Drinks With Caroline
Caroline Levy, a veteran Wall Street analyst, delves deep into the world of beverages with some of her hero's.
Caroline’s quick wit, empathetic approach, and vibrant personality allow leaders to be vulnerable and speak truths not typically heard outside of closed-door conversations.
Drinks With Caroline
Bourcard Nesin, Beverage Analyst at Rabobank - Today, young men have less income than young women - hurting alcohol sales.
Young people aren't drinking less because they're health nuts—they're just broke. New data shows Gen Z spends 30% less of their income on alcohol than millennials did at the same age. Is this the end of premiumization or just the beginning?
There's more opportunity to market to women with a college degree. They have money to spend and I think in a lot of ways, because identity is complicated and fluid. Marketing to women isn't going to alienate boys and the example I would use there is hard seltzers.
Speaker 2:Hello friends, old and new, and welcome to Drinks with Caroline. I'm so happy you've joined me for what I believe will be another stimulating conversation with an industry expert, founder or otherwise fabulous person in the consumer industry. Good morning, burkhard, and welcome to Drinks with Caroline. I would like, for my listeners, to introduce Burkhard Nessin, who is an industry analyst in the beverage sector at Rubber Bank and has put out a ground-shaking report on Gen Z and drinking habits, and what I love about Burkhard is that he comes out of the academic field and has written a very data-driven report with some surprising conclusions. So, burkhard, before I let you take it away, just one last thing. You co-host a great podcast called Liquid Assets with some of your colleagues at Rabobank. I've really been enjoying listening to that, and please fill us in on some of the findings from your newest report.
Speaker 1:Thank you for mentioning liquid assets and, if I'm not mistaken, we're trying to get you on the show to talk about what it means to be a good board member. Maybe we'll get that on. And thanks for talking about the report. I've been doing my job for seven or eight years now and written a lot of stuff. Maybe one other report I've written has broken through the way this one has, and I think the reason it's broken through and the reason that a lot of your listeners might have read this is because there's real meat on that bone.
Speaker 1:The inspiration for the report, which is about Gen Z they're drinking, but I think it's a much bigger conversation about what it means to be a kid these days and how that influences behavior in a much larger look at demographics. A lot of the writing about Gen Z is simplistic, it's high level and it's way too broad. I don't think that it's actually actionable to say young people care about health, the health and wellness generation, and I actually don't think that is even the right way to think about that. I actually don't think, even at that high level, saying that Gen Z is all about health and wellness is all that correct.
Speaker 2:Phenomenal. Yes, I love the fact you're stirring the pot and doing it with data. So could we touch on some of your key findings? And you have some great charts throughout the report. We're not going to share those here, but I think if you could just start with the first finding and maybe walk us through the other key items, and I'm sure we'll have a lot to talk about as you do that.
Speaker 1:Yeah, the report was inspired. A shout out to Lawson Whiting you were an equity analyst, carolyn right, yes, yes I am proudly not an equity analyst.
Speaker 1:I will avoid reading public company reports as often as possible because I tend to find them to be quite boring, but also that the information delivered by public companies tend to be evasive. Right, they'll say all these complicated words, but they're actually not saying that much. But I really appreciated Lawson Whiting's approach to the way he conducted his calls, because I felt like they were actually informative and earnest attempts to deliver clear information. So shout out to him and who's he with.
Speaker 1:So he's the CEO of Brown Foreman, the owner of famous American bourbon brand Jack Daniels, among many other things.
Speaker 1:So an executive who actually digs deep and comes out with new and interesting information to share with the street, yeah, which I just was appreciative of because it was a more interesting call, and he actually said something to the effect of we're, as an industry, so freaked out about Gen Z and the fact they'll never drink alcohol, and we have some internal research showing that a big part of that is just they don't have any money. And I said, is that true Essentially? And I just tried to do this little fact checking and the answer is yeah, he's kind of right. Gen Z is essentially poor.
Speaker 2:I think you used the word broke.
Speaker 1:Broke, yeah, but I also would just add that you know Gen Z is broke, but so was I when I was in my twenties, and so were you when you were in your twenties. I remember bouncing a check trying to buy rice in college. I was paying with a check. I'm still in my thirties, so it probably was a me thing, not a society thing, to not have a debit card, at least at that point in my life.
Speaker 2:Oh yeah, I would freewheel downhill to save gas money.
Speaker 1:Yeah, exactly, it was an interesting time, but there was a shop in thrift stores. You know, I didn't have any income right because I was at school, like it was just tight. And so I think, really one of the big insights, that I really wanted to help the industry and really any industry I write about beverage, alcohol mostly but any industry needs to understand that young people may desire premium stuff, but they're broke, and so it's not a unique thing to Gen Z, but they're certainly not having the money. And as these people get older and they get college degrees and college degrees are ostensibly very useful because as long as the future earnings of that degree are greater than the debt you incur to get it, then it's a very smart thing to do. And so as people get those degrees which they can't get until they're their mid-20s in a lot of cases, and get deeper into their careers and get past that debt, they don't have the money to buy the stuff they want.
Speaker 2:Right and, as you said, that's always been true. But there's something different now.
Speaker 1:Yes, I'll get to that, but I do want to reinforce this idea that, like what and I'll ask you this because it's a fun quiz question what is the most important driver of brand loyalty? Like from an economist perspective, like, what is the number one thing that drives brand loyalty from a consumer demographic characteristic?
Speaker 2:In the beverage business. I think about the badge value of what you carry.
Speaker 1:It's a trick question, because the answer is income. If you have enough money to buy what you want, you buy what you want. And a case I always use as an example is like I don't ever buy a different brand of toilet paper. I always buy the exact same toilet paper because I don't care what the next brand is on sale. My price elasticity is out of control because I have enough money to buy my favorite brand, and so as you get older, your brand loyalty increases.
Speaker 1:Maybe not because you just buy what you want and young people don't have the money to buy what they want, and as they get older, that will happen. But as I dug a little deeper into this and said, yeah, young people are poor and I think that's really important to strategy for companies, because they need to understand that, hey, these people are looking for value. They're just not going to be able to afford that fancy non-alcoholic drink. If they're drinking alcohol, they're probably looking for something that's affordable and also serves their actual, the way they drink, which is mostly partying. But if you dig deeper, you actually see that there is something unique to Gen Z. It's not just that they're poor, but they're spending the same amount of income on alcohol as previous.
Speaker 2:Why is it if this, as always, is being driven by economics? They don't have much money. Why aren't value brands doing better and why does the premiumization trend continue? Does it mean that companies have missed the opportunity to make the value brands more cool and more applicable?
Speaker 1:I think so. The great example is something like wine, where they've continued to struggle with engaging younger consumers, and one of the things that's widely understood in that business is the wine industry has failed to develop products at lower price points that have appeal, and young people don't want to go work for the wine brands that are affordable. Right, you know, really creative, smart people don't want to work for dead and boring brands and they're not necessarily getting the opportunity to do interesting stuff with those brands anyways.
Speaker 2:That's a really interesting point. So exactly where there is the need for youth and creativity and new ways of thinking are the brands people don't want to go and work for.
Speaker 1:Everyone wants value and I really tend to find the products that outperform in the market. We had Liquid Death on our podcast and you know, I know they were a premium water brand, but I actually went and saw the price after we spoke to them and I was like, wait, what? This is premium, like $1.50 for a can. And it was an amazing realization that it's like actually, no, it's pretty darn affordable, especially because what I'm drinking right now is like a sparkling hop tea that costs $3 a can and it's just expensive, right. A 20-year-old me just wouldn't be able to buy that. And so, yes, young people are buying expensive things and splurging on stuff, but if you want to build habits with people when somebody's lifelong support, and you want to do that when they're young, you need to make it affordable so that they can not just buy it once but buy it again and again.
Speaker 1:And I just really get frustrated with all the innovation is tending in our industry to come from these high cost per serving products that are really premium and kind of weird and often like lower alcohol, and I just go like that's not what young people need, and I think the industry ends up looking at these high level numbers and saying you know, hey, young people are drinking less alcohol, which is true, and they want more premium products. Let's give them something low alcohol and high cost and it's like. Well, these people are poor and, yes, fewer young people are drinking than 10 or 15 years ago, but those that do drink still drink like twice a week and drink it in the context of a party, which means they still want to like. They're not necessarily drinking a glass of wine with dinner, right, the occasion is quite a different one, and I think a lot of executives just forget to remember what it was like to be in their 20s.
Speaker 2:Yeah, very good point yeah.
Speaker 1:And that's a real problem.
Speaker 2:So what's happened to underage drinking?
Speaker 1:In this report I dived into the question of underage drinking, and what inspired that was the fact that I'd done this research to show that Gen Z's got less money, but then not only they have less money, but they're spending about the same share of that income on alcohol as millennials and boomers at this time. But millennials, when they were the age of Gen Z, were spending about 30% more of their income on alcohol than Gen Z is, and so the question is why? What is the driver behind that? And I think one of the big drivers is that young people are delaying or this generation, which is a continuation of a trend before that, are starting to drink alcohol later in life that underage drinking has fallen off a cliff. I mean like a cliff that the number of high school seniors, according to US government data, that get drunk has gone down by half in just a couple of decades.
Speaker 1:So half of the number of high schoolers that do the survey are drinking compared to the early 90s.
Speaker 2:So that's a win. I mean, that's a national health win and probably international health win.
Speaker 1:Like this is the problem, so writing about this was deeply uncomfortable. I write about the industry and I have an academic background. I by virtue of not being an equity analyst my compensation isn't tied to the bank doing business with beverage companies, right so I feel like I have a little more objectivity right, where I can write about stuff that I'm not an industry advocate. I feel like I'm an industry observer, and so writing about underage drinking is really hard to do, because I think you're right the industry. What should you do about underage drinking? Nothing. You should continue to celebrate and tell people that are underage not to drink. That is very simple. The driver of those declines and, perhaps, more disturbingly, the drivers of the decline in underage drinking are likely things that are having profound and negative effects on young people's lives.
Speaker 2:That's a pretty different twist on things. So, yes, please share with us, ricard.
Speaker 1:When it comes to why is underage drinking declining, I think a lot of it has to do with technology and really what it means to be a kid.
Speaker 1:So one part of that is understanding that underage drinking isn't the only thing going down. Young people are having, again, a weird thing to talk about, but young people are having less sex, they're doing fewer drugs, they're drinking less alcohol, and yet the probability of having a major depressive episode in your teens, especially for girls, is higher, has like doubled in the last 10 or 15 years. And though I think every public health person is careful to avoid describing something that isn't supported by research, everyone kind of is pointing the finger at the same thing, which is cell phones, and so what you're seeing is that there's just less in-person interactions for one, and that's supported by data. So that if we actually look at underage drinking, that takes place in social context. That's where most of the declines are, and over the last 10 or 15 years, the share of underage drinking occasions that are by themselves kids by themselves is becoming a larger share of drinking occasions. That drinking alone is not declining. It's actually drinking alone is not declining. It's actually social drinking that's declining.
Speaker 2:Right. So, burkhard, though, that doesn't feel like that's ever going to get better. No, and when I say better that's a loaded word, I don't mean better, I just mean change, because it means that there's a group of young people Gen Z now and the next ones after them who won't be used to number one, social settings and number two, drinking much alcohol. So is that bad for the future of?
Speaker 1:alcohol. So young people are starting to drink later in life and it's not just because they're not socializing, but it's also because, you know, they have trackers on their phones and their parents know where they are. I think a big part of my childhood was I did go and party in the woods as an underage kid and no one knew where I was. Right, I said I was at Kyle's house and I was in the woods. Today, every friend group has a million parents looking at their kids and so, even if you don't get caught, one of your friends will and they'll open a chat group and say, hey, where's Billy? He's not home, and then you'll get caught. But then also there's the risk of getting caught by school administrators. Right, it's one picture that somebody sees and you get kicked off of the sports teams or you get kicked off of the chess club.
Speaker 1:There are real and immediate consequences to drinking that are changing the calculus, I think, for young people to drink and so they're choosing not to, that doesn't mean they think it's less healthy or think it's more dangerous.
Speaker 1:Actually, the data suggests that young people don't think that binge drinking on the weekends is more dangerous than they did 20 years ago. So the reason I'm describing that is because you asked about what is this generation going to do in the future, and those conditions of surveillance and loss of privacy are going to go away as these people get older, and so, on one hand, the limitations on drinking are going to go away, but at the same time, drinking and culture around drinking isn't going to be as big a part of these people's identity growing up, and so it's two different balancing factors. One is saying like, yeah, they'll drink more later. And the evidence is actually yes, they do, they catch up. So underage drinking has been declining for two or three decades, but by the time people are in their 30s, the share of the population that regularly drinks alcohol is indistinguishable from previous generations.
Speaker 2:So that is a really important point. Looking at what Gen Z is doing now doesn't seem to predict that they will drink less alcohol than current generations as they age.
Speaker 1:Yes, and I think that's a win for the industry. Right, oh, we get to see underage drinking go down. Did we cause that? No, but it's good Like we're benefiting from it and our products are benefiting from it, and young people tend to drink. When they drink, they tend to binge drink because they're partying. You know, that has a reason that that's. A big part of the industry's harm reduction framework is people get hurt, you can fall, you can drown, you can get in a car crash. So we don't want people to drink too much, we want them to drink moderately, and people tend to drink more moderately as they age, and so if we're essentially allowing people to start drinking later in life and they're going to eventually drink at the same levels with the incomes that correspond with that right, so we can actually get those premium dollars, this seems like a win for the industry. I would caveat the optimism by saying, up to this point, the fall in underage drinking has not correlated with the decline in consumption once people reach middle age. However, that trend doesn't seem to be holding quite as much, and I really think that we can all look at our lives today and say there just doesn't seem to be the same number of occasions to drink.
Speaker 1:I was organizing a panel with a bunch of Gen Z people to actually talk about this report and their experience with growing up in today's world, and I asked a lot of people think that what's going to happen is, once you get into an office environment and you have to hang out with people, you're just going to, as a generation, be like, what do we do? How do I interact with these human beings that I don't know that well, in a way that feels like normal, and what we assume they'll do is they'll go for drinks. But in the panel I kind of realized and this is true in my own life there are no drinks anymore, office drinks, office culture has changed, and so I do think that the fact that we are spending less time with other people and spending more time alone in general is going to start to perhaps cut into that trend that's held steady to this point and that as we get older and we have fewer reasons to spend time with people, those social occasions are disappearing for drinking with friends and at colleges.
Speaker 2:One of the culprits cited for less alcohol consumption in general is marijuana, and there has been some legalization the stigma appears to have lessened. How much do you think of less drinking by young people? Legalization the stigma appears to have lessened. How much do you think of less drinking by young people? Legal age, but young is driven by switch to marijuana based on the view that it's nowhere near as bad for you and nor are mushrooms and nor other drugs that alcohol is the worst drug.
Speaker 1:I don't have great evidence. If I had to guess, I would say zero.
Speaker 2:Wow.
Speaker 1:It's a very non-consensus view, but I think a lot of the industry doesn't understand how drugs work. One of the reasons I started exploring this was because I was like I wonder, when per capita alcohol consumption was kind of starting to dip a little bit in the United States, I was like, could this be driven by the opioid crisis and would opioids impact alcohol consumption? The opioid crisis and like, would opioids impact alcohol consumption? And I started asking public health officials how they thought about it and they explained this thing which, in the context of drug uses, is called comorbidity. Right, and that is just the fact that this is going to be a loaded and a simplistic term, but all drugs are gateway drugs.
Speaker 1:Caffeine if you drink caffeine, you know, according to research, you're far more likely to be the kind of person that would do much harder drugs, right? These linkages are just very intense, and so people who drink just tend to also use marijuana, and people who use marijuana also tend to drink, because there's something inherent about that is open to risk. Right, they might be less religious. There might be all these other factors at play, but there is a lot of scientific research on this and they show essentially, for young people, it's kind of a wash right. There's some people that might never have done any drugs or done any alcohol, that tried using marijuana once, and then they go. Oh wow, altering my mind state is an interesting experience. I want to do more of that Right and and and so they start drinking. Or maybe you create this friend group that smokes but they also drink some and you hadn't been exposed to that before, and so you can imagine, for young people like this, actually there might be an issue of them being compliments, but, but I think that's a that's a very academic way of talking about it. I'd rather talk about it in a way that I think is more intuitive to an audience that isn't as in the weeds as I am.
Speaker 2:One thing strikes me when you say that it's not an either or for many consumers as if you're doing one, you're probably doing some of the other as well is that it feeds into this concept that consumers today are used to choice. They want choice, they desire choice, they want change. They don't want to buy the same drink over and over again, just like they don't want to buy the same food over and over again. So we've become much more interested in different and exotic than we ever were in the past. So that would actually say it is.
Speaker 2:And I come at that just because a lot of beer companies and distributors are longing to get into cannabis-based drinks when it becomes legalized and you can bank it legally.
Speaker 1:I think we need to remember two things on that front. One, people were using marijuana before it was legalized, and so the question isn't what do people that use marijuana like to drink? It's what do people that didn't use marijuana before it was legalized that start using marijuana because it's become liberalized? What do they drink and how does that change their behavior? Because somebody buying marijuana from their dealer and then switching to an official channel isn't actually changing their consumption. We're just measuring it. So I think it's really important to kind of think through things that way and less about like, and that's why I think a lot of the beer stuff you know the industry gets scared, the beer industry gets scared about marijuana use and they see that. You know the people that smoke marijuana are more likely to be beer drinkers.
Speaker 1:I don't necessarily think that's also what the new consumer looks like. When I think about what is somebody who wouldn't use marijuana where it's illegal and would use it where it's legal. I think that is a profile of a consumer that's gonna be older, someone with real risk, like if you're doing something illegal and it could lead you to losing your high paying job, where you have kids and you just can't go meet an illegal drug dealer. You've matured out of that element of your life Like those are the things that I'm more interested in understanding, less so about, like those simple survey questions.
Speaker 1:But coming back to this of whether or not marijuana is a threat to alcohol, there's been no data from any state that's legalized marijuana showing any meaningful change in the trajectory for alcohol sales. So we have a lot of data on this and it just has showed that there might be effect, but it's so small, it's not measurable. But when it comes to whether or not people are choosing to smoke instead of drinking, I tend to think about it as not always being clearly caused connected to one another. I don't think consumers have a bag of marijuana in one hand and a beer in the other and have to look at both and calculate carefully which one they're going to do. Society is changing in ways in which we're socializing less.
Speaker 2:And that is actually the overarching issue for the drinks world, I think.
Speaker 1:For every industry, for public health it's also the biggest one. I'm lonely in my own life and loneliness is just the stress of unmet social need. So it's just this issue of all of America's in a health crisis of loneliness. And alcohol is, by nature, a thing that you know. If you're drinking alone and you're just having a glass of wine with dinner, then like that's one thing, but a lot of cases, if you're drinking alone, it's not because you're having a good time, and so if you aren't socializing and you're not hanging out with people, there are just fewer occasions to drink and people aren't saying I don't want to drink. They're just not doing stuff with people and they're not having these parties.
Speaker 1:Whereas marijuana you look at the data on it the majority of consumption of marijuana is actually with people by themselves.
Speaker 1:And the thing that people don't like about marijuana there's a lot of people who have tried marijuana in the US. Like 60% of the population has tried marijuana at least once, but only like 10 or 15% of the population actually uses marijuana at least once a month in the United States, and that's because it makes you anxious, it makes you socially awkward, and so it's not a drug that's particularly conducive to socialization. It's why it doesn't show up at parties. It's why it doesn't really make sense to smoke as an adult, where you have to talk about stuff and you have kids to take. It just isn't conducive to that. In the same way, alcohol is. So as life moves in the direction of loneliness and solitude, there's a drug marijuana that just is kind of socially acceptable to be used in that context, but also has kind of always been used in that context. And I just say it's more like the reason that these things are shifting. Not because people are choosing alcohol over marijuana. It's because their life is changing in ways that fit one and not the other.
Speaker 2:Yeah, excellent, excellent point. Years and years and years ago, faith Popcorn came up with the concept of cocooning and people staying home more, and that was more intimate groups, it was more partners. It wasn't a sense that you would do it all by yourself. But now we do have a crisis of loneliness and it's spanning so many ages. Fewer people are getting married, fewer people having children, and so I think maybe that's another opportunity for companies drinks companies as well to look at how they can bring social activity that's fun and engaging and unthreatening back to communities as a way to sell brands.
Speaker 1:Good luck with that. I don't think you're wrong. It's just such a monumental task to change the fundamental direction of society and what's becoming the definitional element of modern life. I'm not trying to sound hopeless.
Speaker 2:No, and again, I'm hardly original in saying that that should be done, because lots of brands are tying up with Live Nation and doing activations around health and wellness and fitness and so on, but there has to be an opportunity for more of that. I'm a little more optimistic than you are because I think every time humans find constraints, innovation comes and solutions are formed. So we need to touch on women and education, which was something very interesting that came out of your research. Can you talk a bit about that? Bukkad.
Speaker 1:So we're coming back to why is Gen Z drinking less than previous generations did at the same age? Right? One element is their lives are fundamentally different. Their childhood are fundamentally different. Their childhood was fundamentally different. Their idea of socialization is fundamentally different. Now, fundamentally is a strong word, but they are just different.
Speaker 1:But also they look different, and so the big thing to think about is 20-year-olds or 25-year-olds were 25, 20 years ago. So if you want to think about like why is this group different? It has to be something other than the fact that they're young. And if you look at today's youth, things are very different in terms of every other aspect of their identity. So if we think about demographics, in this case race and ethnicity boomers were about 72% white non-Latino. Gen Z is about 50% white non-Latino. So essentially, there are just way more Latinas, latinos, asian consumers than previous generations.
Speaker 1:So they look different and that means that you know, if you want to market to young people, you need to market to Latinos and black people and Asians, much more so than would have been the case 25 years ago. That is what your consumer looks like, but there's also things like education are distributed differently across that generation. In the 1980s, the graduating class at any university was probably vast majority men. Today it's actually majority women are walking away with college degrees. So the statistic I last saw is around 60% of recent college graduates in the United States are women. Women are better able to succeed in today's world. Therefore they are making more money, they're in higher paying jobs, they have more influence over culture, and going to college is actually the most reliable demographic indicator for your likelihood of drinking alcohol.
Speaker 2:That sounds almost counterintuitive, because the more educated you are, you should know that increasingly there's a view that you shouldn't drink any alcohol. But you're saying educated people, because they have the money, are going to be consumers, as they always have been.
Speaker 1:Yeah, so having more money means you buy more of the stuff you want and you want to drink. You can do that. But there's also something else happening with drinking and interaction with education, and some of it is you get out of town. When you go to college, you're separated from your family and your enclave, which means you can form and misbehave in ways that no one's watching.
Speaker 1:But there's also a link between education and religiosity, and people who are highly religious tend to look at alcohol as a moral wrong, so they're not concerned about it from a health perspective, but they're concerned about it as a corrupting influence on society and individuals.
Speaker 1:And so going to college may actually loosen religious beliefs, but it is also essentially just people who go to college tend to be less religious, and that might just be something inherent about seeking that education, that curiosity you don't have all the answers that kind of thing, and so there does seem to be something unique about the identities of people that go to college and the influence of college that make people drink more, and it's worth mentioning that. Yes, it does seem ironic, but if you actually look at it like a conditional perspective and say, for people who are educated and that drink. There's actually a much lower likelihood of alcohol use disorder than if we look at people with a lower education that drink are much more likely than that group to drink in unhealthy ways. So they drink more, but they drink moderately for the most part.
Speaker 2:So if women have more money, are they drinking as much as they always did? Are men drinking less than they used to?
Speaker 1:So I'll just speak to high level groups, because I haven't done a deep dive on the income. And part of the reason I haven't done that deeper dive on income is because the data starts getting really messy when you start breaking things down further. And so if we're just looking at people that drink alcohol regularly which I kind of defined in this report as did you drink in the last month Women are now the majority of alcohol consumers under 26 years old, and I'm guessing that they're also the majority of alcohol consumers in their 20s. More broadly and that's not because women are drinking more than they used to. There are some groups that are drinking more. In particular, women of color are drinking more than they used to, and that's definitely driven by education, but it's really more so that women are drinking as much as they used to and men are drinking much less.
Speaker 2:And is it also less about volume growth and more about the price paid? Are you looking at dollars spent?
Speaker 1:I'm looking at whether or not you drink. So women, on average, drink about half as much as men do. However, as I just described, they're more economically empowered and independent than women were in the past, and so I think it's really important to you. Asked about, you talk about premiumization, and I'm always trying to think about what is maybe a structural driver of these trends that the industry depends on, like premiumization, why would young people be spending more per serving? Well, the majority of consumers today spend, drink half as much, but have the same income and therefore can spend twice as much per serving. So if I'm a boy and I'm going to a party, I need to buy two bottles of wine for me and my three friends, and if I'm a woman, I need to buy one bottle of wine for me and my three friends because we drink half as much. That woman can spend the same share of income on alcohol and spend twice as much per serving. And so it's this interesting dynamic where, yes, we're seeing volume declines, but it just means that there's more opportunity. I think, when we think about we want to market to young people, there's more opportunity to market to women with a college degree. They have money to spend and I think in a lot of ways, because identity is complicated and fluid, marketing to women isn't going to alienate boys, and the example I would use there is hard seltzers.
Speaker 1:For a long time, women didn't have anything to drink that was sessionable. We had Zima, we had a couple of things, but they were sweet, they weren't good for you, in the same way that we would think about, like low sugar being an important element of perception of healthfulness today, and so women would have to drink wine or cocktails and boys got beer. And the beer industry was antagonistic towards women for years, in my opinion, with you know, sexualizing women, belittling them, a very bro-y culture, and women were really welcome to the table. Step in hard seltzers. And the original Super Bowl ad was mermaids the mermaids from the Bon Viv ad, the ABI brand, and there was very gendered advertising.
Speaker 2:Wow, you remember that. I remember that too. It didn't last very long, though.
Speaker 1:The reason it didn't last very long was and the reason I realized that this product category had legs was an interview that the Jennifer Mulaney from the Wall Street Journal did, in which she was speaking to a bunch of frat boys that were like I'm on a diet and I hate feeling bloated and this stuff is like lower calorie and it's the first thing I go for, because it also doesn't taste like beer, and boys also think beer tastes like poison a little bit. You have to get used to it. And so it's this thing of realizing oh, I was looking to target women, but then it was actually an innovation that delighted men.
Speaker 2:Well, it's interesting, gokhar, because we've come a little bit full circle, because saying that they're interested in less sugar or anything healthier really does speak to the fact that I think awareness of what's good for you, how your body feels, just self-awareness, being able to hack our bodies is changing behavior to some extent, I think you're absolutely right.
Speaker 1:Young people care about health. Old people care about health. Being able to hack our bodies is changing behavior to some extent. I think you're absolutely right. Right, young people care about health. Old people care about health. I might change topics here right to talk about health, and I don't almost want to, you know, since I feel like I've been talking a lot. I'd like to hear your thoughts a little bit on the health side and understand, like do you have any way of thinking like why do young people care about health so much? How should companies think about health in this context?
Speaker 2:I think smartphones and all the Instagramming has made people even more self-conscious in terms of what they look like, what drink they seem to be drinking where, and so on. So I think some of the health consciousness is body consciousness and vanity and I think that is at new extremes. I don't have data, but it feels like it's at new extremes.
Speaker 1:I appreciate you saying that new extremes, because my baseline assumption is that people have been deeply obsessed with the way they look and being thin forever. But there does seem to be something unique about this moment where maybe you are the person that you're looking at instead of it being just some random person. My photo albums used to be mine and now I'm exposed to the entire universe.
Speaker 2:Right. Actually, for me the big change is that men boys. I'm shocked at how much young men care about what they look like. I don't think that was the case when I was growing up.
Speaker 1:We always have. See, this is like a popular misconception, right? Men don't wear makeup and therefore we don't care about the way we look. We always have. See, this is like a popular misconception, right? Men don't wear makeup and therefore we don't care about the way we look. We're obsessed with the way we look. Men have always been obsessed with the way we look, but we just don't think about it because we don't have the societal pressure and norm of putting on makeup. Right, If it was normal in the 17th century, men had been raised saying like men wear makeup and women don't, and that's somehow inherently more feminine or masculine, men today would be wearing makeup. The whole construct is a very social, cultural one. And men I say that because if you look at the government data on who's more likely to be on a diet, there's no distinction between men and women.
Speaker 2:What about under 25? Who's more likely?
Speaker 1:So now we're getting at the point I was going to say, which is, why do young people care about health now? And the fact that when I was young, I didn't start caring about health until I was in my thirties, because that's when I started getting chubby, that's when I started getting like my blood pressure was acting up. In my twenties I had no health problems and I could get drunk and wake up the next day and go for a 10 mile run if I wanted to. Right, there was nothing my body couldn't do and couldn't take. And so I always am like why are young people concerned about health when they're so healthy, their skin is so smooth, they look so good? How is this possible? And I actually went and looked at obesity statistics and in 1990, something like 10% of people aged 15 to 25 were overweight or obese. Today that's closer to 25%. Which is to say, if you care about health, it's not because you're healthy.
Speaker 1:If you care about health, it might mean you have a health problem or perceive yourself to have a health problem. And the obesity rates are particularly, notably higher for girls in that age group. And you say okay, so why would women be more concerned about their weight, their diet. Well, guess what it's? Because there is actually a problem with weight.
Speaker 1:And this is the contradiction, right, people say they care about health but they're not healthy, and so it creates a gap between what people say they care about and what they're purchasing. What I don't really understand is that driven by society or by companies and what our food system looks like. But it's just an important thing to distinguish that young people might care about health because they're not eating healthy, and when it comes to I care about health and alcohol, I'm not seeing a perception of alcohol as being notably, you know, perception of alcohol and its risks rising significantly, necessarily in the government data I look at. And so what health means for these people might mean sugar, and it's not necessarily. I don't I think alcohol is particularly bad for me. It might mean that I just want less sugar in my diet.
Speaker 2:I think you've hit on something very big. I think that is the awareness of the impact of sugar on our bodies and how much is hidden in foods in grocery stores. We don't even know it's there. I think that awareness is rising. Plus we're able to hack our bodies. So I think education is driving some change. But it is again so counterintuitive that, as we're supposedly more concerned with health, we're getting fatter.
Speaker 1:We're concerned about health and body mass indexes going up, but then also we're buying 800 calorie cold coffee drinks at our favorite cafe. Young people are making unhealthy decisions and therefore feeling unhealthy and then saying they care about health and then also being subjected to all this information that says care about health. It just seems like an ecosystem that companies outside of beverage alcohol take advantage of by saying this product is better for you and it's still chock full of sugar and fat and all that stuff. It's almost like the lesson is young people want to care about health but don't want to change anything about their diet. Because they're young people and their brains aren't fully formed and they don't have self-control yet anything about their diet.
Speaker 2:Because they're young people and their brains aren't fully formed and they don't have self-control yet. Hey, I want to care about health and I'm not overly young, to say the least, and I still find it hard to give up my favorite things, if not impossible. So, bukhad, I think we covered a lot of ground. I really value your input. I look forward to joining you on your Liquid Assets podcast and again for my listeners, bukhad Nessin at Rabobank, industry expert, as you can tell, deep diver into the data and it's just been a pleasure to host you, thank you.
Speaker 1:Thank you so much and, if I might give you a compliment, I've like been listening to your shows and I just really admire the way that you interact with people because you just seem so smart and no nonsense Like. I really love the fact that every conversation I see you talking in you're just so direct and precise and it is a really interesting dynamic. So I really appreciate listening to you and learning from you, but also a very honor that you invited me on.
Speaker 2:That's very kind of you. It's really fun for me to get interesting guests on. It's just the greatest privilege really. So happy rest of week and we will see each other soon.
Speaker 1:Yeah, for sure.
Speaker 2:If you enjoyed this session, please do comment, rate and follow us on Apple Podcasts, spotify or wherever you listen, and please share this with your friends and colleagues.