Declining alcohol consumption—especially among Millennials and Gen Z—is starting to reshape the risk profile of breweries, wineries, distilleries, and the suppliers that serve them. A ProSight article by Amy Short, director of research at industry intelligence provider Vertical IQ, frames the shift as slow but steady—one that can materially affect borrower resilience, revenue predictability, and collateral values, particularly for breweries and distilleries that entered during the boom years.
Here are the risk signals and underwriting pressure points the article flags as most worth watching:
Start with the demand signals. Gallup data shows the share of Millennials and Gen Z who consume alcohol is down 10% and 9%, respectively, since 2023. Gallup also found the overall U.S. drinking rate hit 54% in August 2025, the lowest level in the survey’s nearly 90-year history. The trend is tied to moderation, wellness, value-seeking, and post-pandemic lifestyle shifts.
Inventory is the first balance-sheet stress test. Alcoholic beverage inventories totaled $30.8 billion in July, up 6.6% year over year. Elevated inventories can tie up working capital, signal slowing sell-through, and pressure liquidity for producers and distributors—especially those already carrying leverage.
Beer is facing a saturated craft market and a shifting mix. Beer consumption is described as at its lowest level in more than a generation, with 2024 retail value down 0.7% and volume down 2.9%. Craft competition is intense: the number of craft breweries more than doubled from 4,803 (2015) to 9,796 (2024). At the same time, non-alcoholic beer volume rose 175% from 2019 to 2024—creating opportunity, but also potential cannibalization.
Wine volumes are declining, and performance gaps are widening. In 2024, top-quartile wineries saw revenue grow 22%, while the bottom quartile declined 16%—a reminder that credit performance may diverge sharply by brand strength and positioning. Retail prices per liter have been falling since mid-2021, limiting pricing power.
Spirits production is down, and exports are being disrupted. U.S. whiskey production has fallen to its lowest point since 2019, with a 70% year-over-year drop in April for spirits designated for export. Tariff-related export disruptions and weakening export demand add volatility for distillers with sizable international sales.
These are the underwriting pressure points—and the potential offsets. Key lender considerations include: inventory management, demographic sensitivity, pricing power and margin compression, craft saturation, and export exposure. Operators are also adapting through non-alcoholic and zero-proof offerings, premium tiers, health-aligned marketing, and more tasting/on-premise experiences.
Bottom line: The article suggests lenders look for borrowers who demonstrate strategic flexibility, strong brand positioning, and capital discipline as demand shifts.
