Rahul Jacob: Alcohol isn’t what it used to be but maybe that’s alright
Younger folk aren’t drinking much in the rich world, a trend that could catch on elsewhere too, but that doesn’t mean this industry is staring at doom. As volumes fall, prices are going premium.
On few subjects is there a greater generational divide in the developed world than on the merits of having a cocktail. In the past couple of decades in the US, sales of alcohol to those between 65 and 74 years of age rose by half, even after adjusting for inflation.
By contrast, sales declined by 60% to those aged 25 and under. Japan, whose work culture and push for ‘total quality management’ were once known for long work days and hard drinking by the ‘salaryman,’ has seen a decline in overall per capita consumption by more than a quarter in the past three decades. In France, of all places, wine consumption, especially of red wines, faces what an analyst calls an “existential" decline.
Alcohol stocks on developed-world stock markets have been pummelled because it is seen as a sunset industry that is also in the sights of regulators. Diageo’s shares have fallen by a third since 2020, according to an article last month by the Financial Times, which quoted its chief executive officer Debra Crew as saying that “people want to drink better, not more."
This push towards the premium end of the scale is working to an extent. Notwithstanding the doom and gloom surrounding the industry, data company International Wine and Spirit Research (WSR) estimated that in 2023, revenues from alcohol sales actually increased by 2% even as volumes declined by 1%.
Younger people drinking less alcohol or switching to alcohol-free drinks implies that this strategy of raising prices leaves the industry dependent on wealthy but ageing baby boomers. While the industry has not been forced to use anything in the league of health warnings about smoking that tobacco companies must place on cigarette packs, health concerns may be catching up with it.
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At the beginning of this year, outgoing US surgeon general Vivek Murthy called for the labelling of cancer risks from alcohol consumption on alcohol cans and bottles. This gave a whole new meaning to ‘Dry January,’ the annual month for resolutions to abstain from alcohol. The World Health Organization, meanwhile, is ramping up warnings that there is no ‘safe level’ of alcohol consumption.
“Alcohol is the third leading preventable cause of cancer behind tobacco and obesity," Dr Murthy told a medical columnist of USA Today, adding that it causes 20,000 cancer deaths in the US alone. “We now know there are seven cancers that are caused by alcohol consumption—breast cancer, colorectal cancer, mouth cancer, throat cancer, voice box (larynx) cancer, oesophageal cancer and liver cancer."
Dr Murthy’s declaration sparked several articles on the subject. Last month, one in the New York Times quoted Timothy Stockwell, an alcohol researcher at the University of Victoria in Canada, as saying that “when you have a drink, your body turns the ethanol that’s present in the alcoholic beverage into a really nasty substance" called acetaldehyde, which can damage your DNA.
Also Read: India is the world's fastest-growing alcohol market when global demand cools
Given the increasing frequency of these warnings, it will be no surprise if we all—and not just young people—start drinking less. And yet, there is a case for moderation and being a social drinker.
The Economist, in a contrarian column this May, issued some warnings of its own. It argued that the restaurant industry would be devastated if people drastically reduced drinking. Further, the publication claimed that alcohol has a positive impact on creativity and sometimes helps get couples together, dubiously or jokingly linking an observed drop in productivity growth to greater abstinence from alcohol.
The chief executive officer of Asahi has blamed excessive screen time and gaming for reduced alcohol consumption, but it may simply be that people entertain differently and that health warnings are being taken more seriously.
Alcohol’s global giants are looking to markets such as China, India and Brazil to boost sales. But even in the developing world, consumption growth is not as bubbly as it used to be.
While the compound annual growth rate of the per capita consumption of pure alcohol was about 15% for India and China between 2005 and 2010, according to an analysis by Technopak, a consulting company, it is expected to grow just 1.2% annually between 2023 and 2028 for India. Alcohol consumption is declining even faster in China than in the West.
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But the regulatory framework in India is also a dampener on sales. Hardly a month or two goes by before a major state levies additional excise duties or raises the cost of liquor licences for restaurants and bars or booze outlets. But India at least offers a demographic dividend of a different kind. Young people seem to be discovering cocktails and are not part of the developed world’s shift away from alcohol.
In Bengaluru, synonymous with pubs, cocktail bars are opening all the time, reports Rohil Kalita, head bartender of Bar Spirit Forward in the city. He adds that about 60% of Spirit Forward’s customers are aged between 25 and 40.
I am a good bit older than that, but part of the trend. Having been disciplined during the first covid lockdown, during the second, I re-watched Mad Men, the television series about an American advertising agency set in the 1960s, in which cocktails have a central role.
Don’t take my word for it, but in the annus horribilis that is 2025, a cocktail or three a week with friends seems preferable to doom scrolling.
The author is a Mint columnist and a former Financial Times foreign correspondent.
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