When it comes to generational marketing, effective marketing strategies can influence purchasing decisions and how each generation interacts with brands — with Gen Z being no exception.

Although marketers are increasingly targeting this younger audience as more of the generation reaches the legal drinking age, Chicago-based Circana, in its recent “State of the CPG Beverage Alcohol Industry” report, notes that Gen Z consumers aged 21-26 also are driving variety and innovation in the beverage alcohol market.

In exploring and identifying key factors that are driving demand in the market, the report points to Gen Z consumers aged 21-26 as leading the charge, propelling innovation in flavor profiles, packaging and product formats.

One category that continues to hold broad appeal is ready-to-drink (RTD) cocktails and hard seltzers, the report notes. The RTD category has more than tripled since 2018, reaching $10.3 billion in sales in 2023, according to Circana.

“Variety packs stand out as the top-selling RTD format, outselling single-flavor packs,” it states. “To meet evolving consumer demands, brands are innovating with crossover products, with an increasing number of non-alcohol brands venturing into the beverage alcohol space.”

Meanwhile, RTD cocktails that resonate with Gen Z consumers aged 21-26 often feature a higher alcohol-by-volume (ABV) content, are made by recognizable brands, and have packaging suitable for diverse occasions, the report notes.

“Today’s beverage alcohol consumers prioritize convenience and desire innovative experiences,” said Scott Scanlon, executive vice president of alcohol beverages at Circana, in a statement. “Exciting flavor profiles will remain a key driver of innovation in this space. Brands that want to remain competitive should explore opportunities to elevate their offerings, incorporating premium ingredients and packaging.”

Will Blum, CEO and founder of Jacksonville Beach, FL-based Bluebird Hardwater, a canned spirit that combines premium spirits with ultra-purified water, notes that evolving consumer preferences and new technologies will continue to shape the ever-growing beverage alcohol industry.

“The beverage marketplace has seen fundamental changes in recent years, due in part to a broader industry effort to align with the values of younger generations,” said Blum, a Gen Zer, in a statement. “Generation Z desires options and experiences, while being increasingly concerned with health and wellness.

“My generation likes non-alcoholic beer,” Blum continues. “Bluebird Hardwater is light enough for the ‘sober-curious’ to enjoy. Crafted from a blend of 96% ultra-purified water and 4% premium spirits, Bluebird redefines what it means to indulge without compromise.”

In Circana’s report, the market research firm notes that there is a noticeable trend among consumers shifting from value to premium options in both the beer and wine categories.

“Gen Z consumers aged 21-26 tend to prefer sparkling wines and those with fruity or sweet notes,” the report states. “In the beer category, sales remain robust, particularly in the convenience channel. Gen Z consumers aged 21-26 also show a preference for a variety of beer options, including flavored alternatives, Mexican imports, and economy brands.”

As brands continue to focus on convenience, innovative flavors and premium ingredients to stay competitive, it will be interesting to see how Gen Z influences the beverage alcohol market in the future.