Alcohol has already been undergoing a fundamental shift: with the long-term trend of ‘drinking less, but drinking better’. Consumers are cutting back on alcohol in an effort to be healthier. And yet, the majority are not giving up alcohol entirely: they’re just becoming more focused on what they’re drinking, when, and why.
But money is now becoming an increasingly important factor. As inflation bites, consumers are tightening their purse-strings.
That can mean two things for alcohol. Consumers either see alcohol as an affordable luxury: a treat that remains within reach and justified in their daily lives (unlike, for example, a new car or overseas holiday). It’s an easy and familiar indulgence in times of stress or uncertainty.
But for others, it’s the very definition of a discretionary purchase. It’s a non-essential ‘want’ rather than a ‘need’ - and therefore the first to be thrown out of the shopping basket.
The K-shaped economy
To understand how consumers react to these new dynamics, we need to understand the K-shaped economy.
A K-shaped economy is, essentially, a tale of two shoppers. Higher-income households rise along the upward arm of the ‘K’; while lower-income households fall or stagnate along the lower arm.
That suggests two different and distinct groups of consumers: higher-income households spend more on alcohol; while lower-income households spend less.
But that’s quite a simplistic interpretation, says Nataly Kelly, CMO of consumers insights company Zappi. The company’s research shows that even higher earners are feeling the pinch.
Around 41% of regular drinkers say alcohol feels less affordable than a year ago. And - crucially - that number is nearly identical among consumers who earn more than $100k a year.
“Affordability pressure isn’t just isolated to lower-income consumers,” says Kelly.
But the crucial point: “The differences show up in how consumers respond,” she says.
“Lower income consumers are more likely to cut back outright; while higher-income groups are more likely to optimize.”
The rise of pre-drinks
So how does that play out in practice?
First and foremost is a shift from bars and restaurants to at-home drinking occasions.
Today, 40% of drinkers say rising alcohol prices affect their decision to go out or not.
But that doesn’t necessarily mean they’re not drinking: they’re becoming more likely to drink at home (38% of drinkers now say they’re drinking more at home instead of going out to manage the cost of alcohol).
And there’s another shift: the rise of pre-drinking. This practice - having a drink or two at home before going out - is an easy win: the drinks at home are substantially cheaper, thus cutting the bar or restaurant bill (without having to sacrifice the socialising or the experience).
The changing shape of premium
But more crucial is the idea of value: a concept that now needs to be re-examined in the economic context of 2026.
At its base, ‘value’ is the simple worth of a product: and how much consumers want to pay.
And that’s important for higher-income consumers as well as lower-income consumers. Zappi’s research found that a third of higher-income consumers are actively looking for promotions or discounts - around the same as the figure overall.
But value can also mean experience: something that makes a brand feel genuinely and tangibly superior.
In the past, the term ‘premium’ could be thrown around fairly easily with few tangible benefits. Now, consumers want to see very clearly what they are paying extra for.
Where are the opportunities?
So what does that mean for alcohol brands?
For premium brands, the demand is still there: but it needs to be navigated carefully.
Diageo, for example, has built up its portfolio on premium products and that remains its key strength. And yet it has acknowledged that these price points are becoming a struggle. In response, the company is exploring smaller formats: offering premium products at an affordable price points.
There’s also a chance for private label. Particularly in Europe, the reputation of private label brands has grown enormously over the last few years: now providing a tempting alternative to the tried-and-trusted brands.
A structural shift
Thinking of the K-shaped economy as two groups of people who either do spend or don’t spend money, therefore, becomes very simplistic.
“It’s more about different coping strategies,” says Kelly of Zappi.
“Consumers across income levels are becoming more intentional about where they spend, what feels worth paying for, and how they manage discretionary purchases.”
And it’s not even just about alcohol. It’s about how consumers approach goods in general.
“That broader value shift is something we’re seeing across categories right now,” said Kelly. “In our broader consumer trends research, nearly half of consumers identified themselves as value-seekers, signaling this mindset is becoming structural rather than temporary.”
