Millennials seem to be a market mystery for a great many industries. To listen to some business analysts, Americans in their mid-20s are in the midst of a ploy to undercut the paper napkin and also avoid breakfast cereal, golf, and Hooters. One thing they have been purchasing in mass quantities is booze. In 2016, millennials drank 42 percent of the wine sold in the U.S., more than any other generation. They also have helped to boost the craft beer industry and to reinvigorate the craft cocktail market. A new generation is on the cusp of the drinking market, however, and it looks as though this “Generation Z” is far less interested in intoxicants of all varieties–from alcohol to cigarettes and marijuana–than their older siblings and cousins.

Demographically speaking, Generation Z (born between 1995 and 2010) is only slightly smaller than the Millennials (born between 1980 and 1995). According to census numbers, there are about 62.5 million members of Generation Z and 65 million Millennials in the United States. Much of this generation is still too young to legally drink, but already market trends show that the period of rapid sales growth enjoyed by the alcohol industry may be slowing down.

The National Survey on Drug Use and Health is one of the best metrics for measuring shifts in American attitudes towards the use and abuse of a range of intoxicants. According to this survey, in 2005, about 28.2 percent of Americans engaged in underage drinking, while only 20.3 percent did so ten years later.

This statistic is at best only an approximation of what future purchasing trends will look like. After all, most members of Generation Z are still under 18 and far from being old enough, or wealthy enough to purchase alcohol. Some of the trend has been offset by increases in teen marijuana use. A national survey of high school students in 2016 found that for the first time, daily marijuana use exceeded cigarette use. Even so, marijuana use was on a five-year decline among 8th and 10th graders. The same survey found that the “percentage of high school students who reported ever using alcohol dropped by as much as 60 percent compared to peak years.”

It seems that millennials’ younger siblings are a much more sober bunch. These findings could have a dramatic effect on alcohol sales in the U.S. This will likely have dramatic effects on the adult beverage industry.

Over the past decade, craft beer has dramatically increased both its marketshare and brand visibility. In 2014, craft beer sales reached 11 percent marketshare in the overall beer industry and one industry association believes that craft beer can reach 20 percent marketshare by 2020. To reach that goal, however, craft brewers will have to avoid market saturation. Last year, the number of open breweries increased by 19 percent. At the same time, market signals hint that the demand for more brews may be nearly met.

Since 2014, the number of breweries closing has been increasing. Nearly 100 breweries closed in 2016, and openings of new breweries have been dropping by an average of 3.3 percent per year since 2014.  Many people point to these numbers as a sign of market saturation.

These numbers represent a flattening demand paired with the sense that future growth is unlikely.

“Ultimately, what led me to close the doors was flattened growth, stagnant growth,” Alejandro Brown, founder of Big Al Brewing in Seattle, which closed in 2017, told Draft Magazine. “I watched the potential for growth just dry out.”

To some extent, this reflects a surge in the competition. At the same time, it shows that for the businesses relying on a pipeline of new consumers, Generation Z seems much less likely to dive into the craft alcohol culture than Millennials. As more of them reach legal drinking age, the full impacts of this will still be seen.

At least at this point, the alcohol industry seems more likely to greet that day with a stiff drink than a glass of bubbly.

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