Key takeaways
- The global alcohol market contracted for the third consecutive year in 2025, with total volumes down 2% and IWSR forecasts further decline through to 2031.
- Two forces are reshaping alcohol consumption trends simultaneously: financial pressure, with over a third of consumers citing rising costs as a reason for drinking less, and a deeper values shift. For the first time, a majority of Americans now believe even moderate drinking is bad for their health.
- No and low alcohol products grew at double digits in 2025, RTDs reached one billion nine-liter cases globally for the first time, and cocktail consumption is rising as consumers trade frequency for occasion. The opportunity for retail lies in understanding that shift.
In 2025, the global alcohol market contracted for the third consecutive year. Total volumes fell 2%, the equivalent of 500 million nine-liter cases, according to IWSR. Wine dropped 5%, spirits lost 3%. The United States saw an even steeper fall: total alcohol consumption was down 5%, with beer declining 6%. Marten Lodewijks, IWSR’s managing director and president, called it “a major reset.” What is driving this decline? Is it permanent? And how will the market respond?
Is Gen Z really to blame?
The instinctive answer to who is drinking less points at Gen Z. It is, however, the wrong one, or, at least, an incomplete one. IWSR’s consumer research, drawn from more than 32,000 respondents across 15 markets, found that Gen Z legal-drinking-age participation in alcohol in fact rose from 66% to 74% over three years. The generation most frequently blamed for the alcohol market’s decline is, by participation rate, drinking more than it was in 2023.
The real driver of falling alcohol sales is Baby Boomers. The same analysis identified consumers aged 61 and older as the generation exerting the strongest downward pressure on global volumes in 2025, cutting participation, frequency, and intake simultaneously. Boomers now hold the lowest participation rate of any generation at 71% — below Gen Z’s 74%, Millennials’ 81%, and Gen X’s 77%.
The more accurate picture across alcohol consumption trends is one of whole-market moderation. Drinkers across all generations consumed an average of 3.9 drinks per occasion in the first half of 2026, down from 4.4 in 2024. IWSR’s No/Low Alcohol Strategic Study adds a further dimension: among consumers of no and low alcohol products, 75% of Gen Z report moderating their intake over the past six months, alongside 74% of Millennials, 66% of Gen X, and 55% of Boomers. Moderation, in other words, is a market-wide behavior. And when Gen Z does drink, the data suggests they are choosing deliberately: 84% reported drinking cocktails in the past six months, more than any other generation.
Why is this happening?
The decline is not the product of a single cause. Some of it comes down to cost. Gallup’s 2025 Consumption Habits survey found that 54% of American adults now drink alcohol — the lowest participation rate in 90 years of tracking, down from 67% in 2022. Over a third of those drinking less in 2026 cite the rising cost of alcohol as a direct reason, according to Datassential. When household budgets tighten, discretionary purchases contract.
But the second force is a change in attitude that no price recovery will reverse. More than 40% of drinkers say alcohol is no longer an important part of their lives. Gallup recorded a further first in its survey history: a majority of Americans (53%) now believe that even moderate drinking is bad for their health. This reflects a genuine shift in how consumers relate to alcohol, its place in social life, its relationship to wellness, and what it signals about a person’s choices.
IWSR’s assessment leaves little room for optimism on this front: this is not a temporary retreat. This moderation trend has become a permanent feature of the market, driven by lifestyle choices rather than economic pressure alone. Prices may ease. The same cannot be said for how people now think about drinking.
Where is the volume going?
Not all of the lost alcohol volume is simply disappearing. The same IWSR data that records the decline also points to where spending is moving. No-alcohol beer grew 8% in 2025, no-alcohol spirits 8%, no-alcohol still wine 13%. RTDs — ready-to-drink formats — reached one billion nine-liter cases globally for the first time. IWSR forecasts no-alcohol beer will double its share of the global beer market, from 2% in 2025 to 4% by 2033. These numbers represent a market finding new formats for the same social occasions, at lower or zero alcohol content.
The cocktail category points to something different. According to NIQ’s Mixed Drinks Report, 40% of spirits consumers are drinking more cocktails than a year ago, and 56% are buying them at least once a week. IWSR’s Bevtrac survey adds a generational dimension: 84% of Gen Z legal-drinking-age consumers reported drinking cocktails in the past six months — more than any other generation. In a market where alcohol sales are falling broadly, the occasion-led, higher-value single serve is gaining ground. Consumers are not abandoning the ritual of drinking, instead, they are becoming more selective about when and what they choose.
What does this mean for retail?
Volume contraction does not mean spend contraction; it means spend concentration. Consumers who still drink are making more deliberate choices, spending more per occasion on fewer, better products. Quality, occasion and meaning are the axes around which the alcohol market is now being won or lost, for brands and retailers alike.
The no and low alcohol category represents the clearest shelf opportunity in the drinks aisle right now. Growing at double digits while the broader alcohol market falls, it is a mainstream response to a mainstream shift in how people drink. Retailers who treat it as a niche risk ceding margin to those who don’t.
The wider read-through for consumer goods is straightforward. Three consecutive years of declining alcohol consumption trends, across every generation and every major market, amount to a structural change in consumer behavior. The industry’s task now is to catch up.
