Gen Z Fuels Decline in Carbonated Drinks Market Growth

The era of bubbles is fading. About a decade ago, LaCroix sales began to skyrocket. Flavored seltzers appeared everywhere. Grocery stores stocked them. Liquor stores filled shelves with them. The seltzer boom seemed unstoppable.

Today, the landscape looks different. Seltzer fatigue has arrived. Non-carbonated drinks now take the spotlight. Brands like Liquid Death and Surfside Iced Teas dominate consumer attention. The shift moves toward still beverages across both alcoholic and non-alcoholic categories.

Randy Burt serves as Americas director of consumer products at consulting firm AlixPartners. He confirms the trend clearly. “If you think about where there’s more growth, it’s a shift more to still,” he explained. Consumer interest has pivoted away from carbonation.

Carbonated Beverages Face Volume Declines

Seltzers and carbonated drinks will not disappear entirely. Yet their growth has slowed dramatically. Generation Z increasingly seeks options without bubbles. Beverage companies now focus innovation efforts on fizz-free drinks.

The alcohol category illustrates this shift most clearly. Malt-based hard seltzers include brands like White Claw. These products saw volume drop 1.1% in the 52 weeks ended April 26. Market research firm Circana tracked the decline versus the year-ago period.

Ready-to-drink premixed cocktails tell a different story. These beverages saw volume grow 46.4% in the same timeframe. Surfside, Sun Cruiser, and BuzzBallz fueled the growth. Anheuser-Busch InBev’s Cutwater Spirits also contributed. That brand offers both carbonated and non-carbonated options.

Gen Z Reshapes Consumption Patterns

Generation Z drives the switch from bubbly to noncarbonated drinks. This generation typically includes people born between 1997 and 2012. Over their lifetime, soda consumption dropped dramatically from its 1998 peak. Reusable water bottles became a staple accessory. New drinks like refreshers and dirty soda went mainstream.

Gen Z wants to try new products broadly. Older generations show more brand loyalty. They stick to favorite beers or cocktails. Younger consumers embrace different mentalities.

Industry experts observe this consumption shift clearly. “We’re seeing a lot of promiscuity within consumption and alcohol around new products,” one analyst noted. The rise of White Claw and Truly began about eight years ago. Now consumers jump to newer products quickly. Surfside and Sun Cruiser benefit from this behavior.

Generational Divide Emerges Between Millennials and Gen Z

A generational shift separates Gen Z from millennials. Millennials embraced seltzers enthusiastically. They couldn’t get enough of carbonated options. Gen Z consumers prefer different choices as they reach drinking age.

Alcoholic preferences reflect this divide clearly. Non-carbonated alcoholic drinks gain traction among younger drinkers. The market responds with expanded product lines. Innovation accelerates in the still-beverage category. Companies recognize where future growth lies.

Global Market Pressures Mirror US Trends

Brazil’s carbonated soft drink market illustrates related pressures. Growth there slowed to low single digits. Health awareness reshapes consumption patterns. Regulatory pressures intensify across major markets.

The cola segment retains roughly 60-70% of volume share in Brazil. Lemon-lime, orange, and private-label formulations capture incremental share. Value pricing and flavor variety attract cost-conscious consumers. Domestic production covers the vast majority of supply.

In Brazil, reduced-sugar and zero-calorie variants now account for 25-35% of retail soda volume. Front-of-pack warning labels propel this shift. Consumer preferences move toward health-oriented beverages. This trend mirrors patterns emerging in US markets.

Private-Label Brands Gain Market Share

Private-label and regional brand penetration expanded to roughly 10-15% of market volume in Brazil. Large grocery chains prioritize margin-protective store-brand offerings. Discount retailers follow similar strategies. Cost pressures drive retailers toward private-label products.

Convenience-oriented packaging drives innovation in Brazil. 237-ml cans, multi-packs, and PET bottles under 500 ml grow at double-digit paces. These formats reflect on-the-go consumption habits in urban centers. Smaller packages sell better among younger demographics.

Industry Faces Multiple Headwinds

Municipal and state-level sugar tax proposals intensify pressure. These create uncertainty for pricing strategies. A national tax in markets like Brazil could lift retail prices by 15-25%. Such increases would depress volume growth significantly.

Aluminum can supply constraints pressure manufacturers. Volatile global aluminum prices compound the problem. Packaging costs represent 20-30% of total production cost for canned soda. These constraints hit carbonated beverages hardest. Still drinks require less specialized packaging.

Last-mile distribution challenges grow in dense urban centers. Cooler-space allocation at point-of-sale becomes critical. Retailers demand higher slotting fees as SKU counts multiply. Companies must navigate these bottlenecks strategically.

Future Outlook Favors Still Beverages

The beverage industry stands at an inflection point. Carbonated drinks retain significant market share. Yet growth momentum shifts decisively toward still options. Gen Z preferences will shape category dynamics for decades.

Companies invest heavily in non-carbonated innovation. Product development teams focus on flavor variety and health positioning. Marketing budgets shift toward younger demographics. Brands that adapt quickly gain competitive advantages.

The seltzer boom provided valuable lessons. Consumer tastes evolve rapidly in beverage categories. Brand loyalty weakens among younger generations. Companies must innovate continuously or risk irrelevance. The still-beverage revolution is just beginning.