How does an industry grow when its most coveted consumers suddenly decide to take a break? The falloff in consumption from Gen Z and Millennials will most likely continue to be the most impactful trend the alcohol industry faces in 2025 — and your biggest hurdle, whether you produce beer, wine, spirits or any other alcoholic beverage.
Today’s youngest consumers, Gen Z (those up to 28 years of age) and a good share of Millennials (those between 29 and 44) continue to differentiate themselves from previous generations by embracing the “sober curious” movement. This makes the already tough, highly competitive business you all know and love that much tougher.
As Diageo Bar Academy puts it, “When we also take into consideration that over 40% of Gen Z have never tried alcohol [Nielsen 2024], it’s safe to say the drinking landscape is changing significantly.”
Also looming over the industry in 2025 is the potential impact of tariffs. Much will depend on whether they become short- or long-term policy. However, news in January that British Columbia swiftly chose to stop sales of American liquor from “red” states was likely a warning sign of a challenging year ahead.
But before you throw up your hands entirely in frustration, remember there remains plenty of opportunity in the year ahead. RTDs, agave and non-alcohol beer, wine and spirits continue to fly off the shelves.
Bev-Alc Bright Spots in 2025
Spirits
If recent trends continue, the year ahead should continue to see RTDs grow faster than any other segment of the spirits category. It has outpaced all other segments by wide growth rates for several years running.
One of the key trends to watch in 2025 is a continued shift to more premium spirits-based RTDs. According to the Distilled Spirits Council of the U.S. (DISCUS), canned cocktails have grown faster than any other spirit segment — 35.8% by revenue from 2021-22. Spirits have a lot of room to grow in RTDs, as they only comprise 13% of the market, compared to 86% malt-based and only a sliver, 1%, wine-based.
The second fastest-growing spirits category has been agave, mainly tequila and mezcal, which grew by 17.2% from 2021-22. In 2025, expect the vast number of tequila fans to continue to branch out into other agave-based or related beverages like sotol and raicilla.
American whiskey is predicted to face more challenges in 2025. While sales grew by 10.5% in 2021-22, more recent stats indicate a sharp downturn. Many producers have been left with excess stock of aging whiskey and are seeking creative ways to utilize it, such as RTDs.
Beer
Non-alcoholic beer will likely continue to be the big news in 2025. It fits the lifestyle of younger drinking-age consumers with their embrace of the “sober curious” movement.
Overall, the beer category is expected to continue it’s slightly downward trend. In 2024, beer sales were down by -0.7%, with the growth centered on imports, super premium beer and NA beers.
As the craft beer industry matures and chases the hard-to-reach younger consumer, expect 2025 to see a retrenchment of sorts. Breweries are likely to focus on tried-and-true mainstays instead of the over-the-top creations, which were so common during craft beer’s boom years. Breweries that keep teams nimble and accurately project demand and production will thrive.
Wine
Another category that will be challenged in 2025 is wine, which is experiencing its most significant sales drop in 30 years. Warehouses are dealing with an oversupply that may not be fully resolved until 2026 or beyond.
There are bright spots ahead. Younger consumers are driving sales of lighter, more refreshing varieties. White wines like sauvignon blanc, pinot grigio and prosecco are seeing positive growth rates.
“The varietal shifts may be another indicator that the rotation to younger consumers is underway,” says analyst Rob McMillan of Silicon Valley Bank Wine Division.
Like beer, low and no-alcohol wines are growing at a dynamic pace. More research and development dollars are being poured into advancing this category, so expect it to see continued growth and maturity in the coming years.
Bev-Alc Challenges in 2025
The alcohol industry will continue to experience some serious headwinds through the rest of 2025. This includes:
- New proposed warning labels on all alcoholic beverages in the U.S.
- New weight-loss drugs like Ozempic, which dampen food and drink consumption
- Competition from the legalization of recreational marijuana in nearly half of all U.S. states
- A long-term decline in on-premise socializing overall, including amongst younger potential drinkers
- The continued impact of inflation since the pandemic
- The possible increase in labor costs – and shortages – associated with mass deportations of migrant workers
- Continued possible impacts from climate change
Bev-Alc Growth Strategies for 2025
Don’t focus solely on the challenges without looking for the many opportunities to counter the expected headwinds this year. The industry is primed for innovation and diversification.
Revamp Your Marketing Strategy
In his annual wine report, McMillan suggests the wine industry will need to make a concerted, innovative marketing effort to appeal to younger drinking-age consumers. This is good advice for any bev-alc producer, as we all face the same challenge of growing sales by appealing to younger drinking-age customers.
PRO TIPS:
- Recruit social media influencers: They can promote your brand and help spread the word, broadening its appeal to new fans.
- Hold live events: These can be tastings, competitions or classes. Include local celebrities to generate extra excitement. Remember, today’s young consumers need a good reason to get off the couch.
- Membership or rewards clubs: Start one if you haven’t already. It’s a great way to engage your fans and foster repeat sales.
Are you a winery? Check out our Guide to Growing Your Winery in a Competitive Market.
Go Hyper-Local
2025 will be a good year to focus on your business close to home. For craft producers, it makes sense. After all, you source local ingredients, produce your beverages locally, and sell to your community.
Design your marketing and advertising around your neighborhood, town or region. You can even create packaging and product names representing iconic buildings or local landmarks.
If you’ve struggled to get distribution nationally or regionally, it may be time to fall back on the strengths of going hyper-local.
Take Inventory of Your Operations
Looking for a productive way to use those quieter selling periods? It’s actually the perfect time to take a closer look at how your operation runs and what tech you’re using.
As the industry continues to shift, you need systems and processes that can keep up with your evolving business. Many bev-alc producers have realized their current patchwork of software just creates frustrating silos between departments and product categories.
Take advantage of downtime to see if your software and processes are actually holding you back. A good technology review might reveal ways to streamline everything from production to compliance across your entire operation. Smart moves now can position you for much smoother growth when the industry hits another peak!
Turn Lemons into Spiked Lemonade
While 2025 will bring challenges, there’s still ample opportunity to modernize and innovate in the craft beverage space. Whether expanding into new products or categories or upgrading your technology infrastructure, now is the time to address these challenges head-on.
Crafted ERP can help unify your operations across multiple product categories, break down operational silos, and gain the real-time insights you need to make confident decisions in this evolving market. Don’t be left behind by forward-thinking beverage companies. Let’s connect today.
