Why drinks companies will struggle to break Generation Z - Consumer Trends

This month, Ben Cooper examines what a new report from marketing consultants Protein on Generation Z - or Gen Z - consumers may mean for marketers, particularly for those in the drinks arena.

A recently-released report from brand marketing consultants Protein looking at Gen Z consumers strikes a distinctly positive tone when describing the generation that is just starting out in a challenging and daunting world. In his introduction, Protein CEO William Rowe describes Gen Z - consumers aged between 16 and 24 - as "informed, inquisitive and self-educating, with a heightened awareness of race, gender and politics". He also highlights the importance they attach to pursuing personal progression and communal creativity.

Speaking to just-drinks, Rowe exhibits patent enthusiasm for the young consumers whose attitudes and behaviours he has been studying.

"It's fascinating," he says. "I haven't decided whether it's completely terrifying or incredibly hopeful that these guys coming through are so switched on, so driven. But equally, it also feels as though they're having fun."

The report is based on interviews with experts, a literature review, a global survey of 3,400 people aged between 16 and 24, and "ethnographic interactions".  That is to say, the researchers "chatted to, hung out with and explored our ideas with the very people we were studying, to test their validity".

Unsurprisingly, the report also reveals huge dissatisfaction among Gen Z consumers with the current world order and scepticism towards established institutions, including the media, companies and brands. Only 28% of the survey said they trust the media, while just 22% said they trust brands.

Youth has always been sceptical of the established order, but this appears to be even more pronounced in the current cohort of young consumers. Scepticism of brands is nothing new either, yet the report's findings suggest this has hardened among these younger consumers, making them tougher to access and befriend than ever. "The discontent is palpable," the report states, citing protests against Uber and New Balance as chastening examples of Gen Z consumer activism.

Overcoming scepticism through skilful marketing may still be possible, but this generation is savvy too. When asked to consider contemporary brand advertising, just 28% of the survey said they believe the terms "authentic", "craft", "heritage", "artisanal" and "legacy" are still relevant.

Consumer research showing the importance that Millennials - aged 24 to early-30s - and Gen Z attach to the values behind the brands they are asked to buy, is clearly influencing how companies operate - and how they communicate to consumers. However, for any companies that believe this offers immunisation from Gen Z scepticism, Protein counsels caution.

When Gen Z consumers were asked about brands introducing cultural diversity and political statements into campaigns, some 42% gave a negative response because brands are using or misrepresenting a community or movement. Indeed, Protein cites a salutary example from the drinks sector. "As demonstrated by the widely-criticised Pepsi and Kendall Jenner campaign, brands need to be careful when treading political territory that's not theirs, even when coming with good intentions," the report states.

How politicised marketing, palate burnout and the new on-premise will shape the future of drinking - Analysis

For brand marketers, then, Gen Z is a tough crowd. But, for drinks brands, there is an added challenge. Some 28% of Protein's survey said they have started drinking less and 26% said they had never drunk. Meanwhile, only 10% said they had started drinking more as they get older. Such trends have also been widely observed in Millennials but, according to Rowe, these changing attitudes to drinking are "significantly more obvious" among Gen Z consumers.

Another characteristic observed in Millennials that presents strongly in Gen Z, Rowe adds, is "quality over quantity" when drinking. Gen Z consumers are being "much more 'connoisseurial' about their purchase decisions". Like Millennials, they are increasingly interested in the ingredients in drinks, while new styles of drinking venues are emerging, offering the kind of mix of music, food and drink that Gen Z consumers are seeking.

As a caveat, Rowe stresses that such trends are seen more among early adopters, but even these "small fires", as he puts it, will be of interest to alcohol companies trying to predict what the mainstream drinks market might look like in five or ten years' time.

It may be glib to say today's young adults believe the world situation is far too parlous for them to waste time getting drunk, but Rowe sees a link between the importance Gen Z consumers attach to productivity and personal and collective progression and their relative abstemiousness.

"One of the reasons that they are drinking less is because they don't want to be hungover," he says. "Certainly, we feel this is one of the most significant drivers of a much more considered and reduced alcohol consumption."

Protein asked its survey respondents what would worry them most about getting drunk at a party. Some 20% said spending too much money, 21% said pictures and videos appearing on Instagram and 29% said damaging their health. Coming out on top, at 30%, was being too hungover to be productive.

These findings are all the more notable given the recent publication of a paper in the British Medical Journal by Dr Tony Rao, an expert in old-age psychiatry in the UK, suggesting Baby Boomers are now the generation most at risk from substance abuse, with alcohol misuse the most prevalent. According to the paper, the number of people aged over 50 experiencing problems from substance misuse is growing rapidly, with the numbers receiving treatment expected to treble in the US and double in Europe by 2020. If this were not so worrying in itself, one might venture that Gen Z is putting older generations to shame.

What is clear is that whatever else Gen Z may be, feckless they certainly are not. It would also be easy to define this generation in terms of its palpable anger and discontent and its distrust of established institutions. However, Protein's report emphasises the spirit of enterprise it found. "The youth have realised that, to make it as a generation, they're going to have to subvert traditional hierarchies and craft their own path."

This resolve and entrepreneurial verve will be bolstered by an almost innate fluency with digital technology that naturally surpasses that of any previous generation. "Digital-first lifestyles have led to a unique ability to launch incomplete ideas and to test and shape them with the support of a growing network," the report concludes.

Clearly, Gen Z shares some traits with Millennials. But, to conclude that Gen Z consumers are simply "the same, only more so" would not do them justice. Rowe will not be alone in concluding that the Gen Z view is "a world apart" from how older generations saw things at their age, let alone how they view the world now.

Establishing empathy and common cause with consumers is more crucial for brands today than ever it was. With Generation Z, that will be no easy task.