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How Gen Z is Shaking Up the Beverage Industry: From Functional Drinks to Sober Curiosity

Sober Curiosity Gen Z’s Preference for Health-Conscious Drinks

Times are changing, and Gen Z, the digital-native generation born between 1997 and 2012, is driving this change, especially in the beverage industry. As the COVID-19 pandemic ravaged the globe, it spurred an increased focus on health and wellness, turning the tide in beverage preferences. Rather than reaching for sugary sodas or caffeine-packed energy drinks, today’s consumers are more interested in functional beverages with tangible health benefits. Indeed, six in 10 consumers globally are seeking food and drinks to support their immune systems, according to Innova’s Consumer Survey 2020.

More than just a passing fad, this health-conscious trend is expected to stick around, with the global functional beverage market predicted to grow at a Compound Annual Growth Rate of 8.66% from 2019 to 2024, according to LINCHPIN.

The Rise of Functional Beverages: The Healthy Alternative to Energy Drinks

Many Gen Z and Millennial consumers are looking for beverages that do more than just quench their thirst. They want drinks that support their active lifestyles and reflect their health-conscious values. For instance, in a survey conducted by Optimum Nutrition, 75% of respondents preferred beverages with nutritional benefits, and 59% enjoyed non-alcoholic energy drinks for social occasions.


One Gen Z influencer known as Corporate Natalie, famed for her comedic work-life balance content on TikTok and Instagram, explains, "Energy drinks came to mainstream popularity with the Millennial generation. We've become accustomed to reaching for beverages to address energy needs. Still, we are also conscious about what we're putting in our bodies and how our drink choices reflect our personalities," she told Optimum Nutrition.

Oregon-based company Riff is one brand that has recognized this trend, launching a line of energy drinks called Energy + Immunity, which utilizes cascara—an often discarded part of the coffee fruit—as a natural caffeine source. The energy drink also provides a daily dose of vitamin C, highlighting the emphasis on functional benefits in beverage choices.

Non-Alcoholic and Low-Alcohol Drinks: The New Normal

Alcohol's appeal seems to be fading among younger generations. Health, mood, and social image concerns have driven Gen Z towards low-alcohol or non-alcoholic choices such as juices, sports drinks, and innovative mocktails. The desire to avoid the side-effects of alcohol has also given rise to CBD-infused beverages, a segment expected to exceed $1B in annual sales by 2025, according to Brightfield Group.

Brands like Recess are capitalizing on this trend, offering a range of sparkling waters infused with adaptogens and CBD hemp extract, while Amass has created Afterdream, a premium cannabis-infused non-alcoholic spirit.

The Rise of the ‘Meditative Drink’ Trend

As awareness of mental health issues like depression and anxiety grows, the market for beverages that promote mindfulness and relaxation is expanding. Adaptogens, medicinal herbs known for their calming and mood-boosting effects, have become a buzzword in the wellness sector, with Gen Z leading the demand for non-alcoholic beverages that offer mood-enhancing or anxiety-relieving effects.

Companies like Blossom are rising to the occasion, creating lines of super-food lattes termed "meditation in a mug." The functional beverage brand Kin Euphorics, co-founded by Bella Hadid, has also launched its non-alcoholic, non-caffeinated Dream Light beverage infused with ingredients like Reishi Mushroom and Melatonin to promote restful sleep.

How Beverage Brands are Responding

As this Gen Z-driven trend reshapes the beverage landscape, innovative brands are stepping up to cater to these new consumer preferences. Ocean Spray, for instance, has launched a new brand of functional infused waters under the B1U™ brand, free from artificial sweeteners and sugar.

Meanwhile, 3rd BEVCO's functional energy drink LAID not only increases focus and delivers clean energy but also claims to enhance sexual performance, appealing to the wide-ranging health-conscious interests of today's younger consumers.

A New Era in the Beverage Industry

The beverage industry is undergoing a seismic shift, driven by the changing preferences of Generation Z. Their predilection for functional, healthy, and non-alcoholic beverages is shaping the market and encouraging innovation. As this generation's purchasing power increases, the industry will continue to evolve, with innovative drinks that cater to their diverse preferences. This 'Gen Z Effect' is here to stay, ushering in a new era of healthier, more mindful consumption. If brands want to survive and thrive in this evolving landscape, they need to listen and respond to these new consumer demands. One thing is for sure - Generation Z is not just influencing the beverage industry; they're reshaping it.

Picture: BevAlc Insights

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