Pandemic weighs down on Gen Z

By Jo Gilbert

Published: 15 July, 2020

The generation of youngest drinkers are the most difficult age group to entice back through the bar, restaurant or shop door, Wine Intelligence has suggested, with the fallout from Covid-19 likely to have the most detrimental impact on their buying behaviours.

Drawing on models as far reaching as those of early 20th-century economist John Maynard Keynes, Wine Intelligence CEO Lulie Halstead said that consumers are widely believed to ascribe a hybrid model of behaviour where they are capable of doing rational (cutting back on luxuries in times of economic stress) as well as irrational things (maxing out credit cards).

This was built upon following the 2008 financial crisis when economists wrote that consumers also tend to be guided in their shopping habits by behaviours that are in line with their own ‘personal stories’ – and how confident they feel about the future.

“If consumers believe they are at a point in their personal ‘story’ where the world is looking bleak and threatening, this will have a visceral impact on their confidence, shifting their entire mindset towards self-protection and caution. Equally, if they feel their personal story is now at a point where things are looking great and exciting, they will make big investment decisions and take potentially irrational risks – buy a big house with a towering mortgage, or quit their job and start their own company,” Halstead said.

This could have a major impact on the youngest generation of drinkers, Gen Z, whose stories are now entering a ‘bleak’ chapter.

According to Wine Intelligence, the pandemic has wreaked havoc on Gen Z’s “personal narrative of celebrating university graduation, finding their dream job and starting to earn decent money”.

As a result, they are actively downgrading their lifestyles.

“No more expensive dinners out, cancelling holiday plans (if these were even possible) and giving up on future plans for socialising in larger groups,” Halstead said.

This has been exacerbated by the slower than anticipated bounce-back rate of major economies following lockdown periods in April and May. In the UK, bars and pubs opened again for business on 4 July, but the anticipated surge of thirsty drinkers has largely failed to materialise.

The effect on retail sales has not been universal, however. The personal ‘story’ also seems to include a desire to live a more practical and healthy life, suggested by the huge uptick in bicycle sales around the world, including the Netherlands where sales jumped 36% at the largest bicycle distributor in May, while last week the Financial Times reported a global bicycle shortage.

Interestingly, affluent young people in their late 20s and early 30s are more likely to appear at the other end of the spectrum to Gen Z.

As opposed to Gen Z ‘halters’, this slightly older cohort are in the ‘hedonist’ segment, suggesting a strong link between current income and future expectations.

“This analysis suggests that some people have faith in the future, and marketers don’t necessarily need to worry too much about getting these people to leave their homes. However, large numbers of consumers in the developed and developing world are struggling to find a positive narrative. The primary marketing message from industry and government in these markets should be to help them rediscover that positive outlook, if bars, pubs, and restaurants are going to function at anything close to normal during the remainder of this year,” Halstead concluded.

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