Gen Z Is Drinking Less Alcohol — But What Does That Mean for Packaging Demand?
If you’ve been following beverage industry headlines lately, you’ve probably seen the news: Gen Z is drinking less alcohol than any generation before them. For producers, brewers, winemakers, and packaging suppliers alike, that sounds like a warning bell. But before you start worrying about falling demand for cans, bottles, and closures, it’s worth taking a closer look at what’s actually happening — because the story is more nuanced, and frankly more interesting, than the headlines suggest.
The short version: packaging demand isn’t shrinking. It’s shifting. And for beverage brands paying attention, the shift represents as much opportunity as it does challenge.
The Numbers Behind the Trend
The data on Gen Z alcohol consumption is real and worth understanding. A 2023 Gallup survey found that the share of adults under 35 who drink at all dropped ten percentage points over two decades — from 72% in 2001–2003 down to 62% by 2021–2023. More recently, the overall U.S. drinking rate hit 54% in an August 2025 Gallup poll — the lowest rate recorded in nearly 90 years, according to the survey’s history.
The impact is being felt across categories. U.S. wine volume fell 3% in 2023, continuing a multiyear decline driven largely by weaker engagement among younger consumers. Craft beer recorded its third consecutive year of volume declines in 2025, with the Brewers Association reporting a 5.1% drop in production for the full year. Spirits production has softened too, with U.S. whiskey output reaching its lowest point since 2019.
So yes — the trend is real. But here’s what often gets lost in the coverage.
Why Gen Z Is Moderating — and Why It's Not the Whole Story
There isn’t one single reason younger consumers are pulling back from alcohol. Researchers point to a combination of cultural, health, legal, and social factors that have been building for decades.
Health consciousness is a major driver. Younger generations are far more attuned to the relationship between alcohol and long-term wellness than their predecessors. Where alcohol marketing once leaned into “party hard” messaging, today’s brands are careful to frame drinking as part of a balanced lifestyle — because that’s what their audience demands.
Social patterns have also shifted. With in-person socialization declining sharply — the average time Americans spent with friends dropped from 30 hours per month in 2003 to just 10 hours by 2020, according to the U.S. Surgeon General — the bar and party culture that long drove alcohol consumption has a smaller foothold.
Cannabis legalization in roughly half of U.S. states has added another layer of competition for consumers looking to unwind. And perhaps most importantly, Gen Z’s formative social years happened online, not at bars — making alcohol a less central part of their identity than it was for previous generations.
But here’s the nuance: Gen Z isn’t anti-beverage. They’re selective. And as they age into higher incomes and fuller social lives, their habits are already beginning to evolve. IWSR data shows that the share of legal-drinking-age Gen Z adults who reported drinking alcohol in the past six months rose from 46% in 2023 to 70% by 2025 in the U.S. alone. The picture, in other words, is more complicated than “Gen Z doesn’t drink.”
The Real Story: Beverage Demand Is Reallocating, Not Disappearing
What’s actually happening in the market isn’t a collapse in beverage consumption — it’s a reallocation across categories. As alcohol loses share, an entire ecosystem of alternative beverages is growing rapidly to fill that space, and all of it still needs to be bottled, canned, sealed, and shipped.
Non-alcoholic beverages are on a significant growth trajectory. The U.S. non-alcoholic beverage market is projected to grow from $178 billion in 2025 to nearly $247 billion by 2032, at a CAGR of 4.78%. Non-alcoholic beer volume alone rose 175% between 2019 and 2024, and experts predict it will become the world’s second-largest beer segment in the near future. Every single one of those products needs a crown cap, a ROPP closure, or a tamper-evident plastic top.
Functional beverages — drinks formulated with specific health benefits like gut support, energy, focus, or stress relief — are growing even faster. The global functional beverage market was valued at $280 billion in 2025 and is projected to reach $682 billion by 2035, growing at a 9.4% annual rate. This category includes energy drinks, sports drinks, enhanced waters, adaptogenic beverages, and probiotic drinks. Functional drinks now make up roughly 25% of all new beverage SKU launches, and the packaging formats they’re choosing — aluminum cans, glass bottles, tamper-evident plastic closures — are squarely in the wheelhouse of suppliers like us.
Kombucha is a particularly telling example. Once a niche health food product, kombucha has crossed into the mainstream. The North American kombucha market reached $2.1 billion in 2025, growing at around 14% annually. Gen Z and millennials drive more than 65% of U.S. purchases, and they’re increasingly motivated by flavor and everyday refreshment rather than purely functional reasons — which means kombucha is competing directly with beer and soft drinks for the same occasions. Notably, one of C&C’s own customers, Brew Dr. Kombucha, is right at the center of this growth story.
RTD (ready-to-drink) beverages — canned cocktails, hard seltzers, sparkling functional drinks — are also a major growth category. IWSR projects the U.S. RTD market will grow at a 3% CAGR through 2028, while other analysts project even stronger figures for RTD cocktails specifically, with one forecast estimating a 14.1% CAGR between 2025 and 2032. And it’s worth noting: RTDs are almost universally packaged in aluminum cans.
What This Means for Packaging
For anyone in the packaging supply chain, the practical takeaway is this: the total volume of beverage production is not collapsing — it’s diversifying. Brands that once built their identity around craft beer or wine are expanding into functional beverages, non-alcoholic alternatives, and RTD formats. New entrants are launching into the fastest-growing segments every quarter.
All of that activity translates into real, ongoing demand for closures, caps, and packaging components across a wide range of formats:
- ROPP aluminum closures and CT closures remain critical for the growing functional water, kombucha, and premium non-alcoholic beverage categories, which increasingly use glass and aluminum bottles to signal quality.
- Tamper-evident plastic closures are a staple for the rapidly expanding juice, enhanced water, and functional beverage segments.
- Aluminum cans and can-ends are the dominant format for energy drinks, RTDs, hard seltzers, and non-alcoholic beer — all high-growth categories.
- Crown caps continue to serve craft beer, kombucha, and sparkling beverage producers who haven’t yet made the move to cans.
The shift also has implications for how producers think about packaging procurement. As beverage brands diversify their product lines — adding a non-alcoholic variant here, launching an RTD there — their packaging needs become more varied and their timelines more compressed. That makes reliable, fast-turnaround suppliers more valuable than ever.
The Bottom Line
Gen Z drinking less alcohol is a real trend with real consequences for traditional beverage categories. But the narrative that packaging demand is heading off a cliff misses the larger picture. Beverage consumption isn’t disappearing — it’s evolving. And the fastest-growing parts of the beverage landscape are creating strong, sustained demand for exactly the kinds of packaging solutions that serve producers in every segment.
At Capsules & Closures, we work with producers across beer, wine, spirits, kombucha, juice, and functional beverages — and what we’re seeing firsthand reflects what the data shows. The brands thriving right now aren’t the ones sitting still. They’re the ones adapting their product lines, exploring new formats, and building supply chains that can keep up with the pace of change.
If your beverage lineup is evolving — whether you’re launching a non-alcoholic variant, moving into cans, or scaling a functional beverage brand — we’re here to help you find the right closure solution for where your business is going. Get in touch with our team today.
About Capsules and Closures
Capsules & Closures, LLC is a leading U.S.-based supplier of lids, crowns, closures, bar tops, cans, and capsules for the food and beverage industry. For questions on sourcing, pricing, or market conditions, contact Capsules & Closures directly.
