The beer industry is navigating significant shifts as younger Americans increasingly opt for alcohol alternatives, driven by health and wellness priorities. In 2024, over 40% of Americans, especially Gen Z, are cutting back on alcohol. This change is fueling demand for functional beverages, which go beyond traditional drinks by offering health benefits, such as improved focus and mood enhancement through ingredients like adaptogens and THC.
Adaptogens are natural substances, typically derived from plants that are believed to help the body adapt to stress and restore balance. They are used in herbal medicine to enhance the body's ability to cope with physical, mental, and emotional stress. The concept of adaptogens is rooted in traditional medicine systems, such as Ayurveda and Traditional Chinese Medicine (TCM), though it has gained popularity in modern wellness circles.
THC, or tetrahydrocannabinol, is the primary psychoactive compound found in the cannabis plant. It is responsible for the "high" that people experience when they use marijuana. THC works by interacting with the body's endocannabinoid system, specifically binding to cannabinoid receptors in the brain and nervous system.
The global functional beverage market, projected to reach USD 249.5 billion by 2026, represents a growing opportunity. Major beverage companies are exploring nonalcoholic and functional options to cater to this evolving consumer base. However, the rise of these drinks doesn't signal the end of alcohol consumption, as many consumers continue to purchase both alcoholic and nonalcoholic options.
The pandemic has further accelerated the trend, with functional beverages becoming more mainstream, appearing on grocery shelves and bar menus alike. As cannabis-infused drinks gain popularity, particularly among Gen Z, the market is witnessing a shift toward alternatives that provide a similar social experience to alcohol without the downsides.
Despite the growth of these alternatives, industry experts believe that alcohol consumption isn't going away entirely. However, the industry must adapt to these emerging preferences or risk losing market share to innovative, health-conscious competitors.
