UBS has cast fresh doubt on the idea that weakness in beverage alcohol is merely cyclical, arguing the sector faces a slower-burning structural squeeze in North America as younger consumers drink less often and GLP-1 drugs add another drag to volumes.
The bank estimates North America category growth of just 1.3% a year over 2025 to 2035, some 200 to 300 basis points below pre-COVID levels, with volumes in structural decline and pricing and premiumisation left to do most of the work.
Globally, the picture is less severe, with the Swiss bank forecasting 3% annual growth over the same period, only modestly below historical levels, as stronger trajectories in Asia-Pacific and Latin America offset softer developed market demand.
Analysis using UBS Evidence Lab survey data, covering almost 10,000 consumers worldwide, found only 32% of Gen Z drink alcohol weekly, versus roughly 45% for older cohorts, reinforcing the view that demographic change is becoming a genuine headwind for the industry.
Health and wellness emerged as the main reason younger consumers are drinking less, while Gen Z also showed the strongest inclination toward sobriety and abstinence periods.
Besides this slow-burning trend, UBS also highlighted GLP-1 adoption as a credible pressure point. Nearly half of GLP-1 users surveyed said they now drink less alcohol, adding to concerns around moderation, substitution and changing social habits.
Against such a backdrop, UBS said stock selection will increasingly hinge on premiumisation, share gains and geographic diversification.