Australia: Beer industry facing crisis due to increasing costs and low demand from Gen Z consumers

A report by behavioural insights consultancy, Canvas8 explores the shifting preferences of Australian consumers, indicating a decline in beer consumption. The factors driving this change are increasing costs, cultural associations with beer, and the influence of wellness culture among Gen Z consumers.

Similar trends in decreasing alcohol consumption are also evident in Singapore, where local cocktail bars increasingly offer low or no-alcohol beverages. Thus, monitoring the Australian market’s shifting dynamics could provide valuable insights for Singapore’s alcohol industry.

Canvas8, the organisation behind the report, is a consumer insight agency with offices in London, Los Angeles, New York, and Singapore. The company focuses on understanding media, communications, and product development, so as to help their clients better connect with their consumer base.

This particular report, titled “What Do Aussie Drinkers Want from Their Beer?“ by Nikki Natividad, examines changing preferences among Australian drinkers. In particular, there is a growing demand for beers with lower alcohol content.

As a whole, the proportion of Australians who drink beer has decreased significantly. In the last year, 32.5% of Australians drank beer, a 5.5% decrease from the pre-pandemic years. While this number may not initially seem significant, this proportion is the lowest level in around 80 years.

Overall, the decline is hitting craft beer manufacturers the hardest. Craft beer is usually created by local, independent breweries, who dedicate their business to crafting unique flavours for their customers. Generally, these drinks are usually tailored and marketed to the local community.

The decreasing demand comes hand in hand with rising costs and tax pressures from the Australian government, which has strained many of these small businesses. As a result, craft beer bars may pass expenses onto their consumers. In turn, these individuals, who are already juggling a lower disposable income and an increase in costs of living, will then be increasingly discouraged to patronise their establishments. Even when they do go on nights out, they may purchase less when they do. This will fuel a cycle of declining consumption.

Furthermore, this downward trend is unique to beer. Drinkers these days appear to increasingly favour spirits and wine as opposed to beer — in the present day, there are around 900,000 less beer drinkers since 2020.

According to the report, post-war European migration may have elevated wine in Australian culture, making beer appear less refined by comparison. Wine, often associated with luxury and sophistication, contrasts with beer’s image as a casual drink for wild pub nights or sporting events. These class and activity-based connotations may drive Australians toward drinks like wine, which project a more refined image, or spirits, which offer more value in terms of alcohol content.

The role of Gen Z in propelling this overall change cannot be ignored as well. While 68.1% of Australian adults report regularly consuming alcohol, 38% are aiming to reduce their intake, with the 18 to 29 age group leading the trend. Of the younger Gen Z’s, aged 18 to 24, 76% prefer socialising in non-alcohol settings.

The reasons as to why can be attributed to a few factors. Young people are increasingly prioritising healthier lifestyles and are more conscious of how their choices impact long-term well-being. Instead of binge drinking and late-night outings, many Gen Z individuals focus on clean eating, exercise, and self-care routines. Additionally, the rising cost of nightlife is another deterrent, leading more young adults to opt for nights in rather than expensive evenings out.

This trend isn’t confined to Australia. Countries like the UK and Germany have seen similar shifts, as has Singapore. It appears that the nightlife industry may need to rethink its strategies, either by offering more low or no-alcohol options or by reinventing itself to attract a generation less interested in traditional drinking culture.

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