Alcohol consumption might be in decline due to a cocktail of reasons, so to speak. There are affordability issues keeping people from splurging at their favorite bars, particularly as the economy slackens in President Donald Trump’s second term, including high gas prices, sluggish job growth, a sagging stock market, and surging electricity costs, among others.

Increased health awareness also likely plays a role. Medical studies increasingly detail how alcohol contributes to cancer, heart disease, and liver disease.

Perhaps most surprisingly, there’s been a fall in alcohol consumption among young people, an abrupt shift from what used to be a rite of passage for the college set, though industry leaders push back on that Generation Z-is-drinking-less narrative a bit. Andrew Heritage, chief economist for the Beer Institute, said that while it is true Gen Z is consuming less alcohol than other generational cohorts did at their same point in life, there are caveats.

“It’s no secret that overall alcohol sales are declining by every type of beverage alcohol, beer included,” Heritage said in an interview.

And the recent trend line of less drinking shows a dramatic drop-off. In a nation that, ironically, a century ago, temporarily made Prohibition part of the Constitution, the share of adults reporting alcohol consumption has fallen for three years in a row. In 2022, 67% reported alcohol consumption, which fell to 62% in 2023, 58% in 2024, and hit that record low of 54% last year.

Economic factors 

Lower alcohol use comes amid major economic uncertainty. While the labor market is relatively stable, and unemployment is not at near-recession levels, consumers have been grappling with years of too-high inflation, which has caused consumer sentiment to plunge.

“Consumer confidence has had a significant drag on the U.S. spirits industry growth, and you’ll see it’s had an even broader drag in some of the other sectors in beverage alcohol as well,” Chris Swonger, president and CEO of the Distilled Spirits Council of the United States, said in an interview.

Inflation has been making life feel more unaffordable. It’s a troubling trend that spiked during former President Joe Biden’s single term in office, and has continued, to varying degrees, after Trump returned. Heading into the Nov. 3 midterm elections, voters report that cost-of-living issues and affordability concerns are top of mind, and some argue that could be part of the reason why people are consuming less alcohol.

Swonger said all of the issues with affordability continue to erode “discretionary income.”

“Which has an impact [on] industries like ours that are premium categories, like distilled spirits,” Swonger said. He also pointed out that the youngest drinkers have lower purchasing power right now.

Michelle Minton, managing director of drug policy at the Reason Foundation, said in an interview that people have been “pulling back on luxury spending” in recent years.

Consumer sentiment fell to a record low in April, dropping further than it did during the worst of the Great Recession and when the country was locked down during the COVID-19 pandemic.

Heritage said he thinks the economic environment is the biggest factor at play right now.

“I think probably two-thirds to three-quarters of the current picture can be explained from just pure macroeconomic stress that the consumer feels,” he said.

The health dynamic

Some are also highlighting concerns about alcohol consumption and health.

“The data indicate more awareness about alcohol’s deleterious effects when you overdo it,” Dr. George Koob, director of the National Institute on Alcohol Abuse and Alcoholism, one of the 27 institutes at the National Institute of Health, said in an interview.

The Gallup survey on alcohol consumption found that, for the first time, a majority of U.S. adults said that they think drinking in moderation, defined as “one or two drinks a day,” is bad for one’s health.

“Today’s belief that moderate alcohol consumption is unhealthy follows increases from 28% in 2018 and 39% in 2023 to 45% a year ago,” the report reads. “By contrast, from 2001 through 2011, the percentage with this view hovered near 25%, roughly equal to those who considered drinking beneficial.”

Koob said the health concerns are particularly seen in younger people concerned about sleep quality, their anxiety levels, and alcohol’s interactions with mental health.

“They want a healthier lifestyle,” he said.

Minton said she thinks, particularly for the younger generation of drinkers, health concerns are playing a role in reducing their consumption of alcohol products.

“That’s a reflection of a lot of the public health research that is pointing towards certain harmful health effects,” she said. “Younger people are very health-conscious in that way.”

Other factors

There has also been a rise in alcohol alternatives that might be supplanting its use among some consumers.

“The rise of marijuana and hemp cannabinoids as a replacement for alcohol is definitely something we’re seeing, especially among younger generations,” Minton said.

But Heritage said research hasn’t necessarily borne out the conclusion that THC or cannabinoid-infused alcohol alternatives have meaningfully driven down overall alcohol consumption.

“Absence of evidence is not evidence of absence, but we also would expect to see if there was a sizable effect, for that to pop in in the numbers, and it just has not yet,” he said.

There are also questions about GLP-1 drugs, such as Ozempic, and their ability to suppress alcohol consumption. They have become increasingly popular as fat-loss drugs, but some say they also might cause people to consume less alcohol.

“We know it decreases drinking from anecdotal reports and limited studies,” Koob said, although he said the bigger question is whether it decreases drinking and helps with alcohol use disorder.

Heritgage said that minor factors such as GLP-1 usage could be playing a small role in the overall decline.

“Like GLP-1s, for example, I think you could maybe explain a tenth to two-tenths of the decline in beer last year, when I went and tried to crunch some numbers on that,” he said.

Industry response

The Washington Examiner asked Swonger what the spirits industry can do to help itself expand in light of the declines in alcohol consumption.

“Creative innovation,” he responded, “and the industry will continue to do that and bring these products to life.”

He was hopeful for the outlook.

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“Despite the economic winds, there’s no substitute for having a great cocktail with friends that’s creative, that provides a taste profile that may be different, that one person’s looking at versus another person,” Swonger said.

“And the industry just needs to continue to be consumer-led and bring innovative, great products to market, and the industry is going to continue to thrive,” the CEO added.

Zach Halaschak (@zhalaschak) is the economics reporter for the Washington Examiner.