth person is careful to
avoid describing something thatisn't supported by research,
everyone kind of is pointing thefinger at the same thing, which
is cell phones, and so whatyou're seeing is that there's
just less in-person interactionsfor one, and that's supported
(12:26):
by data.
So that if we actually look atunderage drinking, that takes
place in social context.
That's where most of thedeclines are, and over the last
10 or 15 years, the share ofunderage drinking occasions that
are by themselves kids bythemselves is becoming a larger
share of drinking occasions.
That drinking alone is notdeclining.
It's actually drinking alone isnot declining.
It's actually social drinkingthat's declining.
Speaker 2 (12:47):
Right.
So, burkhard, though, thatdoesn't feel like that's ever
going to get better.
No, and when I say betterthat's a loaded word, I don't
mean better, I just mean change,because it means that there's a
group of young people Gen Z nowand the next ones after them
who won't be used to number one,social settings and number two,
(13:13):
drinking much alcohol.
So is that bad for the futureof?
Speaker 1 (13:14):
alcohol.
So young people are starting todrink later in life and it's
not just because they're notsocializing, but it's also
because, you know, they havetrackers on their phones and
their parents know where theyare.
I think a big part of mychildhood was I did go and party
in the woods as an underage kidand no one knew where I was.
Right, I said I was at Kyle'shouse and I was in the woods.
Today, every friend group has amillion parents looking at
(13:35):
their kids and so, even if youdon't get caught, one of your
friends will and they'll open achat group and say, hey, where's
Billy?
He's not home, and then you'llget caught.
But then also there's the riskof getting caught by school
administrators.
Right, it's one picture thatsomebody sees and you get kicked
off of the sports teams or youget kicked off of the chess club
.
There are real and immediateconsequences to drinking that
(13:57):
are changing the calculus, Ithink, for young people to drink
and so they're choosing not to,that doesn't mean they think
it's less healthy or think it'smore dangerous.
Actually, the data suggests thatyoung people don't think that
binge drinking on the weekendsis more dangerous than they did
20 years ago.
So the reason I'm describingthat is because you asked about
what is this generation going todo in the future, and those
(14:17):
conditions of surveillance andloss of privacy are going to go
away as these people get older,and so, on one hand, the
limitations on drinking aregoing to go away, but at the
same time, drinking and culturearound drinking isn't going to
be as big a part of thesepeople's identity growing up,
and so it's two differentbalancing factors.
(14:39):
One is saying like, yeah,they'll drink more later.
And the evidence is actuallyyes, they do, they catch up.
So underage drinking has beendeclining for two or three
decades, but by the time peopleare in their 30s, the share of
the population that regularlydrinks alcohol is
indistinguishable from previousgenerations.
Speaker 2 (14:55):
So that is a really important point.
Looking at what Gen Z is doingnow doesn't seem to predict that
they will drink less alcoholthan current generations as they
age.
Speaker 1 (15:06):
Yes, and I think that's a win for the industry.
Right, oh, we get to seeunderage drinking go down.
Did we cause that?
No, but it's good Like we'rebenefiting from it and our
products are benefiting from it,and young people tend to drink.
When they drink, they tend tobinge drink because they're
partying.
You know, that has a reasonthat that's.
A big part of the industry'sharm reduction framework is
people get hurt, you can fall,you can drown, you can get in a
(15:27):
car crash.
So we don't want people todrink too much, we want them to
drink moderately, and peopletend to drink more moderately as
they age, and so if we'reessentially allowing people to
start drinking later in life andthey're going to eventually
drink at the same levels withthe incomes that correspond with
that right, so we can actuallyget those premium dollars, this
(15:51):
seems like a win for theindustry.
I would caveat the optimism bysaying, up to this point, the
fall in underage drinking hasnot correlated with the decline
in consumption once people reachmiddle age.
However, that trend doesn'tseem to be holding quite as much
, and I really think that we canall look at our lives today and
say there just doesn't seem tobe the same number of occasions
to drink.
I was organizing a panel with abunch of Gen Z people to
(16:13):
actually talk about this reportand their experience with
growing up in today's world, andI asked a lot of people think
that what's going to happen is,once you get into an office
environment and you have to hangout with people, you're just
going to, as a generation, belike, what do we do?
How do I interact with thesehuman beings that I don't know
that well, in a way that feelslike normal, and what we assume
(16:38):
they'll do is they'll go fordrinks.
But in the panel I kind ofrealized and this is true in my
own life there are no drinksanymore, office drinks, office
culture has changed, and so I dothink that the fact that we are
spending less time with otherpeople and spending more time
alone in general is going tostart to perhaps cut into that
trend that's held steady to thispoint and that as we get older
(17:01):
and we have fewer reasons tospend time with people, those
social occasions aredisappearing for drinking with
friends and at colleges.
Speaker 2 (17:08):
One of the culprits cited for less alcohol
consumption in general ismarijuana, and there has been
some legalization the stigmaappears to have lessened.
How much do you think of lessdrinking by young people?
Legalization the stigma appearsto have lessened.
How much do you think of lessdrinking by young people?
Legal age, but young is drivenby switch to marijuana based on
(17:28):
the view that it's nowhere nearas bad for you and nor are
mushrooms and nor other drugsthat alcohol is the worst drug.
Speaker 1 (17:36):
I don't have great evidence.
If I had to guess, I would sayzero.
Speaker 2 (17:39):
Wow.
Speaker 1 (17:40):
It's a very non-consensus view, but I think
a lot of the industry doesn'tunderstand how drugs work.
One of the reasons I startedexploring this was because I was
like I wonder, when per capitaalcohol consumption was kind of
starting to dip a little bit inthe United States, I was like,
could this be driven by theopioid crisis and would opioids
impact alcohol consumption?
(18:00):
The opioid crisis and like,would opioids impact alcohol
consumption?
And I started asking publichealth officials how they
thought about it and theyexplained this thing which, in
the context of drug uses, iscalled comorbidity.
Right, and that is just thefact that this is going to be a
loaded and a simplistic term,but all drugs are gateway drugs.
Caffeine if you drink caffeine,you know, according to research,
you're far more likely to bethe kind of person that would do
(18:22):
much harder drugs, right?
These linkages are just veryintense, and so people who drink
just tend to also use marijuana, and people who use marijuana
also tend to drink, becausethere's something inherent about
that is open to risk.
Right, they might be lessreligious.
There might be all these otherfactors at play, but there is a
lot of scientific research onthis and they show essentially,
(18:44):
for young people, it's kind of awash right.
There's some people that mightnever have done any drugs or
done any alcohol, that triedusing marijuana once, and then
they go.
Oh wow, altering my mind stateis an interesting experience.
I want to do more of that Rightand and and so they start
drinking.
Or maybe you create this friendgroup that smokes but they also
(19:07):
drink some and you hadn't beenexposed to that before, and so
you can imagine, for youngpeople like this, actually there
might be an issue of them beingcompliments, but, but I think
that's a that's a very academicway of talking about it.
I'd rather talk about it in away that I think is more
intuitive to an audience thatisn't as in the weeds as I am.
Speaker 2 (19:25):
One thing strikes me when you say that it's not an
either or for many consumers asif you're doing one, you're
probably doing some of the otheras well is that it feeds into
this concept that consumerstoday are used to choice.
They want choice, they desirechoice, they want change.
They don't want to buy the samedrink over and over again, just
like they don't want to buy thesame food over and over again.
(19:46):
So we've become much moreinterested in different and
exotic than we ever were in thepast.
So that would actually say itis.
And I come at that just becausea lot of beer companies and
distributors are longing to getinto cannabis-based drinks when
it becomes legalized and you canbank it legally.
Speaker 1 (20:09):
I think we need to remember two things on that
front.
One, people were usingmarijuana before it was
legalized, and so the questionisn't what do people that use
marijuana like to drink?
It's what do people that didn'tuse marijuana before it was
legalized that start usingmarijuana because it's become
liberalized?
What do they drink and how doesthat change their behavior?
Because somebody buyingmarijuana from their dealer and
(20:29):
then switching to an officialchannel isn't actually changing
their consumption.
We're just measuring it.
So I think it's reallyimportant to kind of think
through things that way and lessabout like, and that's why I
think a lot of the beer stuffyou know the industry gets
scared, the beer industry getsscared about marijuana use and
they see that.
You know the people that smokemarijuana are more likely to be
beer drinkers.
I don't necessarily think that'salso what the new consumer
(20:52):
looks like.
When I think about what issomebody who wouldn't use
marijuana where it's illegal andwould use it where it's legal.
I think that is a profile of aconsumer that's gonna be older,
someone with real risk, like ifyou're doing something illegal
and it could lead you to losingyour high paying job, where you
have kids and you just can't gomeet an illegal drug dealer.
You've matured out of thatelement of your life Like those
(21:14):
are the things that I'm moreinterested in understanding,
less so about, like those simplesurvey questions.
But coming back to this ofwhether or not marijuana is a
threat to alcohol, there's beenno data from any state that's
legalized marijuana showing anymeaningful change in the
trajectory for alcohol sales.
So we have a lot of data onthis and it just has showed that
there might be effect, but it'sso small, it's not measurable.
(21:34):
But when it comes to whether ornot people are choosing to
smoke instead of drinking, Itend to think about it as not
always being clearly causedconnected to one another.
I don't think consumers have abag of marijuana in one hand and
a beer in the other and have tolook at both and calculate
carefully which one they'regoing to do.
Society is changing in ways inwhich we're socializing less.
Speaker 2 (21:58):
And that is actually the overarching issue for the
drinks world, I think.
Speaker 1 (22:03):
For every industry, for public health it's also the
biggest one.
I'm lonely in my own life andloneliness is just the stress of
unmet social need.
So it's just this issue of allof America's in a health crisis
of loneliness.
And alcohol is, by nature, athing that you know.
If you're drinking alone andyou're just having a glass of
wine with dinner, then likethat's one thing, but a lot of
cases, if you're drinking alone,it's not because you're having
(22:25):
a good time, and so if youaren't socializing and you're
not hanging out with people,there are just fewer occasions
to drink and people aren'tsaying I don't want to drink.
They're just not doing stuffwith people and they're not
having these parties.
Whereas marijuana you look atthe data on it the majority of
consumption of marijuana isactually with people by
themselves.
(22:49):
And the thing that people don'tlike about marijuana there's a
lot of people who have triedmarijuana in the US.
Like 60% of the population hastried marijuana at least once,
but only like 10 or 15% of thepopulation actually uses
marijuana at least once a monthin the United States, and that's
because it makes you anxious,it makes you socially awkward,
and so it's not a drug that'sparticularly conducive to
socialization.
It's why it doesn't show up atparties.
It's why it doesn't really makesense to smoke as an adult,
(23:12):
where you have to talk aboutstuff and you have kids to take.
It just isn't conducive to that.
In the same way, alcohol is.
So as life moves in thedirection of loneliness and
solitude, there's a drugmarijuana that just is kind of
socially acceptable to be usedin that context, but also has
kind of always been used in thatcontext.
And I just say it's more likethe reason that these things are
(23:34):
shifting.
Not because people are choosingalcohol over marijuana.
It's because their life ischanging in ways that fit one
and not the other.
Speaker 2 (23:40):
Yeah, excellent, excellent point.
Years and years and years ago,faith Popcorn came up with the
concept of cocooning and peoplestaying home more, and that was
more intimate groups, it wasmore partners.
It wasn't a sense that youwould do it all by yourself.
But now we do have a crisis ofloneliness and it's spanning so
(24:01):
many ages.
Fewer people are gettingmarried, fewer people having
children, and so I think maybethat's another opportunity for
companies drinks companies aswell to look at how they can
bring social activity that's funand engaging and unthreatening
back to communities as a way tosell brands.
Speaker 1 (24:23):
Good luck with that.
I don't think you're wrong.
It's just such a monumentaltask to change the fundamental
direction of society and what'sbecoming the definitional
element of modern life.
I'm not trying to soundhopeless.
Speaker 2 (24:36):
No, and again, I'm hardly original in saying that
that should be done, becauselots of brands are tying up with
Live Nation and doingactivations around health and
wellness and fitness and so on,but there has to be an
opportunity for more of that.
I'm a little more optimisticthan you are because I think
every time humans findconstraints, innovation comes
(24:59):
and solutions are formed.
So we need to touch on womenand education, which was
something very interesting thatcame out of your research.
Can you talk a bit about that?
Bukkad.
Speaker 1 (25:11):
So we're coming back to why is Gen Z drinking less
than previous generations did atthe same age?
Right?
One element is their lives arefundamentally different.
Their childhood arefundamentally different.
Their childhood wasfundamentally different.
Their idea of socialization isfundamentally different.
Now, fundamentally is a strongword, but they are just
different.
But also they look different,and so the big thing to think
(25:31):
about is 20-year-olds or25-year-olds were 25, 20 years
ago.
So if you want to think aboutlike why is this group different
?
It has to be something otherthan the fact that they're young
.
And if you look at today'syouth, things are very different
in terms of every other aspectof their identity.
So if we think aboutdemographics, in this case race
and ethnicity boomers were about72% white non-Latino.
(25:55):
Gen Z is about 50% whitenon-Latino.
So essentially, there are justway more Latinas, latinos, asian
consumers than previousgenerations.
So they look different and thatmeans that you know, if you want
to market to young people, youneed to market to Latinos and
black people and Asians, muchmore so than would have been the
case 25 years ago.
That is what your consumerlooks like, but there's also
(26:18):
things like education aredistributed differently across
that generation.
In the 1980s, the graduatingclass at any university was
probably vast majority men.
Today it's actually majoritywomen are walking away with
college degrees.
So the statistic I last saw isaround 60% of recent college
graduates in the United Statesare women.
(26:38):
Women are better able tosucceed in today's world.
Therefore they are making moremoney, they're in higher paying
jobs, they have more influenceover culture, and going to
college is actually the mostreliable demographic indicator
for your likelihood of drinkingalcohol.
Speaker 2 (26:58):
That sounds almost counterintuitive, because the
more educated you are, youshould know that increasingly
there's a view that youshouldn't drink any alcohol.
But you're saying educatedpeople, because they have the
money, are going to be consumers, as they always have been.
Speaker 1 (27:12):
Yeah, so having more money means you buy more of the
stuff you want and you want todrink.
You can do that.
But there's also something elsehappening with drinking and
interaction with education, andsome of it is you get out of
town.
When you go to college, you'reseparated from your family and
your enclave, which means youcan form and misbehave in ways
that no one's watching.
But there's also a link betweeneducation and religiosity, and
(27:35):
people who are highly religioustend to look at alcohol as a
moral wrong, so they're notconcerned about it from a health
perspective, but they'reconcerned about it as a
corrupting influence on societyand individuals.
And so going to college mayactually loosen religious
beliefs, but it is alsoessentially just people who go
to college tend to be lessreligious, and that might just
(27:57):
be something inherent aboutseeking that education, that
curiosity you don't have all theanswers that kind of thing, and
so there does seem to besomething unique about the
identities of people that go tocollege and the influence of
college that make people drinkmore, and it's worth mentioning
that.
Yes, it does seem ironic, butif you actually look at it like
a conditional perspective andsay, for people who are educated
(28:19):
and that drink.
There's actually a much lowerlikelihood of alcohol use
disorder than if we look atpeople with a lower education
that drink are much more likelythan that group to drink in
unhealthy ways.
So they drink more, but theydrink moderately for the most
part.
Speaker 2 (28:34):
So if women have more money, are they drinking as
much as they always did?
Are men drinking less than theyused to?
Speaker 1 (28:43):
So I'll just speak to high level groups, because I
haven't done a deep dive on theincome.
And part of the reason Ihaven't done that deeper dive on
income is because the datastarts getting really messy when
you start breaking things downfurther.
And so if we're just looking atpeople that drink alcohol
regularly which I kind ofdefined in this report as did
you drink in the last monthWomen are now the majority of
(29:05):
alcohol consumers under 26 yearsold, and I'm guessing that
they're also the majority ofalcohol consumers in their 20s.
More broadly and that's notbecause women are drinking more
than they used to.
There are some groups that aredrinking more.
In particular, women of colorare drinking more than they used
to, and that's definitelydriven by education, but it's
really more so that women aredrinking as much as they used to
(29:27):
and men are drinking much less.
Speaker 2 (29:29):
And is it also less about volume growth and more
about the price paid?
Are you looking at dollarsspent?
Speaker 1 (29:35):
I'm looking at whether or not you drink.
So women, on average, drinkabout half as much as men do.
However, as I just described,they're more economically
empowered and independent thanwomen were in the past, and so I
think it's really important toyou.
Asked about, you talk aboutpremiumization, and I'm always
trying to think about what ismaybe a structural driver of
these trends that the industrydepends on, like premiumization,
(29:57):
why would young people bespending more per serving?
Well, the majority of consumerstoday spend, drink half as much
, but have the same income andtherefore can spend twice as
much per serving.
So if I'm a boy and I'm goingto a party, I need to buy two
bottles of wine for me and mythree friends, and if I'm a
woman, I need to buy one bottleof wine for me and my three
(30:20):
friends because we drink half asmuch.
That woman can spend the sameshare of income on alcohol and
spend twice as much per serving.
And so it's this interestingdynamic where, yes, we're seeing
volume declines, but it justmeans that there's more
opportunity.
I think, when we think about wewant to market to young people,
there's more opportunity tomarket to women with a college
(30:41):
degree.
They have money to spend and Ithink in a lot of ways, because
identity is complicated andfluid, marketing to women isn't
going to alienate boys, and theexample I would use there is
hard seltzers.
For a long time, women didn'thave anything to drink that was
sessionable.
We had Zima, we had a couple ofthings, but they were sweet,
they weren't good for you, inthe same way that we would think
(31:02):
about, like low sugar being animportant element of perception
of healthfulness today, and sowomen would have to drink wine
or cocktails and boys got beer.
And the beer industry wasantagonistic towards women for
years, in my opinion, with youknow, sexualizing women,
belittling them, a very bro-yculture, and women were really
welcome to the table.
(31:23):
Step in hard seltzers.
And the original Super Bowl adwas mermaids the mermaids from
the Bon Viv ad, the ABI brand,and there was very gendered
advertising.
Speaker 2 (31:34):
Wow, you remember that.
I remember that too.
It didn't last very long,though.
Speaker 1 (31:38):
The reason it didn't last very long was and the
reason I realized that thisproduct category had legs was an
interview that the JenniferMulaney from the Wall Street
Journal did, in which she wasspeaking to a bunch of frat boys
that were like I'm on a dietand I hate feeling bloated and
(31:59):
this stuff is like lower calorieand it's the first thing I go
for, because it also doesn'ttaste like beer, and boys also
think beer tastes like poison alittle bit.
You have to get used to it.
And so it's this thing ofrealizing oh, I was looking to
target women, but then it wasactually an innovation that
delighted men.
Speaker 2 (32:16):
Well, it's interesting, gokhar, because
we've come a little bit fullcircle, because saying that
they're interested in less sugaror anything healthier really
does speak to the fact that Ithink awareness of what's good
for you, how your body feels,just self-awareness, being able
to hack our bodies is changingbehavior to some extent, I think
you're absolutely right.
Speaker 1 (32:33):
Young people care about health.
Old people care about health.
Being able to hack our bodiesis changing behavior to some
extent.
I think you're absolutely right.
Right, young people care abouthealth.
Old people care about health.
I might change topics hereright to talk about health, and
I don't almost want to, you know, since I feel like I've been
talking a lot.
I'd like to hear your thoughtsa little bit on the health side
and understand, like do you haveany way of thinking like why do
young people care about healthso much?
How should companies thinkabout health in this context?
Speaker 2 (32:54):
I think smartphones and all the Instagramming has
made people even moreself-conscious in terms of what
they look like, what drink theyseem to be drinking where, and
so on.
So I think some of the healthconsciousness is body
consciousness and vanity and Ithink that is at new extremes.
I don't have data, but it feelslike it's at new extremes.
Speaker 1 (33:16):
I appreciate you saying that new extremes,
because my baseline assumptionis that people have been deeply
obsessed with the way they lookand being thin forever.
But there does seem to besomething unique about this
moment where maybe you are theperson that you're looking at
instead of it being just somerandom person.
My photo albums used to be mineand now I'm exposed to the
(33:36):
entire universe.
Speaker 2 (33:37):
Right.
Actually, for me the big changeis that men boys.
I'm shocked at how much youngmen care about what they look
like.
I don't think that was the casewhen I was growing up.
Speaker 1 (33:48):
We always have.
See, this is like a popularmisconception, right?
Men don't wear makeup andtherefore we don't care about
the way we look.
We always have.
See, this is like a popularmisconception, right?
Men don't wear makeup andtherefore we don't care about
the way we look.
We're obsessed with the way welook.
Men have always been obsessedwith the way we look, but we
just don't think about itbecause we don't have the
societal pressure and norm ofputting on makeup.
Right, If it was normal in the17th century, men had been
raised saying like men wearmakeup and women don't, and
(34:09):
that's somehow inherently morefeminine or masculine, men today
would be wearing makeup.
The whole construct is a verysocial, cultural one.
And men I say that because ifyou look at the government data
on who's more likely to be on adiet, there's no distinction
between men and women.
Speaker 2 (34:25):
What about under 25?
Who's more likely?
Speaker 1 (34:28):
So now we're getting at the point I was going to say,
which is, why do young peoplecare about health now?
And the fact that when I wasyoung, I didn't start caring
about health until I was in mythirties, because that's when I
started getting chubby, that'swhen I started getting like my
blood pressure was acting up.
In my twenties I had no healthproblems and I could get drunk
and wake up the next day and gofor a 10 mile run if I wanted to
(34:50):
.
Right, there was nothing mybody couldn't do and couldn't
take.
And so I always am like why areyoung people concerned about
health when they're so healthy,their skin is so smooth, they
look so good?
How is this possible?
And I actually went and lookedat obesity statistics and in
1990, something like 10% ofpeople aged 15 to 25 were
(35:10):
overweight or obese.
Today that's closer to 25%.
Which is to say, if you careabout health, it's not because
you're healthy.
If you care about health, itmight mean you have a health
problem or perceive yourself tohave a health problem.
And the obesity rates areparticularly, notably higher for
girls in that age group.
And you say okay, so why wouldwomen be more concerned about
(35:30):
their weight, their diet.
Well, guess what it's?
Because there is actually aproblem with weight.
And this is the contradiction,right, people say they care
about health but they're nothealthy, and so it creates a gap
between what people say theycare about and what they're
purchasing.
What I don't really understandis that driven by society or by
(35:51):
companies and what our foodsystem looks like.
But it's just an importantthing to distinguish that young
people might care about healthbecause they're not eating
healthy, and when it comes to Icare about health and alcohol,
I'm not seeing a perception ofalcohol as being notably, you
know, perception of alcohol andits risks rising significantly,
necessarily in the governmentdata I look at.
(36:13):
And so what health means forthese people might mean sugar,
and it's not necessarily.
I don't I think alcohol isparticularly bad for me.
It might mean that I just wantless sugar in my diet.
Speaker 2 (36:27):
I think you've hit on something very big.
I think that is the awarenessof the impact of sugar on our
bodies and how much is hidden infoods in grocery stores.
We don't even know it's there.
I think that awareness isrising.
Plus we're able to hack ourbodies.
So I think education is drivingsome change.
But it is again socounterintuitive that, as we're
(36:48):
supposedly more concerned withhealth, we're getting fatter.
Speaker 1 (36:50):
We're concerned about health and body mass indexes
going up, but then also we'rebuying 800 calorie cold coffee
drinks at our favorite cafe.
Young people are makingunhealthy decisions and
therefore feeling unhealthy andthen saying they care about
health and then also beingsubjected to all this
information that says care abouthealth.
It just seems like an ecosystemthat companies outside of
(37:13):
beverage alcohol take advantageof by saying this product is
better for you and it's stillchock full of sugar and fat and
all that stuff.
It's almost like the lesson isyoung people want to care about
health but don't want to changeanything about their diet.
Because they're young peopleand their brains aren't fully
formed and they don't haveself-control yet anything about
their diet.
Speaker 2 (37:31):
Because they're young people and their brains aren't
fully formed and they don't haveself-control yet.
Hey, I want to care abouthealth and I'm not overly young,
to say the least, and I stillfind it hard to give up my
favorite things, if notimpossible.
So, bukhad, I think we covereda lot of ground.
I really value your input.
I look forward to joining youon your Liquid Assets podcast
(37:52):
and again for my listeners,bukhad Nessin at Rabobank,
industry expert, as you can tell, deep diver into the data and
it's just been a pleasure tohost you, thank you.
Speaker 1 (38:05):
Thank you so much and , if I might give you a
compliment, I've like beenlistening to your shows and I
just really admire the way thatyou interact with people because
you just seem so smart and nononsense Like.
I really love the fact thatevery conversation I see you
talking in you're just so directand precise and it is a really
(38:27):
interesting dynamic.
So I really appreciatelistening to you and learning
from you, but also a very honorthat you invited me on.
Speaker 2 (38:34):
That's very kind of you.
It's really fun for me to getinteresting guests on.
It's just the greatestprivilege really.
So happy rest of week and wewill see each other soon.
Speaker 1 (38:45):
Yeah, for sure.
Speaker 2 (38:47):
If you enjoyed this session, please do comment, rate
and follow us on Apple Podcasts, spotify or wherever you listen
, and please share this withyour friends and colleagues.
There's more opportunity to market to women
with a college degree.
They have money to spend and Ithink in a lot of ways, because
identity is complicated andfluid.
Marketing to women isn't goingto alienate boys and the example
I would use there is hardseltzers.
Speaker 2 (00:19):
Hello friends, old and new, and welcome to Drinks
with Caroline.
I'm so happy you've joined mefor what I believe will be
another stimulating conversationwith an industry expert,
founder or otherwise fabulousperson in the consumer industry.
Good morning, burkhard, andwelcome to Drinks with Caroline.
(00:40):
I would like, for my listeners,to introduce Burkhard Nessin,
who is an industry analyst inthe beverage sector at Rubber
Bank and has put out aground-shaking report on Gen Z
and drinking habits, and what Ilove about Burkhard is that he
comes out of the academic fieldand has written a very
(01:02):
data-driven report with somesurprising conclusions.
So, burkhard, before I let youtake it away, just one last
thing.
You co-host a great podcastcalled Liquid Assets with some
of your colleagues at Rabobank.
I've really been enjoyinglistening to that, and please
fill us in on some of thefindings from your newest report
(01:25):
.
Speaker 1 (01:25):
Thank you for mentioning liquid assets and, if
I'm not mistaken, we're tryingto get you on the show to talk
about what it means to be a goodboard member.
Maybe we'll get that on.
And thanks for talking aboutthe report.
I've been doing my job forseven or eight years now and
written a lot of stuff.
Maybe one other report I'vewritten has broken through the
way this one has, and I thinkthe reason it's broken through
(01:47):
and the reason that a lot ofyour listeners might have read
this is because there's realmeat on that bone.
The inspiration for the report,which is about Gen Z they're
drinking, but I think it's amuch bigger conversation about
what it means to be a kid thesedays and how that influences
behavior in a much larger lookat demographics.
A lot of the writing about GenZ is simplistic, it's high level
(02:08):
and it's way too broad.
I don't think that it'sactually actionable to say young
people care about health, thehealth and wellness generation,
and I actually don't think thatis even the right way to think
about that.
I actually don't think, even atthat high level, saying that
Gen Z is all about health andwellness is all that correct.
Speaker 2 (02:27):
Phenomenal.
Yes, I love the fact you'restirring the pot and doing it
with data.
So could we touch on some ofyour key findings?
And you have some great chartsthroughout the report.
We're not going to share thosehere, but I think if you could
just start with the firstfinding and maybe walk us
through the other key items, andI'm sure we'll have a lot to
(02:48):
talk about as you do that.
Speaker 1 (02:50):
Yeah, the report was inspired.
A shout out to Lawson Whitingyou were an equity analyst,
carolyn right, yes, yes I amproudly not an equity analyst.
I will avoid reading publiccompany reports as often as
possible because I tend to findthem to be quite boring, but
also that the informationdelivered by public companies
tend to be evasive.
Right, they'll say all thesecomplicated words, but they're
(03:13):
actually not saying that much.
But I really appreciated LawsonWhiting's approach to the way
he conducted his calls, becauseI felt like they were actually
informative and earnest attemptsto deliver clear information.
So shout out to him and who'she with.
So he's the CEO of Brown Foreman, the owner of famous American
bourbon brand Jack Daniels,among many other things.
So an executive who actuallydigs deep and comes out with new
(03:36):
and interesting information toshare with the street, yeah,
which I just was appreciative ofbecause it was a more
interesting call, and heactually said something to the
effect of we're, as an industry,so freaked out about Gen Z and
the fact they'll never drinkalcohol, and we have some
internal research showing that abig part of that is just they
don't have any money.
And I said, is that trueEssentially?
(03:57):
And I just tried to do thislittle fact checking and the
answer is yeah, he's kind ofright.
Gen Z is essentially poor.
Speaker 2 (04:05):
I think you used the word broke.
Speaker 1 (04:07):
Broke, yeah, but I also would just add that you
know Gen Z is broke, but so wasI when I was in my twenties, and
so were you when you were inyour twenties.
I remember bouncing a checktrying to buy rice in college.
I was paying with a check.
I'm still in my thirties, so itprobably was a me thing, not a
society thing, to not have adebit card, at least at that
point in my life.
Speaker 2 (04:26):
Oh yeah, I would freewheel downhill to save gas
money.
Speaker 1 (04:30):
Yeah, exactly, it was an interesting time, but there
was a shop in thrift stores.
You know, I didn't have anyincome right because I was at
school, like it was just tight.
And so I think, really one ofthe big insights, that I really
wanted to help the industry andreally any industry I write
about beverage, alcohol mostlybut any industry needs to
understand that young people maydesire premium stuff, but
(04:51):
they're broke, and so it's not aunique thing to Gen Z, but
they're certainly not having themoney.
And as these people get olderand they get college degrees and
college degrees are ostensiblyvery useful because as long as
the future earnings of thatdegree are greater than the debt
you incur to get it, then it'sa very smart thing to do.
And so as people get thosedegrees which they can't get
(05:13):
until they're their mid-20s in alot of cases, and get deeper
into their careers and get pastthat debt, they don't have the
money to buy the stuff they want.
Speaker 2 (05:20):
Right and, as you said, that's always been true.
But there's something differentnow.
Speaker 1 (05:25):
Yes, I'll get to that , but I do want to reinforce
this idea that, like what andI'll ask you this because it's a
fun quiz question what is themost important driver of brand
loyalty?
Like from an economistperspective, like, what is the
number one thing that drivesbrand loyalty from a consumer
demographic characteristic?
Speaker 2 (05:44):
In the beverage business.
I think about the badge valueof what you carry.
Speaker 1 (05:48):
It's a trick question , because the answer is income.
If you have enough money to buywhat you want, you buy what you
want.
And a case I always use as anexample is like I don't ever buy
a different brand of toiletpaper.
I always buy the exact sametoilet paper because I don't
care what the next brand is onsale.
My price elasticity is out ofcontrol because I have enough
money to buy my favorite brand,and so as you get older, your
(06:11):
brand loyalty increases.
Maybe not because you just buywhat you want and young people
don't have the money to buy whatthey want, and as they get
older, that will happen.
But as I dug a little deeperinto this and said, yeah, young
people are poor and I thinkthat's really important to
strategy for companies, becausethey need to understand that,
hey, these people are lookingfor value.
They're just not going to beable to afford that fancy
non-alcoholic drink.
(06:31):
If they're drinking alcohol,they're probably looking for
something that's affordable andalso serves their actual, the
way they drink, which is mostlypartying.
But if you dig deeper, youactually see that there is
something unique to Gen Z.
It's not just that they're poor, but they're spending the same
amount of income on alcohol asprevious.
Speaker 2 (06:48):
Why is it if this, as always, is being driven by
economics?
They don't have much money.
Why aren't value brands doingbetter and why does the
premiumization trend continue?
Does it mean that companieshave missed the opportunity to
make the value brands more cooland more applicable?
Speaker 1 (07:07):
I think so.
The great example is somethinglike wine, where they've
continued to struggle withengaging younger consumers, and
one of the things that's widelyunderstood in that business is
the wine industry has failed todevelop products at lower price
points that have appeal, andyoung people don't want to go
work for the wine brands thatare affordable.
Right, you know, reallycreative, smart people don't
want to work for dead and boringbrands and they're not
(07:30):
necessarily getting theopportunity to do interesting
stuff with those brands anyways.
Speaker 2 (07:34):
That's a really interesting point.
So exactly where there is theneed for youth and creativity
and new ways of thinking are thebrands people don't want to go
and work for.
Speaker 1 (07:46):
Everyone wants value and I really tend to find the
products that outperform in themarket.
We had Liquid Death on ourpodcast and you know, I know
they were a premium water brand,but I actually went and saw the
price after we spoke to themand I was like, wait, what?
This is premium, like $1.50 fora can.
And it was an amazingrealization that it's like
(08:07):
actually, no, it's pretty darnaffordable, especially because
what I'm drinking right now islike a sparkling hop tea that
costs $3 a can and it's justexpensive, right.
A 20-year-old me just wouldn'tbe able to buy that.
And so, yes, young people arebuying expensive things and
splurging on stuff, but if youwant to build habits with people
when somebody's lifelongsupport, and you want to do that
(08:30):
when they're young, you need tomake it affordable so that they
can not just buy it once butbuy it again and again.
And I just really get frustratedwith all the innovation is
tending in our industry to comefrom these high cost per serving
products that are reallypremium and kind of weird and
often like lower alcohol, and Ijust go like that's not what
young people need, and I thinkthe industry ends up looking at
(08:52):
these high level numbers andsaying you know, hey, young
people are drinking less alcohol, which is true, and they want
more premium products.
Let's give them something lowalcohol and high cost and it's
like.
Well, these people are poor and, yes, fewer young people are
drinking than 10 or 15 years ago, but those that do drink still
drink like twice a week anddrink it in the context of a
party, which means they stillwant to like.
(09:14):
They're not necessarilydrinking a glass of wine with
dinner, right, the occasion isquite a different one, and I
think a lot of executives justforget to remember what it was
like to be in their 20s.
Speaker 2 (09:23):
Yeah, very good point yeah.
Speaker 1 (09:25):
And that's a real problem.
Speaker 2 (09:27):
So what's happened to underage drinking?
Speaker 1 (09:29):
In this report I dived into the question of
underage drinking, and whatinspired that was the fact that
I'd done this research to showthat Gen Z's got less money, but
then not only they have lessmoney, but they're spending
about the same share of thatincome on alcohol as millennials
and boomers at this time.
But millennials, when they werethe age of Gen Z, were spending
(09:51):
about 30% more of their incomeon alcohol than Gen Z is, and so
the question is why?
What is the driver behind that?
And I think one of the bigdrivers is that young people are
delaying or this generation,which is a continuation of a
trend before that, are startingto drink alcohol later in life
(10:13):
that underage drinking hasfallen off a cliff.
I mean like a cliff that thenumber of high school seniors,
according to US government data,that get drunk has gone down by
half in just a couple ofdecades.
So half of the number of highschoolers that do the survey are
drinking compared to the early90s.
Speaker 2 (10:31):
So that's a win.
I mean, that's a nationalhealth win and probably
international health win.
Speaker 1 (10:37):
Like this is the problem, so writing about this
was deeply uncomfortable.
I write about the industry andI have an academic background.
I by virtue of not being anequity analyst my compensation
isn't tied to the bank doingbusiness with beverage companies
, right so I feel like I have alittle more objectivity right,
where I can write about stuffthat I'm not an industry
(10:58):
advocate.
I feel like I'm an industryobserver, and so writing about
underage drinking is really hardto do, because I think you're
right the industry.
What should you do aboutunderage drinking?
Nothing.
You should continue tocelebrate and tell people that
are underage not to drink.
That is very simple.
The driver of those declinesand, perhaps, more disturbingly,
the drivers of the decline inunderage drinking are likely
(11:30):
things that are having profoundand negative effects on young
people's lives.
Speaker 2 (11:34):
That's a pretty different twist on things.
So, yes, please share with us,ricard.
Speaker 1 (11:40):
When it comes to why is underage drinking declining,
I think a lot of it has to dowith technology and really what
it means to be a kid.
So one part of that isunderstanding that underage
drinking isn't the only thinggoing down.
Young people are having, again,a weird thing to talk about,
but young people are having lesssex, they're doing fewer drugs,
they're drinking less alcohol,and yet the probability of
(12:03):
having a major depressiveepisode in your teens,
especially for girls, is higher,has like doubled in the last 10
or 15 years.
And though I think every publichealth person is careful to
avoid describing something thatisn't supported by research,
everyone kind of is pointing thefinger at the same thing, which
is cell phones, and so whatyou're seeing is that there's
just less in-person interactionsfor one, and that's supported
(12:26):
by data.
So that if we actually look atunderage drinking, that takes
place in social context.
That's where most of thedeclines are, and over the last
10 or 15 years, the share ofunderage drinking occasions that
are by themselves kids bythemselves is becoming a larger
share of drinking occasions.
That drinking alone is notdeclining.
It's actually drinking alone isnot declining.
It's actually social drinkingthat's declining.
Speaker 2 (12:47):
Right.
So, burkhard, though, thatdoesn't feel like that's ever
going to get better.
No, and when I say betterthat's a loaded word, I don't
mean better, I just mean change,because it means that there's a
group of young people Gen Z nowand the next ones after them
who won't be used to number one,social settings and number two,
(13:13):
drinking much alcohol.
So is that bad for the futureof?
Speaker 1 (13:14):
alcohol.
So young people are starting todrink later in life and it's
not just because they're notsocializing, but it's also
because, you know, they havetrackers on their phones and
their parents know where theyare.
I think a big part of mychildhood was I did go and party
in the woods as an underage kidand no one knew where I was.
Right, I said I was at Kyle'shouse and I was in the woods.
Today, every friend group has amillion parents looking at
(13:35):
their kids and so, even if youdon't get caught, one of your
friends will and they'll open achat group and say, hey, where's
Billy?
He's not home, and then you'llget caught.
But then also there's the riskof getting caught by school
administrators.
Right, it's one picture thatsomebody sees and you get kicked
off of the sports teams or youget kicked off of the chess club
.
There are real and immediateconsequences to drinking that
(13:57):
are changing the calculus, Ithink, for young people to drink
and so they're choosing not to,that doesn't mean they think
it's less healthy or think it'smore dangerous.
Actually, the data suggests thatyoung people don't think that
binge drinking on the weekendsis more dangerous than they did
20 years ago.
So the reason I'm describingthat is because you asked about
what is this generation going todo in the future, and those
(14:17):
conditions of surveillance andloss of privacy are going to go
away as these people get older,and so, on one hand, the
limitations on drinking aregoing to go away, but at the
same time, drinking and culturearound drinking isn't going to
be as big a part of thesepeople's identity growing up,
and so it's two differentbalancing factors.
(14:39):
One is saying like, yeah,they'll drink more later.
And the evidence is actuallyyes, they do, they catch up.
So underage drinking has beendeclining for two or three
decades, but by the time peopleare in their 30s, the share of
the population that regularlydrinks alcohol is
indistinguishable from previousgenerations.
Speaker 2 (14:55):
So that is a really important point.
Looking at what Gen Z is doingnow doesn't seem to predict that
they will drink less alcoholthan current generations as they
age.
Speaker 1 (15:06):
Yes, and I think that's a win for the industry.
Right, oh, we get to seeunderage drinking go down.
Did we cause that?
No, but it's good Like we'rebenefiting from it and our
products are benefiting from it,and young people tend to drink.
When they drink, they tend tobinge drink because they're
partying.
You know, that has a reasonthat that's.
A big part of the industry'sharm reduction framework is
people get hurt, you can fall,you can drown, you can get in a
(15:27):
car crash.
So we don't want people todrink too much, we want them to
drink moderately, and peopletend to drink more moderately as
they age, and so if we'reessentially allowing people to
start drinking later in life andthey're going to eventually
drink at the same levels withthe incomes that correspond with
that right, so we can actuallyget those premium dollars, this
(15:51):
seems like a win for theindustry.
I would caveat the optimism bysaying, up to this point, the
fall in underage drinking hasnot correlated with the decline
in consumption once people reachmiddle age.
However, that trend doesn'tseem to be holding quite as much
, and I really think that we canall look at our lives today and
say there just doesn't seem tobe the same number of occasions
to drink.
I was organizing a panel with abunch of Gen Z people to
(16:13):
actually talk about this reportand their experience with
growing up in today's world, andI asked a lot of people think
that what's going to happen is,once you get into an office
environment and you have to hangout with people, you're just
going to, as a generation, belike, what do we do?
How do I interact with thesehuman beings that I don't know
that well, in a way that feelslike normal, and what we assume
(16:38):
they'll do is they'll go fordrinks.
But in the panel I kind ofrealized and this is true in my
own life there are no drinksanymore, office drinks, office
culture has changed, and so I dothink that the fact that we are
spending less time with otherpeople and spending more time
alone in general is going tostart to perhaps cut into that
trend that's held steady to thispoint and that as we get older
(17:01):
and we have fewer reasons tospend time with people, those
social occasions aredisappearing for drinking with
friends and at colleges.
Speaker 2 (17:08):
One of the culprits cited for less alcohol
consumption in general ismarijuana, and there has been
some legalization the stigmaappears to have lessened.
How much do you think of lessdrinking by young people?
Legalization the stigma appearsto have lessened.
How much do you think of lessdrinking by young people?
Legal age, but young is drivenby switch to marijuana based on
(17:28):
the view that it's nowhere nearas bad for you and nor are
mushrooms and nor other drugsthat alcohol is the worst drug.
Speaker 1 (17:36):
I don't have great evidence.
If I had to guess, I would sayzero.
Speaker 2 (17:39):
Wow.
Speaker 1 (17:40):
It's a very non-consensus view, but I think
a lot of the industry doesn'tunderstand how drugs work.
One of the reasons I startedexploring this was because I was
like I wonder, when per capitaalcohol consumption was kind of
starting to dip a little bit inthe United States, I was like,
could this be driven by theopioid crisis and would opioids
impact alcohol consumption?
(18:00):
The opioid crisis and like,would opioids impact alcohol
consumption?
And I started asking publichealth officials how they
thought about it and theyexplained this thing which, in
the context of drug uses, iscalled comorbidity.
Right, and that is just thefact that this is going to be a
loaded and a simplistic term,but all drugs are gateway drugs.
Caffeine if you drink caffeine,you know, according to research,
you're far more likely to bethe kind of person that would do
(18:22):
much harder drugs, right?
These linkages are just veryintense, and so people who drink
just tend to also use marijuana, and people who use marijuana
also tend to drink, becausethere's something inherent about
that is open to risk.
Right, they might be lessreligious.
There might be all these otherfactors at play, but there is a
lot of scientific research onthis and they show essentially,
(18:44):
for young people, it's kind of awash right.
There's some people that mightnever have done any drugs or
done any alcohol, that triedusing marijuana once, and then
they go.
Oh wow, altering my mind stateis an interesting experience.
I want to do more of that Rightand and and so they start
drinking.
Or maybe you create this friendgroup that smokes but they also
(19:07):
drink some and you hadn't beenexposed to that before, and so
you can imagine, for youngpeople like this, actually there
might be an issue of them beingcompliments, but, but I think
that's a that's a very academicway of talking about it.
I'd rather talk about it in away that I think is more
intuitive to an audience thatisn't as in the weeds as I am.
Speaker 2 (19:25):
One thing strikes me when you say that it's not an
either or for many consumers asif you're doing one, you're
probably doing some of the otheras well is that it feeds into
this concept that consumerstoday are used to choice.
They want choice, they desirechoice, they want change.
They don't want to buy the samedrink over and over again, just
like they don't want to buy thesame food over and over again.
(19:46):
So we've become much moreinterested in different and
exotic than we ever were in thepast.
So that would actually say itis.
And I come at that just becausea lot of beer companies and
distributors are longing to getinto cannabis-based drinks when
it becomes legalized and you canbank it legally.
Speaker 1 (20:09):
I think we need to remember two things on that
front.
One, people were usingmarijuana before it was
legalized, and so the questionisn't what do people that use
marijuana like to drink?
It's what do people that didn'tuse marijuana before it was
legalized that start usingmarijuana because it's become
liberalized?
What do they drink and how doesthat change their behavior?
Because somebody buyingmarijuana from their dealer and
(20:29):
then switching to an officialchannel isn't actually changing
their consumption.
We're just measuring it.
So I think it's reallyimportant to kind of think
through things that way and lessabout like, and that's why I
think a lot of the beer stuffyou know the industry gets
scared, the beer industry getsscared about marijuana use and
they see that.
You know the people that smokemarijuana are more likely to be
beer drinkers.
I don't necessarily think that'salso what the new consumer
(20:52):
looks like.
When I think about what issomebody who wouldn't use
marijuana where it's illegal andwould use it where it's legal.
I think that is a profile of aconsumer that's gonna be older,
someone with real risk, like ifyou're doing something illegal
and it could lead you to losingyour high paying job, where you
have kids and you just can't gomeet an illegal drug dealer.
You've matured out of thatelement of your life Like those
(21:14):
are the things that I'm moreinterested in understanding,
less so about, like those simplesurvey questions.
But coming back to this ofwhether or not marijuana is a
threat to alcohol, there's beenno data from any state that's
legalized marijuana showing anymeaningful change in the
trajectory for alcohol sales.
So we have a lot of data onthis and it just has showed that
there might be effect, but it'sso small, it's not measurable.
(21:34):
But when it comes to whether ornot people are choosing to
smoke instead of drinking, Itend to think about it as not
always being clearly causedconnected to one another.
I don't think consumers have abag of marijuana in one hand and
a beer in the other and have tolook at both and calculate
carefully which one they'regoing to do.
Society is changing in ways inwhich we're socializing less.
Speaker 2 (21:58):
And that is actually the overarching issue for the
drinks world, I think.
Speaker 1 (22:03):
For every industry, for public health it's also the
biggest one.
I'm lonely in my own life andloneliness is just the stress of
unmet social need.
So it's just this issue of allof America's in a health crisis
of loneliness.
And alcohol is, by nature, athing that you know.
If you're drinking alone andyou're just having a glass of
wine with dinner, then likethat's one thing, but a lot of
cases, if you're drinking alone,it's not because you're having
(22:25):
a good time, and so if youaren't socializing and you're
not hanging out with people,there are just fewer occasions
to drink and people aren'tsaying I don't want to drink.
They're just not doing stuffwith people and they're not
having these parties.
Whereas marijuana you look atthe data on it the majority of
consumption of marijuana isactually with people by
themselves.
(22:49):
And the thing that people don'tlike about marijuana there's a
lot of people who have triedmarijuana in the US.
Like 60% of the population hastried marijuana at least once,
but only like 10 or 15% of thepopulation actually uses
marijuana at least once a monthin the United States, and that's
because it makes you anxious,it makes you socially awkward,
and so it's not a drug that'sparticularly conducive to
socialization.
It's why it doesn't show up atparties.
It's why it doesn't really makesense to smoke as an adult,
(23:12):
where you have to talk aboutstuff and you have kids to take.
It just isn't conducive to that.
In the same way, alcohol is.
So as life moves in thedirection of loneliness and
solitude, there's a drugmarijuana that just is kind of
socially acceptable to be usedin that context, but also has
kind of always been used in thatcontext.
And I just say it's more likethe reason that these things are
(23:34):
shifting.
Not because people are choosingalcohol over marijuana.
It's because their life ischanging in ways that fit one
and not the other.
Speaker 2 (23:40):
Yeah, excellent, excellent point.
Years and years and years ago,faith Popcorn came up with the
concept of cocooning and peoplestaying home more, and that was
more intimate groups, it wasmore partners.
It wasn't a sense that youwould do it all by yourself.
But now we do have a crisis ofloneliness and it's spanning so
(24:01):
many ages.
Fewer people are gettingmarried, fewer people having
children, and so I think maybethat's another opportunity for
companies drinks companies aswell to look at how they can
bring social activity that's funand engaging and unthreatening
back to communities as a way tosell brands.
Speaker 1 (24:23):
Good luck with that.
I don't think you're wrong.
It's just such a monumentaltask to change the fundamental
direction of society and what'sbecoming the definitional
element of modern life.
I'm not trying to soundhopeless.
Speaker 2 (24:36):
No, and again, I'm hardly original in saying that
that should be done, becauselots of brands are tying up with
Live Nation and doingactivations around health and
wellness and fitness and so on,but there has to be an
opportunity for more of that.
I'm a little more optimisticthan you are because I think
every time humans findconstraints, innovation comes
(24:59):
and solutions are formed.
So we need to touch on womenand education, which was
something very interesting thatcame out of your research.
Can you talk a bit about that?
Bukkad.
Speaker 1 (25:11):
So we're coming back to why is Gen Z drinking less
than previous generations did atthe same age?
Right?
One element is their lives arefundamentally different.
Their childhood arefundamentally different.
Their childhood wasfundamentally different.
Their idea of socialization isfundamentally different.
Now, fundamentally is a strongword, but they are just
different.
But also they look different,and so the big thing to think
(25:31):
about is 20-year-olds or25-year-olds were 25, 20 years
ago.
So if you want to think aboutlike why is this group different
?
It has to be something otherthan the fact that they're young
.
And if you look at today'syouth, things are very different
in terms of every other aspectof their identity.
So if we think aboutdemographics, in this case race
and ethnicity boomers were about72% white non-Latino.
(25:55):
Gen Z is about 50% whitenon-Latino.
So essentially, there are justway more Latinas, latinos, asian
consumers than previousgenerations.
So they look different and thatmeans that you know, if you want
to market to young people, youneed to market to Latinos and
black people and Asians, muchmore so than would have been the
case 25 years ago.
That is what your consumerlooks like, but there's also
(26:18):
things like education aredistributed differently across
that generation.
In the 1980s, the graduatingclass at any university was
probably vast majority men.
Today it's actually majoritywomen are walking away with
college degrees.
So the statistic I last saw isaround 60% of recent college
graduates in the United Statesare women.
(26:38):
Women are better able tosucceed in today's world.
Therefore they are making moremoney, they're in higher paying
jobs, they have more influenceover culture, and going to
college is actually the mostreliable demographic indicator
for your likelihood of drinkingalcohol.
Speaker 2 (26:58):
That sounds almost counterintuitive, because the
more educated you are, youshould know that increasingly
there's a view that youshouldn't drink any alcohol.
But you're saying educatedpeople, because they have the
money, are going to be consumers, as they always have been.
Speaker 1 (27:12):
Yeah, so having more money means you buy more of the
stuff you want and you want todrink.
You can do that.
But there's also something elsehappening with drinking and
interaction with education, andsome of it is you get out of
town.
When you go to college, you'reseparated from your family and
your enclave, which means youcan form and misbehave in ways
that no one's watching.
But there's also a link betweeneducation and religiosity, and
(27:35):
people who are highly religioustend to look at alcohol as a
moral wrong, so they're notconcerned about it from a health
perspective, but they'reconcerned about it as a
corrupting influence on societyand individuals.
And so going to college mayactually loosen religious
beliefs, but it is alsoessentially just people who go
to college tend to be lessreligious, and that might just
(27:57):
be something inherent aboutseeking that education, that
curiosity you don't have all theanswers that kind of thing, and
so there does seem to besomething unique about the
identities of people that go tocollege and the influence of
college that make people drinkmore, and it's worth mentioning
that.
Yes, it does seem ironic, butif you actually look at it like
a conditional perspective andsay, for people who are educated
(28:19):
and that drink.
There's actually a much lowerlikelihood of alcohol use
disorder than if we look atpeople with a lower education
that drink are much more likelythan that group to drink in
unhealthy ways.
So they drink more, but theydrink moderately for the most
part.
Speaker 2 (28:34):
So if women have more money, are they drinking as
much as they always did?
Are men drinking less than theyused to?
Speaker 1 (28:43):
So I'll just speak to high level groups, because I
haven't done a deep dive on theincome.
And part of the reason Ihaven't done that deeper dive on
income is because the datastarts getting really messy when
you start breaking things downfurther.
And so if we're just looking atpeople that drink alcohol
regularly which I kind ofdefined in this report as did
you drink in the last monthWomen are now the majority of
(29:05):
alcohol consumers under 26 yearsold, and I'm guessing that
they're also the majority ofalcohol consumers in their 20s.
More broadly and that's notbecause women are drinking more
than they used to.
There are some groups that aredrinking more.
In particular, women of colorare drinking more than they used
to, and that's definitelydriven by education, but it's
really more so that women aredrinking as much as they used to
(29:27):
and men are drinking much less.
Speaker 2 (29:29):
And is it also less about volume growth and more
about the price paid?
Are you looking at dollarsspent?
Speaker 1 (29:35):
I'm looking at whether or not you drink.
So women, on average, drinkabout half as much as men do.
However, as I just described,they're more economically
empowered and independent thanwomen were in the past, and so I
think it's really important toyou.
Asked about, you talk aboutpremiumization, and I'm always
trying to think about what ismaybe a structural driver of
these trends that the industrydepends on, like premiumization,
(29:57):
why would young people bespending more per serving?
Well, the majority of consumerstoday spend, drink half as much
, but have the same income andtherefore can spend twice as
much per serving.
So if I'm a boy and I'm goingto a party, I need to buy two
bottles of wine for me and mythree friends, and if I'm a
woman, I need to buy one bottleof wine for me and my three
(30:20):
friends because we drink half asmuch.
That woman can spend the sameshare of income on alcohol and
spend twice as much per serving.
And so it's this interestingdynamic where, yes, we're seeing
volume declines, but it justmeans that there's more
opportunity.
I think, when we think about wewant to market to young people,
there's more opportunity tomarket to women with a college
(30:41):
degree.
They have money to spend and Ithink in a lot of ways, because
identity is complicated andfluid, marketing to women isn't
going to alienate boys, and theexample I would use there is
hard seltzers.
For a long time, women didn'thave anything to drink that was
sessionable.
We had Zima, we had a couple ofthings, but they were sweet,
they weren't good for you, inthe same way that we would think
(31:02):
about, like low sugar being animportant element of perception
of healthfulness today, and sowomen would have to drink wine
or cocktails and boys got beer.
And the beer industry wasantagonistic towards women for
years, in my opinion, with youknow, sexualizing women,
belittling them, a very bro-yculture, and women were really
welcome to the table.
(31:23):
Step in hard seltzers.
And the original Super Bowl adwas mermaids the mermaids from
the Bon Viv ad, the ABI brand,and there was very gendered
advertising.
Speaker 2 (31:34):
Wow, you remember that.
I remember that too.
It didn't last very long,though.
Speaker 1 (31:38):
The reason it didn't last very long was and the
reason I realized that thisproduct category had legs was an
interview that the JenniferMulaney from the Wall Street
Journal did, in which she wasspeaking to a bunch of frat boys
that were like I'm on a dietand I hate feeling bloated and
(31:59):
this stuff is like lower calorieand it's the first thing I go
for, because it also doesn'ttaste like beer, and boys also
think beer tastes like poison alittle bit.
You have to get used to it.
And so it's this thing ofrealizing oh, I was looking to
target women, but then it wasactually an innovation that
delighted men.
Speaker 2 (32:16):
Well, it's interesting, gokhar, because
we've come a little bit fullcircle, because saying that
they're interested in less sugaror anything healthier really
does speak to the fact that Ithink awareness of what's good
for you, how your body feels,just self-awareness, being able
to hack our bodies is changingbehavior to some extent, I think
you're absolutely right.
Speaker 1 (32:33):
Young people care about health.
Old people care about health.
Being able to hack our bodiesis changing behavior to some
extent.
I think you're absolutely right.
Right, young people care abouthealth.
Old people care about health.
I might change topics hereright to talk about health, and
I don't almost want to, you know, since I feel like I've been
talking a lot.
I'd like to hear your thoughtsa little bit on the health side
and understand, like do you haveany way of thinking like why do
young people care about healthso much?
How should companies thinkabout health in this context?
Speaker 2 (32:54):
I think smartphones and all the Instagramming has
made people even moreself-conscious in terms of what
they look like, what drink theyseem to be drinking where, and
so on.
So I think some of the healthconsciousness is body
consciousness and vanity and Ithink that is at new extremes.
I don't have data, but it feelslike it's at new extremes.
Speaker 1 (33:16):
I appreciate you saying that new extremes,
because my baseline assumptionis that people have been deeply
obsessed with the way they lookand being thin forever.
But there does seem to besomething unique about this
moment where maybe you are theperson that you're looking at
instead of it being just somerandom person.
My photo albums used to be mineand now I'm exposed to the
(33:36):
entire universe.
Speaker 2 (33:37):
Right.
Actually, for me the big changeis that men boys.
I'm shocked at how much youngmen care about what they look
like.
I don't think that was the casewhen I was growing up.
Speaker 1 (33:48):
We always have.
See, this is like a popularmisconception, right?
Men don't wear makeup andtherefore we don't care about
the way we look.
We always have.
See, this is like a popularmisconception, right?
Men don't wear makeup andtherefore we don't care about
the way we look.
We're obsessed with the way welook.
Men have always been obsessedwith the way we look, but we
just don't think about itbecause we don't have the
societal pressure and norm ofputting on makeup.
Right, If it was normal in the17th century, men had been
raised saying like men wearmakeup and women don't, and
(34:09):
that's somehow inherently morefeminine or masculine, men today
would be wearing makeup.
The whole construct is a verysocial, cultural one.
And men I say that because ifyou look at the government data
on who's more likely to be on adiet, there's no distinction
between men and women.
Speaker 2 (34:25):
What about under 25?
Who's more likely?
Speaker 1 (34:28):
So now we're getting at the point I was going to say,
which is, why do young peoplecare about health now?
And the fact that when I wasyoung, I didn't start caring
about health until I was in mythirties, because that's when I
started getting chubby, that'swhen I started getting like my
blood pressure was acting up.
In my twenties I had no healthproblems and I could get drunk
and wake up the next day and gofor a 10 mile run if I wanted to
(34:50):
.
Right, there was nothing mybody couldn't do and couldn't
take.
And so I always am like why areyoung people concerned about
health when they're so healthy,their skin is so smooth, they
look so good?
How is this possible?
And I actually went and lookedat obesity statistics and in
1990, something like 10% ofpeople aged 15 to 25 were
(35:10):
overweight or obese.
Today that's closer to 25%.
Which is to say, if you careabout health, it's not because
you're healthy.
If you care about health, itmight mean you have a health
problem or perceive yourself tohave a health problem.
And the obesity rates areparticularly, notably higher for
girls in that age group.
And you say okay, so why wouldwomen be more concerned about
(35:30):
their weight, their diet.
Well, guess what it's?
Because there is actually aproblem with weight.
And this is the contradiction,right, people say they care
about health but they're nothealthy, and so it creates a gap
between what people say theycare about and what they're
purchasing.
What I don't really understandis that driven by society or by
(35:51):
companies and what our foodsystem looks like.
But it's just an importantthing to distinguish that young
people might care about healthbecause they're not eating
healthy, and when it comes to Icare about health and alcohol,
I'm not seeing a perception ofalcohol as being notably, you
know, perception of alcohol andits risks rising significantly,
necessarily in the governmentdata I look at.
(36:13):
And so what health means forthese people might mean sugar,
and it's not necessarily.
I don't I think alcohol isparticularly bad for me.
It might mean that I just wantless sugar in my diet.
Speaker 2 (36:27):
I think you've hit on something very big.
I think that is the awarenessof the impact of sugar on our
bodies and how much is hidden infoods in grocery stores.
We don't even know it's there.
I think that awareness isrising.
Plus we're able to hack ourbodies.
So I think education is drivingsome change.
But it is again socounterintuitive that, as we're
(36:48):
supposedly more concerned withhealth, we're getting fatter.
Speaker 1 (36:50):
We're concerned about health and body mass indexes
going up, but then also we'rebuying 800 calorie cold coffee
drinks at our favorite cafe.
Young people are makingunhealthy decisions and
therefore feeling unhealthy andthen saying they care about
health and then also beingsubjected to all this
information that says care abouthealth.
It just seems like an ecosystemthat companies outside of
(37:13):
beverage alcohol take advantageof by saying this product is
better for you and it's stillchock full of sugar and fat and
all that stuff.
It's almost like the lesson isyoung people want to care about
health but don't want to changeanything about their diet.
Because they're young peopleand their brains aren't fully
formed and they don't haveself-control yet anything about
their diet.
Speaker 2 (37:31):
Because they're young people and their brains aren't
fully formed and they don't haveself-control yet.
Hey, I want to care abouthealth and I'm not overly young,
to say the least, and I stillfind it hard to give up my
favorite things, if notimpossible.
So, bukhad, I think we covereda lot of ground.
I really value your input.
I look forward to joining youon your Liquid Assets podcast
(37:52):
and again for my listeners,bukhad Nessin at Rabobank,
industry expert, as you can tell, deep diver into the data and
it's just been a pleasure tohost you, thank you.
Speaker 1 (38:05):
Thank you so much and , if I might give you a
compliment, I've like beenlistening to your shows and I
just really admire the way thatyou interact with people because
you just seem so smart and nononsense Like.
I really love the fact thatevery conversation I see you
talking in you're just so directand precise and it is a really
(38:27):
interesting dynamic.
So I really appreciatelistening to you and learning
from you, but also a very honorthat you invited me on.
Speaker 2 (38:34):
That's very kind of you.
It's really fun for me to getinteresting guests on.
It's just the greatestprivilege really.
So happy rest of week and wewill see each other soon.
Speaker 1 (38:45):
Yeah, for sure.
Speaker 2 (38:47):
If you enjoyed this session, please do comment, rate
and follow us on Apple Podcasts, spotify or wherever you listen
, and please share this withyour friends and colleagues.
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